Shares of Reffind Ltd (ASX: RFN) dropped 10.7% on Monday. They’re now fetching just 12.5 cents, which is below the group’s initial public offer (IPO) price of 20 cents and almost 94% below their peak of $1.965 in October 2015.

Believe it or not, 1-Page Ltd (ASX: 1PG) has been just as bad for investors in recent months. Investors who purchased shares for 20 cents in the IPO watched the shares soar as high as $5.69 in September, only to crash 89%. The shares ended yesterday’s session 13% lower at just 60 cents.

These heavy losses don’t necessarily mean that the two businesses are destined for failure. I personally own shares in 1-Page, for instance, based on the belief that the company itself could potentially have a tool that could revolutionise the way in which companies hire and promote talent.

It still could, but the company’s revenues and cash flows certainly aren’t reflective of that yet and it is certainly testing my patience.

Reffind is the same. In its latest quarter, it generated just $134,000 in receipts from customers with a total net operating cash outflow of $969,000.

It’s early days still for both companies, which could still grow those figures over time, but the lack of revenue is certainly a concern for existing shareholders.

The troubling thing is that Reffind and 1-Page are just two examples of technology businesses with promise and potential but little in the way to show for it with revenue or cash flows. That has the potential to damage investor confidence in IPOs which is why the ASX could be set to crack down on this activity in the near future.

According to a recent report from The Australian Financial Review, early-stage technology companies with limited revenue could soon be blocked from listing on the Australian Securities Exchange. That comes after 105 tech company floats on the ASX in the last two years, with 45% of those businesses having had revenue of less than $1 million.

Of course, many investors know the risks involved when buying the shares. If the product never takes off, there is the potential to lose 100% of invested capital. However, others are more naïve; they see a company with a promising product or service whose share price is soaring higher, and buy its shares only to watch them collapse again.

The AFR quoted Natasha Mandie, managing director for EM Advisory, as saying: “The reality is for investors that most of these listings will fail, either completely or partially, but fail. Only about 20 per cent or less will be a success.”

Notably, Mandie has been advising the recently-listed Redbubble Ltd (ASX: RBL). The company’s shares are trading marginally higher than their float price at $1.36 and, unlike 1-Page or Reffind, it expects to generate $114.5 million in revenue in financial year 2016. It also had $57.4 million in pro forma net cash as at 31 December 2015.

It’s too early to tell whether 1-Page and Reffind will succeed in the future. If they do, current shareholders could be very well rewarded. But they are packed full of risk and the longer they go without generating a reasonable amount of cash, the less likely they are to succeed as investments.

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Motley Fool contributor Ryan Newman owns shares of 1-Page Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.