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Spongetech:
Shorts & Longs Set to Face Off? |
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 Good
news from Spongetech Delivery Systems Inc. (OTCBB:
SPNG) this morning, and perhaps some even better news about
a potential short-covering rally for the stock. More on that in a second.
First
up, Spongetech's trademark has officially been approved by the U.S Patent
and Trademark Office. The company wasn't particularly worried about
someone else stepping in and using the name prior to the product's proliferation,
but now with the company starting to rack up a lot of distribution, that
layer of protection will be important.
Not
to turn this into a lesson on legality, but a trademark is technically
a sign, name, logo, or combination of all three that allows its owner sole
use of it. In other words, now nobody else can package up a sponge and
put the word 'Spongetech' on it. Score one for Spongetech's longevity.
 The
next step for the company is securing patents on the technology behind
the specialty sponge....something different than a trademark. A patent
is the exclusive right to use or license any new and useful process, machine,
method of manufacture, composition, or any useful improvement of the same.
In Spongetech's case, the sponge itself (all facets of it) is what they'll
be looking to protect. I don't know what the timeframe is on the patent(s),
though I suspect we'll be hearing about them soon.
I don't
want to overstate the importance of the trademark. On the other hand, I
don't want to understate it either. The more dollars the company
does in business, the more valuable the name becomes. In that regard, protection
is necessary - particularly from some big company with deep pockets who
see the idea and want to copy it. But, it's only part of the equation.
The
most important piece of the puzzle is still sales and profits - something
I don't think Spongetech is going to have a problem with either. If
you missed Friday's overview and forecast, be sure to click
here. Impressive stuff.
The
full press release is below. Now about this short interest business...
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It's
Just a Theory, But... |
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The
prior two trading days (Friday and Monday) have been a roller coaster.
We were thrilled to see SPNG open at 5.5 cents on Friday, and see it close
out at 6 cents. It also happened to be the highest volume 'up' day ever
for the company, so we were feeling pretty good.
Well,
what
happened yesterday made Friday's volume look like peanuts. More importantly,
it may have exposed a very interesting - and perhaps very bullish
- situation.
 Before
I even begin to try and explain the last couple of days, I do want to let
you know it's the kind of thing that will never 'officially' show up on
a 10Q. It may never be confirmed or even addressed by the company or major
shareholders. For that reason, I'm not always a big fan of even
opening these cans of worms and mentioning something that can't be substantiated.
When the premise makes sense though, I don't mind voicing the possibility
as just that - a possibility.
Prior
to our launch of Friday's profile, it was our understanding there was a
substantial amount of short interest in SPNG shares. In some cases
this can weigh in on stocks, but more often than not it's actually
a positive situation - it can force all those short holders to 'buy' the
stock when they need to cover a trade that's moving against them. You might
recall we scored big with Overstock.com (NASDAQ:
OSTK) back
in September based on this idea, called a 'short squeeze'.
The
thing is, it's not always easy to distinguish between general 'buying'
and 'short-covering'. We may have seen a little of both on Friday. After
all, it was the highest bullish volume day ever for the company. About
2.2 million shares were transacted on the heels of a very nice gain.
So
how in the world did shares slide back down to a low of 3.5 cents on Monday
after such a great push on Friday? I believe it was the short sellers
trying to regain control. If it was me in a short trade and I saw Friday's
action, I know I'd be scrambling.
 If
that's what it was though, it wasn't enough. Despite the fact that 1.7
million shares were sold in the first part of the day and drove shares
lower, it just wasn't enough to keep them down. More than five million
shares were bought once the low of 3.5 cents was hit, pushing shares back
up to their close of 5 cents.
Who
do you think that was doing all the buying? I'm sure there were a few
value seekers in there, but I have to think it was a lot of short covering
- it was just an unusually large shift in volume as well as momentum.
If
I'm right, these guys ran out of shares to sell, or capital (or both),
and finished out the day running backwards on their heels. I suspect they
may have missed one key factor....there are nearly 50 million shares issued
and outstanding, but only about 1/4 of them are free trading - the rest
are restricted. The smaller active float means a little buying can
go a long way. And, since there have to be shares 'available' to short
in the first place, they may have literally run out of willing stock 'lenders'.
(Click
here for the complete mechanics behind short selling.)
With
that being the case, these same people may have more unfinished business
to take care of today...in the form of covering more of their short positions.
Only
a theory? Yeah, but I think a sound one.
Look,
you and I both know anything can and will happen - there's never a guarantee.
If I'm wrong now, it won't be the first time. However, we've seen two late
bullish efforts for the last two days, on some very abnormal volume.
Ultimately I think the bulls are going to win the battle either way; I
just think a heavy dose of short-covering could accelerate the victory.
Today
should prove interesting.
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SpongeTech(R)
Delivery Systems, Inc. Announces that it Received Final Approval by U.S.
Trademark office that SpongeTech(R) has now been Registered by USPTO Office
in Washington, DC, for its Brand Name and the Trade-Mark of its' Logo SpongeTech(R)!!
SpongeTech(R)
is Ready to become a Household Name!
NEW YORK, Dec.
4 /PRNewswire-FirstCall/ -- SpongeTech(R) Delivery Systems, Inc. (OTC Bulletin
Board: SPNG - News) announces that it has received final registration for
the name and the trade-mark for its' logo! Registration #: 3306073. The
SpongeTech(R) name is now ready to be branded to every household! If not
by its unique, environmentally friendly car care system, then by the underlying
cleaning and bath products we will be supplying to you in the future with
this new age delivery system.
