Borislav Tonev

Sitoa Global Inc (OTCMKTS:STOA) Can Do Without Pumps

by Borislav Tonev June 17, 2013
00STOA.pngWe last covered Sitoa Global Inc (OTCMKTS:STOA, STOA message board) before the start of Thursday's session when we talked about the fall that the ticker experienced during the previous day. It was indeed a pretty hard landing for a company that had been on an upward trend before that. After our coverage went online, however, the emails stopped and STOA did manage to regain their composure finishing Thursday and Friday in the green. During the last session of the week they added 33% which is exactly the same as Medient Studios Inc (OTCMKTS:MDNT) the only difference being that STOA did generate more dollar volume.

The case of MDNT is slightly different since the interest in their stock started only recently when they started making revenues from their movies and when they published their latest report investors could see that not only have they generated some sales, but they've also registered net income amounting to more than $500 thousand.

STOA are a bit more modest. They have been traded actively for some time, but throughout the years the direction for the ticker has been only one - down. They too issued their report recently and in it we also read that they have managed to finish the first quarter of 2013 in the green. Here are the figures once again:

  • cash: $383 thousand
  • current assets: $545 thousand
  • current liabilities: $409 thousand
  • quarterly revenue: $883 thousand
  • quarterly net income: $27 thousand

0STOA_logo.jpgWhile the 10-Q is not as impressive as the one that we saw from MDNT, it is better than most of the statements that we go through every day. Probably this is what got IRIS Corporation Berhad interested. As we wrote in our previous article, the announcement for the signed Letter of Intent came out way back in March and it stated that the merger should be completed before the end of the second quarter of 2013. This means that the two companies have two weeks to get the whole thing straight before some people start losing faith in them. Until then there will be quite a lot of anxious traders spending countless hours on STOA's Yahoo Finance profile hitting the Refresh button every few seconds.

We reckon that an update from the management team either through a press release or through a letter to the shareholders will give investors a bit more confidence which would in turn push the price in the right direction, but apparently the people running STOA don't deem this too important.

9XUII.pngYou will probably accuse us of being unnecessarily pessimistic about the whole thing, but we should point out that we've seen the same scenario with a lot of promoted penny stock companies - the PR department announces that there' been some interest from a big company, pumpers launch an awareness campaign, investors get excited, price jumps high, merger fails for one reason or another, ticker crashes hard wiping out all profits and leaving traders licking their wounds. A recent example is Xumanii, Inc. f/k/a Medora Corp (OTCMKTS:XUII). There was a huge promotional campaign around them during the last couple of months and at one point, rumors emerged that Apple Inc. (NASDAQ:AAPL) might be interested in doing business with XUII. Predictably, investors were all over the ticker for a few days however, having checked out their chart this morning we can guess that XUII failed to make a significant impression on the electronic giants.

The case of STOA, of course is a little bit different. They do seem to be a genuine enterprise with hopes of becoming really big, but since there are no news around the merger between them and IRIS, some horrendous trading sessions like the one that we saw last Wednesday might happen at any time. If the deal turns out to be off for some reason, the crash could be even more painful, which is why you need to be sure that you can afford all the losses before jumping in.

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