Two (Promoted) Small Caps That Surged Friday: PGLO & ASAB

Small cap stocks Pan Global Corp (OTCMKTS: PGLO) and Allerayde SAB (OTCMKTS: ASAB) surged 28.46% and 19.5%, respectively, last Friday. However, both small cap have also been the subject of paid promotional campaigns that have earned both mentions in investment newsletters or investor alerts. And while there is nothing wrong with properly disclosed stock promotions or investor relation campaigns, they can come back to bite unwary investors and traders alike. So do these two small cap stocks have what it takes to stay high this week and into the future? Here is a closer look and a quick reality check:

Pan Global Corp (OTCMKTS: PGLO) Talks Up the Global Small Hydro Power Market

Small cap Pan Global Corp through its wholly owned subsidiary, Pan Asia Infratech, Corp., is focused on environmentally sustainable energy, infrastructure and technologies. On Friday, Pan Global Corp surged 28.46% to $0.736 for a market cap of $335.04 million plus PGLO is down 63.2% in intermittent trading since last March according to Google Finance.

What's the Catch With Pan Global Corp? According to various disclosures, a transaction of $20k has or will occur to mention Pan Global Corp in various investment newsletters. Pan Global Corp has been very busy issuing press releases lately. Last Thursday, Pan Global Corp issued a press release to talk up the "global market opportunity for the small hydro power ("SHP") industry" which is expected to grow steadily with 200 GW installed capacity by 2020 while the value in 2015 is expected to be more than a double of 2008 figures - reaching $38.5 billion (USD). Last Tuesday, Pan Global Corp announced that its wholly-owned subsidiary (Pan Asia Infratech) had entered into a definitive stock purchase agreement to acquire 100% of the outstanding shares and convertible debt of Regency Yamuna Energy Limited - a privately held Indian corporation which is commissioning a 5.7 MW small-hydro project in northern India. Otherwise, investors should note Pan Global Corp recently announced a reduction of its issued and outstanding common shares from 455,155,000 to 155,155,000 plus the company recently completed a common stock for preferred stock exchange agreement its majority shareholder to exchange 300,000,000 common shares for 3,000,000 Shares of Series C Convertible Preferred Shares. A quick look at Pan Global Corp's financials reveals revenues of $15k (most recent reported quarter), zero, zero and zero for the past four reported quarters along with net losses of $107k (most recent reported quarter), $6k, $7k and $7k. At the end of June, Pan Global Corp had $10k in cash to cover $395k in current liabilities. So its obvious why Pan Global Corp had to use a "definitive stock purchase agreement" to acquire Regency Yamuna Energy Limited, but it remains to be seen whether the company can take advantage of the global market opportunity for the small hydro power market.

Allerayde SAB (OTCMKTS: ASAB) Is Being Pumped Up By Alot of Money

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Small cap Allerayde SAB is a US/UK based healthcare company specializing innovative, product development and marketing in allergy, eczema and anaphylaxis (allergy shock) both in the professional and consumer sectors. On Friday, Allerayde SAB surged 19.5% to $0.490 for a market cap of $36.49 million plus ASAB is up 9,700% over the past year and down 15.5% since April 2010 according to Google Finance.

What's the Catch With Allerayde SAB? According to various disclosures, transactions of €7k, €20k and €500k have or will occur to mention Allerayde SAB in various investment newsletters. However and despite the large amount of promotion money being spent on pumping up Allerayde SAB, I am not seeing any press release or news from the company on Yahoo! Finance or Google Finance. Moreover, Allerayde SAB has reported revenues of zero (most recent reported quarter), $16k, zero and zero for the past four quarters along with net losses of $4k (most recent reported quarter), $61k and $458k and net income of $81k. At the end of June, Allerayde SAB had no cash to cover $2,570k in current liabilities. Those financials make it hard to justify Allerayde SAB's market cap – along with all the promotion money being thrown around to promote the stock.