Borislav Tonev

CodeSmart Holdings Inc (OTCMKTS:ITEN) Starts Another Climb

by Borislav Tonev October 21, 2013
8ITEN.gifWe first covered CodeSmart Holdings Inc (OTCMKTS:ITEN, ITEN message board) more than two months ago and if you have a look at our articles, you'll see that we never fail to mention the rather erratic stock performance. Active trading began in July and at first, the price was hovering around the $7 per share mark. Unfortunately, it immediately started sliding and by mid-September, it had already reached the $2 levels. Then the ticker made another surge but once again, it failed to withstand the pressure above $3. The following drop was just as significant and on October 8, ITEN registered a 52-week low of $1.85.

Last week we saw another surge and trading was particularly interesting during Friday's session. ITEN opened the day at $2.46 and from the very start, began climbing up the chart. More than 325 thousand shares changed hands resulting in a 13.5% price increase and a dollar volume of around $888 thousand. The ticker closed last week at $2.758 and looking at today's early trading, we might be in for another interesting session. About an hour after the opening bell, the ticker has registered an intraday high of $3.25 and is currently around 8% above Friday's value.

So, what is causing the renewed interest? Fortunately, it isn't the paid pumpers. From the start, ITEN looked like a prime candidate for a promotion, with the change in the business plan, the stock split and the intense issuance of shares during the first days after the merger. Yet, the ticker is still not the target of a pump. That said, there's no shortage of people being quite optimistic about the company's future.

The management team, for example, have been publishing revenue and net income projections from the very start and as we've mentioned numerous times, the predictions seem a bit far-fetched. They also paid an entity called Umbrella Research to publish a report in which a price target of around $12 was set and all this seems to be in a severe contradiction with the latest 10-Q which reveals a working capital deficit of around $1 million, quarterly revenues of no more than $24 thousand and a net loss of nearly $2 million.

Despite that, the people who currently run ITEN, don't seem at all bothered by the rather disappointing report and they continue to be adamant that things will be looking bright towards the end of the year. At least thirteen press releases have hit the wire since the publishing of the 10-Q and each sounds more optimistic than its predecessor.

It would seem that new contracts are being signed almost every day and if the announcements are to be believed, each and every deal will bring massive value to the shareholders and future investors who are currently presented with an undervalued stock. The thing is, we've been around penny stocks for long enough to know that things don't always go according to plan which is why waiting for the next quarterly report might be considered to be the best call. Unfortunately, it won't be out for another three weeks and we're sure that some of you are wondering what to do in the meantime.

3ITEN_logo.pngThe truth is, the stock behavior over the last few months has been extremely unpredictable. Although the press releases certainly sound optimistic and although some people are trying to raise awareness through Seeking Alpha articles and coverages on other blogs, the stock doesn't appear to be doing what everyone expects it to do. In fact, it sometimes drops without an immediate warning and leaves quite a lot of investors with very little time to react. This is why proceeding with caution is definitely a good decision.

On the whole, Friday was an exciting session with quite a lot in terms of trading and dollar volumes. ALJ Regional Holdings, Inc. (OTCMKTS:ALJJ) and Imageware Systems Inc (OTCMKTS:IWSY) were among the biggest winners while Sigma Labs Inc (OTCMKTS:SGLB) and American Community (OTCMKTS:ACYD) displayed some rather scary corrections.

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