Smack Sportswear (OTCQB: SMAK) has been active this week as the indoor and beach volleyball apparel company has issued a couple press releases in hopes of attracting more attention from investors and while they may have seen some of the results they were hoping for on Thursday there remain a number of questions concerning what direction they are heading.
Between Monday and Wednesday shares of SMAK bounced between a low of 0.0943 and a high of 0.1250 but on Thursday the company saw a significant spike, climbing as high as 0.2300, this after announcing that they had signed a promotional deal with the #1 ranked female beach volleyball player in the U.S., Whitney Pavlik.
Pavlik now joins her partner Jenny Kropp as a spokesperson for the SMAK brand giving the company what they believe to be a catalyst for not only domestic growth but international appeal as well. SMAK CEO Bill Sigler said as much in today’’ press release noting, “Since training for the 2013 USA volleyball has kicked off, Jenny and Whitney are not only sporting our gear on and off the court, but also will be promoting our brand through point-of-purchase displays and a national advertising campaign during 2013. In addition, their participation in the FIVB Tour will bring the Smack brand of athletic bikinis to global markets and should open up new global distribution channels for Smack in 2013.”
While the addition of Pavlik as a spokesperson is certainly a nice move for SMAK one has to wonder if it really warranted the share price spike that the company enjoyed earlier today.
Yesterday the company issued a press release announcing their first flagship store had officially opened but that opening occurred on February 23, 2013, nearly two weeks ago. It seems that such an historic accomplishment would have justified an announcement earlier unless they were holding off to bundle some announcements as part of a promotional campaign; whatever the reason SMAK has their work cut out for them.
SMAK has to start showing value to their shareholders and not helping matters any is the fact that they recently filed a Notification of Late Filing for their quarter ended December 31, 2012. Until investors can get a clearer picture of where SMAK stands it is extremely difficult to make an investment decision, especially when the only information an investor has is the quarterly report for the period ended September 30, 2012 in which they showed a negative cash and cash equivalent balance of $9 and no revenue along with accumulated operating losses of approximately $222,360 since inception.
For his part Sigler believes the opening of the company’s flagship store will be a significant catalyst for growth going forward, stating in yesterday’s press release “Store sales in our first year of operations are expected to add around $200,000 to $300,000 to our top-line growth in 2013. But higher revenue growth is expected as we form relationships with our core target market — the coaches and owners who require uniforms and equipment for hundreds of players.”
Generating sales is one thing, becoming profitable is another matter all together and SMAK speaks little of their expenses. Again, the only thing an investor has to go on is what was published in that quarterly report and SMAK acknowledged “Management does not believe that the Company will be able to generate any significant profit during the coming year. Management believes that general and administrative costs and well as building its infrastructure will most likely exceed any anticipated revenues for the coming year.”
As it stands SMAK is still in a state of uncertainty and they aren’t helping to clear up that uncertainty with late filings and delaying announcements. Until the company gets current with their quarterly report and provides investors with a clearer picture of where they are then the skepticism will remain.