Sitoa Global Inc (OTCMKTS:STOA) Tripped And Fell Hard

After an impressive two trading sessions on Monday and Tuesday, when Sitoa Global Inc (OTCMKTS:STOA) jumped from $0.0025 all the way to $0.007 with an intraday high precariously close to the $0.01 per share mark, the ticker stumbled yesterday and when the closing bell rang, it was at $0.004 or 42% below the previous close. So, what happened? Well, there could be a few reasons for this, actually.

For one, there was an email that we received yesterday from Bird Gang Stocks and while according to the disclaimer, there was no compensation, we are well aware that this sort of pumping could still adversely affect the performance of the stock. But was it only the emails that stopped STOA‘s ascend?

Well, quite frankly, we reckon that there are some other factors as well. Such as the fact that after they issued the press release back in March about the Letter of Intent signed with IRIS Corporation Berhad, there’s been no news to inform us how things are going. According to the March announcement, they were negotiating the details around the deal, but right now, nearly three months later, it would seem that they still aren’t ready, which is quite disturbing since STOA promised that the definitive agreement containing all the details will be released before the end of Q2. This basically means that the have no more than a couple of weeks to get things straight.

As always we checked out the message boards to see what investors think about it and with their help we saw that STOA is not the only acquisition target for IRIS. After rummaging around some SEC filings, we managed to find this 8-K form according to which DM Products Inc (OTCMKTS:DMPD) are also carrying out negotiations. The scenario is pretty much the same – DMPD announced that they have signed the Letter of Intent a couple of months after STOA but their shareholders are still anxiously waiting for some development around the deal. Will a potential acquisition of DMPD put a spoke in STOA‘s wheel? Nobody can say that for sure, but it is a cause for concern and the fact that just a couple of weeks before the deadline nothing seems to be completed is keeping investors and shareholders awake at night. But is this really enough to push the price so low in just a single day?

Our eyebrows are raised even further by the fact that although STOA have been in the double-zero field for quite some time, they do appear to be company with real operations, working capital and a net income (albeit a small one). It’s not all good news, though. There has been a conversion of debt on a truly massive scale since the beginning of 2013 and according to the latest 10-Q the number of shares issued between January 7 and April 24 amounts to more than 80 million. The average value estimated during the conversion is $0.0023 per share which, as you can see, even after yesterday’s crash is quite an opportunity for a profit.

The note holders who received the cheap shares are not disclosed in the 10-Q, but having in mind the number of Schedule 13 forms filed by known toxic financing entities Asher Enterprises and Magna Group, we are inclined to believe that they are probably the ones who got them. We’ve seen them in numerous filings published by a lot of small cap ventures and one thing that is in common around all of them is the fact that they often get pumped with some catastrophic results.

Speaking of pumps, we should probably mention another disaster that happened yesterday. Despite the efforts from the newsletters, Inova Technology Inc (OTCMKTS:INVA) plummeted by as much as 58% when they announced that they are going to perform a reverse stock split. Whether it was the investors’ reaction to the management’s decision or something else that pushed the price down remains a mystery. Another IT company that suffered losses yesterday despite some supposedly promising news is OBJ Enterprises f/k/a Obscene Jeans Corp. (OTCBB:OBJE). Unlike STOA and INVA they are not mentioned anywhere in the promotional emails at the moment, but looking at the chart from a few months back, we can see that investors are starting to lose their hope for OBJE.

Whether STOA will follow in their footsteps is largely dependent on the closing of the deal with IRIS Corporation. The poor performance from yesterday, however, shows that there are some risks involved in a potential investment and it is crucial that you weigh them carefully before making any decisions.