Moving Stocks Preparing to Sink STAR8 CORP (PINK:STRH) with a Promo

Scarcely two days have passed since fast Moving Stocks initiated promotional coverage on Odyssey Pictures Corporation (PINK:OPIX) and the promoter is fully charged for yet another pump. The victim this time is STAR8 CORP (PINK:STRH).

The reason why we have just classified STRH as a victim lies with the dismal market performance of OPIX, Moving Stocks’s previous pump job. Indeed, OPIX shares enjoyed a fairly huge appreciation in terms of market value, yet it was all gone in the twinkling of an eye. Yesterday, OPIX lost half of its artificially boosted share price and it was largely due to the fact that the campaign was no longer active.

Even though OPIX is just an individual example of a failed promoted penny stock, it is by no means an isolated case, for each and every promotion out there is bound to adversely impact the market value of the stocks they are targeted to.

Today, it’s STRH‘s turn to undergo that kind of ‘treatment’ on the charts. Does it stand any chance of resisting the pressure third parties will exert on it, though?

For a start, STRH pretends to have developed what they call low-cost, Android-based smart mobile phones and a would-be tablet (set for release in Q2) aimed at providing customers with a much cheaper alternative to the products offered by such industry giants as Apple, Samsung and HTC to name but a few. Intentions good, but what about the financial dimensions of this plan?

As of Sep. 30, 2012, STRH‘s financial situation was dependent upon:

• $2,826 in cash;
• $104K of current assets vs. $268K of current liabilities;
• $655 thousand of accumulated deficit since inception;
• quarterly revenue in excess of $1.4 million and a net loss of $26.5K.

Even though STRH‘s revenues have cracked the $1 million benchmark, the company is still operating at a loss and has trouble paying off its short-term debt. The latter could easily turn into an endless source of dilution considering that the company’s outstanding stock, i.e 174 million, barely covers 1/3 of the total shares authorized, which means that there are still more than 325 million shares waiting to see the light of day on one occasion or another.

All in all, promoted stocks tend to crash down big time sooner rather than later, which is why you should beware of STRH and the likes.