SPKL filed its Q1 10Q yesterday afternoon, and the filing really contained no surprises. The market is responding in kind my delivering another quiet day of trading with the stock still trying to get through the $.90 and stick higher than that level.
The top line number was $625k in revs- up from $221k in the same quarter in 2007. That nearly a triple in top line performance- 182% revenue growth to be exact.

The quarter was reflective of exactly what the company has been saying it was doing- investing the $6 million raised at $.85 per share last December into expanding it’s company owned store portfolio.

If you are wondering about the current state of restaurant openings and future openings, here’s a quote directly out of the 10Q:

As of May 3, 2008, we have sold 127 franchises. Of the franchises sold, 31 franchise restaurants are opened and operating, 1 company-built and owned restaurant is open, 5 franchise restaurants have been repurchased by the Company, 6 franchise restaurants are under construction, 2 company restaurants are under construction, 6 franchise sites are under lease negotiation (we have either received an actual lease that is being reviewed or a letter of intent), 1 franchise restaurant closed and 75 franchise sites are subject to area development agreements. An area development agreement is entered into when a franchisee has purchased the rights to a geographic area with a set number of restaurants in that area.

As you can see from this statement, it is very reasonable to expect continued growth from SPKL long out into the future.

At the end of the quarter, SPKL still had about $3.6 million and cash, and no long term debt.

The only real liability on the balance sheet is about $1 million in deferred franchise fees. This debt is really the fuel for growth. This liability is, in fact, the franchisee fess already paid into the company for expansion. It is shown as a liability on the balance sheet until the restaurants represented by the franchisee fees open for business. Then, the liability is converted to revenues as SPKL has fulfilled its obligation to get the store open. As that number goes down, the number of stores goes up. I would like to see the number go up, as that means more franchises have been sold.

As far as losses go, the company lost about $1.5 million, or $.03 per share. I would expect the losses to continue throughout 2008, and improve to a profit or at least cash flow positive in 2009.

New store openings are now picking up, with several on the horizon.

Here’s the current chart:

This is a slightly ascending wedge. The market is just grinding away at that $.90 resistance point. Sooner or later, it is going to break out, and bust north. When it does, it needs to work its way higher than $1, to set up a pattern of higher lows and higher highs.

It’s tough to say where this stock might be in the next two weeks, but the company is proving its worth everyday with new franchise sales and new store openings. If you can see out a year or two, this company should be far more valuable than the current $42 million market value it commands.

There aren’t many fast casual chains growing at this clip. If you’re not a believer yet, go try the food.