CodeSmart Holdings Inc (OTCMKTS:ITEN) Tries To Turn The Tables

CodeSmart Holdings Inc (OTCMKTS:ITEN) opened yesterday’s session at $2.66 (way above Tuesday’s close), showed some signs of hesitation during the first hour or so but then continued strong to finish the day at $2.77. This amounts to 25% in daily gains and, at first glance, it would appear that the cause for all the excitement is a press release that came out just minutes before the opening bell. Or is it?

Well, the announcement informs us that ITEN have managed to secure the services of an entity called OmniView Capital that will help them with a host of things like capital structuring and strategy, valuation, research etc. A good announcement, indeed, but is it really worth a 25% run?

The recent performance displayed by the ticker has been so unpredictable, that knowing when it will go up and when it will crash is nearly impossible. On Tuesday, for example, ITEN announced that a new Vice President by the name of Harvey Bair has been appointed. Mr. Bair has quite a lot of experience and his professional resume also looks rather good. Yet, traders seemed unimpressed. Six and a half hours of trading resulted in a 1.35% loss and a volume that is way below the average.

A similar behavior was observed on September 17 when ITEN announced that they have been picked as the exclusive provider of ICD-10 accreditation by the Oakton Community College. The partnership is supposed to boost the company credibility and, more importantly bring in some fresh proceeds to the next financial statements, and yet, instead of going up, the ticker plummeted by 20%. But what is causing the rather shaky chart movement?

Well, it could be the fact that ITEN have picked a rather particular niche of the market. The ICD-10 coding system is not something that everybody uses and it’s generally harder to understand for the average Joe. In addition to this, ITEN has been a publicly traded venture for only a couple of months and drawing in more and more investors is proving tough. The general public doesn’t seem to trust them all that much and, quite frankly, they do seem to be a touch overly optimistic about the future.

We mentioned in our previous articles that they project around $6 million in revenues and around $2 million in net income by year’s end. That’s all well and good, but when you have in mind the fact that the first six months of 2013 resulted in just $31 thousand in proceeds from their educational system and around $2 million in losses, things start to look a little bit dubious.

What’s more, the share price has fallen from around $7 to just $2.77 in a little over two months which is definitely not the sort of healthy stock performance expected from a company that is going to be extremely successful.

But even at yesterday’s close, ITEN‘s market cap stands at around $43 million and that, we reckon, is way too much for an enterprise that boasts a negative working capital of around $1 million, quarterly revenues of less than $25 thousand and cash reserves that are hardly exceeding the $260 thousand mark. This raises the possibility of further drops and means that unless ITEN‘s management team succeed in convincing everybody that the figures projected during the days after the acquisition are close to the truth, quite a lot of investors might be caught off guard. Make sure you have this in mind while considering your options.

On the bright side, the ticker is still managing to avoid the paid pumpers which is more than can be said about Blue Fire Equipment Corp (OTCMKTS:BLFR) who are still suffering the effects of the promotion carried out for them about a month ago.