To OTC Journal Members:
 

The Pickle (OTC BB: SPKL): Spicy on the Top Line

The Spicy Pickle June quarterly results were out today, and they were spot on what I was expecting. A huge percentage increase in the top line, and huge expenses in the quarter as they built three new stores and bought back four stores from a franchisee. My expectations are for continued top line improvement over the coming quarters, but much lower expenses as they won't be building or buying more company stores for the forseeable future.

Here's a few highlights:

• Revenues- The Good News- the Top Line was $1.225 million- up 280% over the same quarter in 2007, and up 143% from Q1 of '08. Pretty impressive growth all the way around.
• Profits- SPKL lost $1.6 million in the quarter- to me, this doesn't seem unreasonable in a quarter where you had to build out 3 new stores and buy 4 from existing franchisees. Some of that investment now appears on the balance sheet in the form of property and equipment, which increased from $700k to $2 million.
• Balance Sheet- Cash reserves dropped from $5.4 million to $2.1 million. For a company this size- that's a big drop. However, most of that money is not gone. It is now found in the form of 7 company owned stores that are generating revenues and cash flow everyday. They invested the money they raised in December at $.85 per share.

Originally, there were 705 shares issued. As of the June 30, there were still 650 of those preferred units remaining unconverted, a number of which are in my Defined Benefit Plan. This means 80% of the convertible holders still like their chances for making money with a cost basis of $.85.

On a go forward basis, I would expect the top line to keep growing, but the cash burn rate to drop considerably. I believe they will continue to burn cash for a couple more quarters, and then turn cash flow positive in 2009. They could run a little low on capital before turning profitable, but this isn't a biotech company. Cash comes in everyday, and its growing.

There is very little reaction to today's news in the market. The stock continues to trade in the low $.60 range on very anemic volume- typical for the end of August. Any aspect of today's financial filing that could be construed as negative is probably already priced into the stock.

I would expect SPKL to pick up nicely and and start to behave quite a bit better as we head into the Fall.

Home Page : www.otcjournal.com
Email Questions or Comments To: editor@otcjournal.com
 

Information is power and timely information is profitable. Become informed and profit from OTC Journal Profiles and Trading Alerts by becoming a Preferred Member today. There is no cost associated with your email subscription. Add your email address below and make sure to check your email inbox and confirm your opt-in request to start receiving the OTC Journal Email Newsletter on a regular basis.

To ensure newsletter delivery, you can add any additional email addresses you may have to the OTC Journal Member List. Receiving the OTC Journal Newsletter in multiple locations is the best way of making sure you don't miss the next investing or trading opportunity! For web based email addresses, the OTC Journal recommends @yahoo.com or @aol.com for timely and reliable email newsletter delivery.

Note: Your email address will be kept strictly confidential, and will not be shared with any other entity for any purpose at any time. If you no longer wish to receive the OTC Journal, simply follow the instructions located at the bottom of every OTC Journal Newsletter Edition.

If you find the OTC Journal informative and profitable, please forward our newsletter alert service to like-minded friends and associates who share similar market interests.

To ensure newsletter delivery, you can add any additional email addresses you may have to the OTC Journal Member List. Receiving the OTC Journal Newsletter in multiple locations is the best way of making sure you don't miss the next investing or trading opportunity! For web based email addresses, the OTC Journal recommends @yahoo.com or @aol.com for timely and reliable email newsletter delivery.

Note: Your email address will be kept strictly confidential, and will not be shared with any other entity for any purpose at any time. If you no longer wish to receive the OTC Journal, simply follow the instructions located at the bottom of every OTC Journal Newsletter Edition. 

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.All statements and opinions expressed herein are those of the editors and are subject to change without notice. A profile, description, or other mention of a company in the newsletter is neither an offer nor solicitation of an offer to buy or sell any securities mentioned. While we believe all sources of information provided to us and contained in our publication to be accurate and reliable, we cannot and do not guarantee the accuracy of information we received from third parties. 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. 

From time to time MarketByte, LLC sells shares in the open market it receives as compensation for coverage of client companies. Since the shares are received as compensation for services and not for investment purposes, the editors do not view the sale of the shares as contradictory to any advice delivered in the content. This should be viewed as a conflict of interest by shareholders or prospective shareholders of the client companies.

The editor, members of the editor's family, and/or entities with which they are affiliated aside from MarketBtye LLC itself, are prohibited pursuant to company policy from owning, buying, selling or otherwise trading stock for their own benefit in the companies who appear in the publication unless such activities are specifically disclosed in the newsletter. 

THE READER SHOULD VERIFY ALL CLAIMS AND DO THEIR OWN DUE DILIGENCE BEFORE INVESTING IN ANY SECURITIES MENTIONED IN THIS PUBLICATION. INVESTING IN SECURITIES IS SPECULATIVE AND CARRIES A HIGH DEGREE OF RISK. 

We encourage our readers to invest carefully and read the investor information available at the web sites of the Securities and Exchange Commission ("SEC") at http://www.sec.gov and/or the National Association of Securities Dealers ("NASD") at http://www.nasd.com. We also strongly recommend that you read the SEC advisory to investors concerning Internet Stock Fraud, which can be found at http://www.sec.gov/consumer/cyberfr.htm. Readers can review all public filings by companies at the SEC's EDGAR page. The NASD has published information on how to invest carefully at its web site. MarketByte LLC's mailing address is 4653 Carmel Mtn Rd Suite 308 #402, San Diego, CA 92130.

The information found in this profile is protected by the copyright laws of the United States and may not be copied, or reproduced in any way without the express, written consent of the editors of otcjournal.com.