Epic Stores Corp (OTCMKTS:EPSC) Is Today's OTC Focus

Epic Stores Corp (OTCMKTS:EPSC) has quickly emerged as a volume leader on the OTC markets. The company is a second-hand goods retailer with locations throughout the United States. Based in Phoenix, Arizona, the company offers high quality, on-trend second-hand clothing, accessories and household products at affordable prices. Epic employs approximately 230 employees and operates 10 retail stores in four states. Founded in 2010, Epic opened its first retail store in Phoenix, Arizona. Since that time, the company has opened additional stores in Arizona, Nevada, Colorado and Texas. All of the retail stores sell products directly to consumers. Epic also operates a wholesale business that supplies used shoes, books and clothing to distributors.EPSC emerged out of the merger between Epic Stores and Be At TV Inc (BETV/BETVD), which took effect on August 18, 2015. Volume has steadily been increasing since the beginning of the year as a hard mailer promotion campaign has been hitting investor's mail boxes.Epic Stores is a unique story in that the resale sector has outperformed other retailers, even in the light of economic expansion. Since the Great Recession, one would expect this sector to not do as well, but the opposite has occurred. Furthermore, Epic will most likely benefit if and when the US economy dips back into recession. It seems habits picked up during hard times are resonating with today's consumers. CEO Brian Davidson said:

"Concerns about the possibility of an economic recession is driving cost-conscience consumers into our stores, as evidenced by notable improvements in our store-level metrics. This progress validates our unique strategy of partnering with schools, houses of worship, and charitable organizations near our stores, integrating us with the communities we serve, helping us bolster our inventory with high-quality, low-cost items and expanding brand recognition."

The latest results from the company have been positive. Epic reported a 26.6% improvement in its unit sell through ratio in the first two months of 2016 compared to the same period last year. Epic reported a 7.0% improvement in the ratio of average price produced vs. average price sold in its standard stores (excluding the outlet store), in the first two months of 2016 compared to the same period last year. Management also reported a 129.8% improvement in on-site merchandise acquisition during the first two months of 2016 compared to the same period last year. The company claims that this progress is directly related to the company's work with local schools and charitable organizations, generating in low-cost inventory for local stores and driving consumer awareness of Epic's stores. Epic also reported a 27.3% improvement in sell through during the first two months of 2016 compared to the same period last year.Epic Stores has grown to 10 stores, with a goal of adding another six to eight stores during 2016 along with the relocation of two smaller stores. The retailer operates stores in four states that include Arizona, Colorado, Nevada, and Texas. The current plans include the opening of stores in Houston and San Antonio in the next couple of months that are currently under construction. Other target sites include Dallas, Tulsa, and Central Valley California.While Epic has a good business, the biggest problem for the stock is dilution. EPSC just issued $500k worth of 10% Senior Secured Convertible Promissory Notes to Old Main Capital, LLC. The conversion price is $.63 per share or 54% of the lowest daily volume weighted average price of common stock of Epic in the 20 consecutive trading days immediately prior to the applicable conversion date. For Epic to fund its growth plans, the company will need to continue raising more money and diluting existing shareholders.With a market cap of $55 million, EPSC has been the work of a well-run promotion. Longer term, it will be hard for the promoters to keep the share price up as more stock gets converted at lower prices and hits the market. With so much cheap stock out there, we just don't see how new investors can make any money in EPSC. Buyer Beware! We will be updating Insider Financial as soon as we know more. For continuing coverage on EPSC, sign up for our free newsletter today and get our next hot stock pick!Disclosure: We have no position in EPSC and have not been compensated for this article.