Iteknik Holding Corp (OTCMKTS:ITKH) Trading High But For How Long?

The page has turned and things are finally looking up for Iteknik Holding Corp (OTCMKTS:ITKH) after being on the receiving end for months. Sentiments on Wall Street are slowly turning, in favor of the digital media company, if a spike to 6-year highs is anything to go by.Amidst the spike, it is still unclear whether the gigantic rally is sustainable and whether the catalysts have what it takes to push the stock even higher. Trading volumes in the stock have improved, an indication that investors are starting to take note of the stock’s prospects. ITKH Daily ChartWith the stock trading at the $0.006 handle, it needs to close above the $0.01 handle to be taken seriously, as a bounce-back play after years of underperformance. It remains to be seen if the stock will continue to power high after recent developments.Before we look at the factors that appear to have strengthened investor confidence in the company, let us look at what the company does in pursuit of shareholder value.ITeknik Holding OverviewITeknik Holding provides wholesale and retail telecommunication products and services. The company acquires sound companies that are market accepted, scalable with a quantifiable value proposition. The primary goal is to invest in companies that have the potential to achieve exceptional performance over time, in marketing advertising and digital media space.Why iTeknik is Trading High Renewed investor interest in iTeknik Holding follows the announcement of stellar financial results by the company’s wholly-owned subsidiary Big Rhino. The stock sentiments on the street have consequently received a boost on the subsidiary reporting a 14% increase in revenues.Revenues for Q3 FY2018 came in at $856,103, up from $750,954 reported a year ago. Net operating income also increased by 27.5% from $95,097 to $121,318. However, net loss in the quarter increased to (-$257,897) versus (-$235,333) reported in the second quarter. The company attributes the increase to an extraordinary charge of $45,585 for employee stock plan.Big Rhino is an advertising agency, focusing on clients in various industries. As of the end of last year, the company’s customer base in automotive space had increased by 73.6%, Medical services by 12.2%, Real estate by 2% and other segments by 12,2%

“The Big Rhino team has produced a tremendous first year. The rate of revenue growth has been extraordinary, and the profit increase, especially in the last six months, has been excellent. In addition to the financial success, Big Rhino has diversified its client base from almost exclusively automotive to several other industries including medical and real estate,” said CEO, Fred Wicks.

Big Rhino’s stellar financial results are one of the catalysts that continue to affirm investor confidence in iTeknik Holdings. However, there are a number of issues, which the company needs to sort out if it is to continue powering high.Financial Reporting Concern ITeknik is yet to become fully reporting, even as its wholly subsidiary continues to report stellar financial results. Early last year the company engaged the services PCAOB, a certified auditing firm, to audit its books of accounts.The company estimates that the auditing process will be complete by next month. A lack of financial results makes it extremely impossible to evaluate how the iTeknik Holding is doing away from its subsidiary.Blender Company Integration Mid last year, iTeknik Holding Corporation completed the acquisition of Arizona based multi-cultural focused advertising and digital media firm The Blender Company LLC. The acquisition was poised to give the company access to contracts within the state and local government agencies.

“This is the second acquisition we have completed since focusing on this the marketing, advertising, and digital marketing space. We will continue to look for additional acquisition opportunities as we continue our expansion plans,” said Mr. Wicks.

Fast forward, iTeknik Holdings is yet to issue an update on how the integration of Blender has turned out. It is also unclear whether the company has been able to leverage Blender Company contracts to generate value.Until the company reports its financial results, investors will remain in the dark as to whether the acquisition was the right call in terms of expanding the company advertising footprint and generating revenues.What next for iTeknik After Recent Spike While a spike in share price did not come as a surprise, given the stellar financial results by Bright Rhino, it remains to be seen if the stock has some steam to continue rising. Some people may argue that the stock is overstretched at current levels given it is yet to post its own financial results which will point a clear picture of its growth metrics.Until the company posts its financial results and provides details about the performance of the Blender Company, it may be wise to take a back seat, especially after the recent gigantic rise. Iteknik also needs to issue updates about its other businesses for investors to have a better feel about its long-term prospects.We will be updating our subscribers as soon as we know more. For the latest updates on ITKH, sign up below!Disclosure: We have no position in ITKH and have not been compensated for this article.Image courtesy of Simon via Flickr