Borislav Tonev

CodeSmart Holdings (OTCBB:ITEN)'s First Days Of Trading

by Borislav Tonev August 15, 2013
ITEN.pngWe deal with penny stock promotions around here every day and we must say that CodeSmart Holdings (OTCBB:ITEN, ITEN message board) looks like the perfect pump set up. The business plan was changed a couple of months ago, some new people took the helm, a stock split was performed and the number of authorized shares was increased. In addition to this, some stock was sold at $1.60 (which considering the current value of $2.60 is quite a discount) and if you've followed as many pumps as we have, you know that these steps are often taken when a newly-born small cap venture is prepared for a promotional campaign. Still, as of right now, there seems to be no such thing. The newsletters are keeping quiet, we found no landing pages or paper mailer brochures, and even the message boards are pretty inactive. There are a couple of optimistic contributors on Seeking Alpha saying that ITEN will prosper, but we'll just assume that they really like the company and see if there's any merit to their claims.

The chart certainly doesn't look good. Active trading started no more than a month ago on July 15 and back then ITEN was valued at around $7 per share. Experience has taught us that a price this high often scares away penny stock investors and, apparently, this is exactly what happened. The ticker started sliding down immediately and by August 2, just 18 days after trading started, it was already below the $5 per share mark. Apparently, even this was too high for ITEN and it continued its relentless descend, losing more ground and registering just a single green sessions in around two weeks. Yesterday, it wiped out a further 13% which means that if you are one of the unfortunate few to have bought ITEN stock about a month ago, you're probably looking at losses of around 60%. You're probably also wondering if getting some of your money back is even a distant possibility.

Well, ITEN's original idea was to develop a special brand of food products for national supermarket chains and specialty stores but it's evident from their older filings that they weren't terribly successful with that. Now, however, the new management team is confident that they're onto something with their eLearning platform for the new ICD-10 coding system that is supposed to be implemented all over the world by October 2014. In fact, they seem a bit overly optimistic saying in an 8-K from July 3 that they expect to register around $6 million in revenues and approximately $2 million in net income for the fiscal year ending December 31, 2013.

That's quite a lot of money especially when you consider the fact that after doing a quick Google Search, you'll find dozens of other free reference and training systems for the same exact ICD-10. It's also a lot when you have in mind that according to another 8-K (the one describing the reverse merger from May), the new subsidiary had the following financial resources as of December 2012:

  • current assets: $6 thousand
  • current liabilities: $2 thousand
  • net loss: $23 thousand

In the interest of fairness, ITEN did say that they have made a private placement and that probably means that they raised some money, but the real figures will be revealed when they publish their quarterly report which should be out within the next five days. We're quite eager to see some more up-to-date financial information and we're also curious to find out how much they're paying for the rent of their HQ in Downtown New York. Not least because the same exact address is offered as a virtual office.

ITEN_logo.pngAll in all, it's still quite early to say if the new online education platform will be successful or not which means that although ITEN's stock is not being touted at the moment (which is more than can be said about ventures like Wild Craze Inc (OTCBB:WILD) and BluForest Inc (OTCMKTS:BLUF)), it still remains a risky choice which is why treading carefully and considering all the options is absolutely crucial.

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