Even A Paid Pump Can’t Push Italk Inc (OTCMKTS:TALK) Up

Last Friday the pump newsletter TheNextBigTrade issued an email alert touting the stock of Italk Inc (OTCMKTS:TALK). The disclaimer at the bottom of the email revealed that they were being paid $25 thousand for a one-day promotion. Although almost all of the pennystock pumps that have been launched lately have gone virtually unnoticed this one single email did attract the attention of the market.

By the time of the closing bell over 880 million shares had changed hands, amount that is 88 times higher than the 10 million shares traded on Thursday. The majority of the volume was registered immediately after the opening bell when the stock climbed to $0.0003 per share. Unfortunately investors‘ enthusiasm began to fade and TALK closed the day completely flat at $0.0002.

The disappointing end of the sessions shouldn’t come as a surprise after doing even a minimal amount of due diligence – TALK is simply surrounded by red flags. The last PR issued by the company is now more than five months old while the latest news article featured on the official website is from April, 2014.

The financial state of the company is equally as depressing. The quarterly report for the period ending February 28, 2015, showed that back then TALK had:

• $29 thousand cash
• $91 thousand total current assets
• $2.8 million total current liabilities
• $159 thousand revenues
• $373 thousand net loss

The company is capable of generating revenues but that is the only positive thing that could be said about the balance sheet. TALK have nearly non-existent cash reserves and a massive working capital deficit of $2.7 million. Not to mention that close to $1 million of the reported liabilities consisted of convertible notes payable.

The dilution caused by the convertible debt has been nothing short of devastating. Just for the first three months of the year a little over $31 thousand in debt has been converted into more than 215 million common shares. The average price of each share was $0.000144. Back in January TALK increased their authorized shares to 1.875 billion which means that there is quite a lot of room for future conversions. And it seems that this is exactly what has been happening because as of April 22 TALK reported 349 million outstanding shares while as we said earlier Friday’s volume surpassed 880 million shares.

With the pump outfit being hired for only one day, the dire financials and the millions upon millions of underpriced shares that could see the light of day as a conversion of debt TALK is definitely a dangerous stock to play. Any trades should be preceded by extensive research and careful planning.