To OTC Journal Members:
 

Spicy Pickle (OTC BB: SPKL) Notches #42

SPKL announced store #42 is now open for business. It is located in Michigan- Portage, Michigan to be precise. Michigan represents the 14th state for Spicy Pickle.

The Michigan franchisee has committed to opening 10 stores in the Kalamazoo- Grand Rapids- Ann Arbor area, and is a highly experienced restaurateur in the fast casual space. Nine to go, and real estate is being looked into now.

Like pretty much every non energy microcap stock, SPKL has been beaten up badly in the traditional summer sell down. This year has been particularly tough on these small stocks, as headline shock is keeping bargain hunters at bay, and a few sellers are pushing stocks down to unreasonably low levels.

Take banks for instance. Of late, the market has been pricing the entire banking sector is closing its doors. However, when Wells Fargo reported June quarterly earnings last week, the market bid the stock up about 30% in two trading days. I guess the world is not quite coming to an end.

So- here's the harsh reality as it regards SPKL. In this environment, the company is not going to expand as rapidly later 2008 as it did in the second half of 2007- They are looking for locations in about 5 cities right now- Houston, LA, Michigan, San Antonio, Chicago. The commercial real estate market has not loosened up the way its going to. It's coming- commercial real estate is going to soften and it will work to the company's advantage.

Another factor is new franchisee signings. There haven't been any lately, which is typical of the summer time. It's going to be slower than it has been as the US slugs its way through an unquestioned recession.

So- here's a couple of issues you need to recognize if you are going to continue to be a shareholder as I am. First- growth will slow without some sort of change at the company as it relates to the US recession. Secondly- this slowing growth has already been priced into the market.

How does the company deal with a slowing environment? One way would be to go International. They could set their sites on heading into growth markets where there is no recession. I'm not saying anything is done in that arena- I'm just suggesting it is a possibility they could look at and should look at.

Secondly, acquisition could become a part of their growth strategy. There are plenty of small regional chains around without their infrastructure that have great venues and models. Growth could accelerate in that direction throughout the course of 2008.

In any case, the company continues opening new stores, and still has another 88 to open. And, for those absurd rumors I have been reading which generally are associated with a market bottom- yes, all 42 stores are doing fine. No stores has closed. All franchise agreements are intact. No franchisees have withdrawn.

It remains impossible to call a technical bottom in the stock. When all levels of support give way, you just have to wait for new ones to form. Right now, it appears the market likes about the $.55 level as a great level to accumulate the stock. 

Today, before the news came out, the stock was already firming and was back in the low $.60's. I can't call it a great short term buy yet, but I do believe it is an excellent level to accumulate for much higher levels between now and the end of the year.

Here is the complete text of today's release for your review:
 

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Go Here to view our compensation on every company we have ever covered, or visit the following web address: http://www.otcjournal.com/disclosure/compensation/section/profile/ for our full profiles and http://www.otcjournal.com/disclosure/compensation/section/alert/ for Trading Alerts. Larry Isen, the editor and publisher of the OTC Journal, through various entities he controls, has purchased 1,200,441 shares of Spicy Pickle at an average cost of $.2125 per share. These purchases were made in Spicy Pickle private offerings. The aforementioned purchases were made between August of 2005 and August of 2006. On 12/15/07, on entity controlled by Larry Isen participated in an additional financing wherein 12 shares of convertible preferred, converting at $.85 into 120,000 shares and 90,000 warrants with an exercise price of $1.60 were purchased. In addition, Larry Isen has received 785,000 shares of Spicy Pickle common stock for consulting services and has purchased 213,343 shares in the open market at an average cost of $.89 cents per share. In addition, MarketByte LLC, an entity controlled by Larry Isen, has received a fee of $30,000 cash, and 300,000 newly issued restricted shares for coverage of Spicy Pickle. TGR Group LLC, the publisher of the Small Cap Network, has received $30,000 and 300,000 newly issued restricted shares for coverage of Spicy Pickle. Mr. Isen is an affiliate of TGR Group. In addition, two other individuals affiliated with TGR Group have purchased a total of 300,000 shares at $.25 per share, 21,961 in the open market at $.76 per share and received an additional 70,000 for consulting services. Current positions of the aforementioned can be found at www.otcjournal.com and www.smallcapnetwork.com in the Spicy Pickle information section. 

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