Investors Forget About Italk Inc (OTCMKTS:TALK)’s Problems
Italk Inc (OTCMKTS:TALK) first logged a close of $0.0001 per share on April 9 and a lot of people were quite shocked by this. Unlike many of the OTC companies that found themselves hitting rock bottom, TALK is actually a working entity that has been generating revenues for quite a while.
A point proven by the report for the quarter ended May 31. It looks like this:
- cash: $34,300
- current assets: $39,794
- current liabilities: $2,035,145
- quarterly revenues: $181,475
- quarterly net income: $185,926
Indeed, the figures are not perfect. The debt is quite huge, there’s been a 17% revenue drop on a year-over-year basis, and, as you might have guessed already, the net income comes from changes in the fair value of derivatives. The statement isn’t nearly as horrific enough to suggest that TALK should be stuck to the bottom however. Yet, stuck it was, and it spent quite a while scraping it.
Many people were scratching their heads wondering what might be going on. Others set themselves the task of finding out. They didn’t need to look far and wide. In fact, all they needed to do was scroll past the figures in the latest 10-Q and go through the rest of the report.
In there, they found out that between August 31 2014 and May 31, 2015, TALK was forced to issue no less than 1,312,946,954 shares in order to satisfy exactly $306,240 worth of convertible debt. A few turns of the scroll wheel later, they also saw that between May 31 and June 30, the company issued a further 383,804,880 shares as a conversion of just $18,228 worth of debt.
The word about the absolutely catastrophic dilution was spread around quite quickly and trading all but seized. TALK was abandoned and it looked like nothing could possibly lift it off the bottom. Yesterday, the stock defied the odds.
The company announced that it’s preparing itself for the acquisition of an entity called United Mobile Solutions Corp which will be accompanied by a change in control and apparently, investors reckon that this is exactly what TALK needs. In a matter of six and a half hours, they racked up a dollar volume of more than $180 thousand (which is quite a lot for a stock that has been stuck in the murky depths of the triple-zero range) and they pushed it to a close of $0.0002 per share. That may not sound like much, but TALK effectively doubled its value and the huge volume goes to show that people believe in its ability to continue going up.
Indeed, the press release says that the future subsidiary is about to bring in as much as $16 million in annual revenues and this should give the operations a massive boost. As we established already, however, solid revenues alone haven’t been enough to keep TALK afloat. Even if you reckon that things will change in the future, you mustn’t forget that about 94% of the latest reported O/S count was issued at an average rate of $0.00019 apiece.