Three (Promoted) Small Caps Set to Keep Rising? SAEE, QFOR & PGCX

Small cap stocks 7 Star Entertainment Inc (OTCMKTS: SAEE), Quadrant 4 Systems Corp (OTCMKTS: QFOR) and Virtual Sourcing, Inc (OTCMKTS: PGCX) surged or rose 35%, 18.9% and 11.27%, respectively, on Friday. Moreover, all three small cap stocks have been the subject of paid promotions albeit they have not been as heavily promoted as a number of other stocks were last week. So will these three small caps keep rising this week or head in the other direction? Here is a closer look to help you decide:

7 Star Entertainment Inc (OTCMKTS: SAEE) Has a Letter of Intent to Make an Acquisition

Small cap 7 Star Entertainment owns and operates a portfolio of online dating web properties along with complementary online bidding, video and affiliate traffic websites, supported by a range of mobile e-commerce applications such as location based services, mobile checkout and credit card processing. On Friday, 7 Star Entertainment surged 35% to $0.0135 plus SAEE is down 93.2% since last February and down 94.6% since September 2012 according to Google Finance.

What's the Catch with 7 Star Entertainment Inc? According to various disclosures, a transaction or transactions of $3k has or will occur to mention 7 Star Entertainment in various investment newsletters. Last Thursday, 7 Star Entertainment announced a letter of intent to acquire California based Orbital Laboratories, Inc, a consumer electronics company involved in the development of new products - including wireless, cellular, and new media technologies. 7 Star Entertainment is still completing the Due Diligence stage and hopes to enter into a final agreement within the next few weeks. The acquisition is part of 7 Star Entertainment's strategy outlined in an October press release to diversify into new sources of revenue by making acquisitions of unique technology and patent portfolios. A quick look at 7 Star Entertainment's financials reveals revenues of zero (June 30, 2013), zero (Dec 31, 2012) and $3k (Sept 30, 2012) for the past three reported quarters and net losses of $13k (June 30, 2013), $19k (Dec 31, 2012) and $9k (Sept 30, 2012). At the beginning of June, 7 Star Entertainment had no cash to cover $246k in current liabilities. So investors might want to wait for the company to complete an acquisition AND report financials that reflect any acquisition.

Quadrant 4 Systems Corp (OTCMKTS: QFOR) Reports Financials

Small cap Quadrant 4 Systems Corp is an IT software company that develops and implements mission-critical cloud-based enterprise systems for both Fortune 500 companies and smaller enterprises. On Friday, Quadrant 4 Systems Corp surged 18.9% to $0.44 for a market cap of $29.4 million plus QFOR is up 252% since the start of the year and up 109,900% over the past five years according to Google Finance.

What's the Catch with Quadrant 4 Systems Corp? According to various disclosures, one promoter has or will receive 500,000 shares of common stock under Rule 144, 250,000 stock options valued at $0.25 and a monthly cash fee for six months of investor awareness services. Last Wednesday, Quadrant 4 Systems Corp reported a 40% revenue increase to $9,142,740 primarily due to the acquisition of SMAC (Social, Mobile, Analytics, Cloud) related assets in the first quarter of 2013 and the expansion of the core businesses to include its newly-launched HealthCare Exchange (QHIX). Quadrant 4 Systems Corp also reported a GAPP net loss of $836,309 verses a net loss of $914,788 for the same period in 2012 with the loss primarily due to debt related interest expenses and non-cash charges such as amortization of goodwill. Nevertheless, investors might want to keep in mind that Quadrant 4 Systems Corp has reported $26,562k (2012), $29,141k (2011) and $15,234k (2010) along with net losses of $5,677k (2012), $149k (2011) and $2,278k (2010). At the end of June, Yahoo! Finance showed that Quadrant 4 Systems Corp had $68k in cash to cover $6,290k in Short/Current Long Term Debt, $10,486k in Long Term Debt and $2,900k in other liabilities. So perhaps investors will want to look more closely at Quadrant 4 Systems Corp's balance sheet before getting to excited about its income statement.

Virtual Sourcing, Inc (OTCMKTS: PGCX) Intends to Become Fully Reporting

Small cap Virtual Sourcing is actively pursuing the acquisition of thriving businesses with a five-year or more operating history, year over year sales growth and an increasing net cash flow already in excess of 10% of sales. Target companies include recyclers, manufacturers of recycled products, plastics extrusion companies and suppliers of recycled materials for manufacturing. On Friday, Virtual Sourcing rose 11.27% to $0.122 for a market cap of $614,700 plus PGCX is up 74.9% since the start of the year and up 1,124% over the past five years according to Google Finance.

What's the Catch With Virtual Sourcing, Inc? According to various disclosures, a transaction or transactions of $15k has or will occur to mention Virtual Sourcing in various investment newsletters. In early October, Virtual Sourcing issued a press release to report that it has hired an accounting firm to complete the audits of its acquisitions and for the company for the last two fiscal years and the stub period through September 30, 2013 in preparation of becoming fully reporting and eventually a listed company as either a Nasdaq Small Cap or NYSE Amex issuer. The goal is to have the audit process completed in the first quarter of 2014. In addition and back in September, Virtual Sourcing announced its subsidiary Allied Recycling Corp had signed a letter of intent to purchase the assets of a holding company that includes a concrete products manufacturer with more than 20 years of operations and historical sales exceeding $17 million annually in four of the last five years plus discretionary earnings in excess of $3 million in its latest fiscal year ended in April 2013. However and since Virtual Sourcing only completed the acquisition of Allied Recycling Corp last June, investors might want to wait for more financials that actually show something at least at the top line as well as some cash as the company had no revenues and no cash to cover $465k in current liabilities.