The promotional coverage for Seven Arts Entertainment, Inc. (NASDAQ:SAPX) would not seize – yesterday evening two more promo e-mails came into our database, proclaiming that SAPX could make another run today. If that happens, it would be most probably due more to the newsletters effect and than to impressive financial results. 
Friday session closed 2.68% lower than the previous close at $0.399 for a share, while the trading volume was only around 915,000 traded shares. Latest news was not related only to the recent corporate developments and financial results, but also to the new promotional coverage. The final outcome of that has been SAPX first climbing to $0.68 and then falling back down below $0.40 within a week.
On Thursday last week, SAPX announced that an equity research company has initiated coverage on Seven Arts Entertainment. Then, yesterday evening we received two e-mails promoting SAPX for the upcoming session. The disclaimers of the e-mails suggest they come from the same promoter as both say they expect to receive $15,000 for the service from a third party, and have previously received $35,000 again to cover SAPX.
The effect of those newsletters should be seen today. Last Thursday, however, the performance of SAPX was quite interesting – the share price opened with a huge gap and jumped to $0.48, while the news about the new research coverage and the company’s latest 8-K filing came out later in the afternoon.
The 8-K contains a summery of SAPX latest corporate developments and complements the information from the PR from the end of October which announced the financial results for the fiscal year ended June 2011.
According to the SEC filing, the company and its predecessor have issued 10 million new shares of common stock for the retirement of debt and as a result SAPX stockholder equity had increased from $3.5 million at the end of 2010 to $18 million as of the end of this October. It is only strange that last week SAPX did not even approach the reported in the earnings press release $0.77 earning per share, suggesting that investors are rather still pessimistic about the future of the company.