CFO Steven Moskowitz
commented, "This is the first step of the company's branding plan by getting
the USPTO registration of our trademark and logo. We can now start using
our branded name to bring consumer awareness and trust in our products
and what we do as a company. The registration for the European Union has
been filed and the Asian market is pending. Worldwide exposure to our brand
logo and product are one of the long term goals that SpongeTech(R) has
strived for and is succeeding. We feel that the investors and shareholders
who are with SpongeTech(R) can feel confident that the first stepping stone
of branding our corporate identity has been reached!!
For more information
please contact Investor Relations at 1-877- SPONGE T for Bill Young or
visit the company website at: http://www.spongetech.com.
About SpongeTech
Delivery Systems
SpongeTech(R)
Delivery Systems designs, produces, markets, and distributes cleaning products
for vehicular use utilizing patented technology relating to sponges containing
hydrophilic (liquid absorbing) foam polyurethane matrices. The Company's
sponges are specially configured with an outer contact layer and an inner
matrix, which is loaded with specially formulated soaps and wax that are
released when the sponge is applied to a surface with minimal pressure.
The Company's products are currently designed specifically for vehicular
cleaning use. However, the Company is exploring the possibility of using
its patented technology for the development of sponges for other uses,
including for use with anti-bacterial, bath and kitchen soaps for household
uses, as well as for use as a children's (child-safe) bath foam sponge.
Each SpongeTech(R) Delivery System sponge is fully biodegradable and is
designed with their cutting-edge technology and environmentally friendly.
"Safe Harbor Statement"
Under The Private
Securities Litigation Reform Act of 1995: The statements in the press release
that relate to the company's expectations with regard to the future impact
on the company's results from new products in development are forward-looking
statements within the meaning of the Private Securities Litigation Reform
Act of 1995. The results anticipated by any or all of these forward-looking
statements may not occur. Additional risks and uncertainties are set forth
in the Company's Annual Report on Form 10-KSB for the year ended December
31, 2005, the Company's Quarterly Report on Form 10-QSB for the first quarter
ended March 31, 2006. The Company undertakes no obligation to publicly
release the result of any revisions to these forward-looking statements
that may be made to reflect events or circumstances after the date hereof,
or to reflect the occurrence of unanticipated events or changes in the
Company's plans or expectations.
SOURCE SpongeTech(R)
Delivery Systems Inc. |
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Got comments, questions or suggestions?
Send 'em on over: Email
the Editor
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TGR Group, LLC
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San Diego, CA 92130 |
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| Did
Titan Global Just Hit a Bottom? |
| If
there's one thing I've learned about our small cap stock pick Titan Global
(OTCBB:
TTGL), it's this...things look worst right at a bottom. The people
who have had the guts to buy TTGL on a dip have been well rewarded.
What
inspired the observation? Titan's chart took a beating on Friday of last
week, pulling the stock from $1.72 to a low of $1.36. The beating, however,
seems to have only been temporary. After reaching that multi-week low,
this small cap found its way back up to a close of $1.59. On Monday we
closed back at $1.67. Could Friday have been the washout day we needed
to go ahead and shake off all the weakness, so we can proceed to better
levels? I believe so.
There
are two things leading to me to that conclusion. First, the rebound began
right as the 200 day moving average line was met. Second, the rebound began
right as the 61.8% Fibonacci retracement line was met. Historically, it's
taken corrections of this magnitude to jump-start the bigger uptrends.
Click
here to look at the chart, but be sure to keep reading.
Where'd
the selling come from in the first place? They announced 2007's fiscal
results on Friday. How anybody was surprised they took a loss was beyond
me, but that was the initial response. However, I think the market is realizing
today that it was within fiscal 2007 the company also swung to an operating
profit (proof that the market isn't efficient, especially in the small
cap world).
If
you were looking for an entry point, I think this is about as good as it
might get |
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| Is
the Worst Over for Clearly Canadian? |
| Believe
me - this is anything but an encouragement to brush you back into a Clearly
Canadian (OTCBB:
CCBEF) position. However, it's my role to point out relevant possibilities
within our small cap universe. With that in mind, I have to confess CCBEF's
chart is getting me curious.
The
stock's freefall is almost painful to look at - a tumble from $3.00 to
lows of $0.60 in less than half of a year. And in some ways, maybe it was
deserved; the company has not been putting up the kinds of results promised...a
message I've delivered a few times in recent blog entries. (I'll spare
you the details - just
click here to find them yourself.)
But,
at some point in time, reason has to kick in. This company's market cap
is now about $14.8 million. For comparative purposes, they did $3.3 million
in sales last quarter, and have done $7.8 million in sales for the last
nine months. Annualized, this company's probably capable of maintaining
the status quo and doing about $12 million in revenue per year. A price/sales
ratio of 1.23? Interesting.
Now
don't get me wrong...a year's worth of acquisitions seems to have done
little except brought about a year's worth of disappointing results - and
some dilution. But, at least the acquisitions are paid for.
I'm
still not quite sure what to think, but I do know this - they have a real
product right now, and have slowly been improving the top line for a few
quarters.
Is
it enough? Maybe. Maybe not. At 70 cents though - not to mention the fact
that the chart has stopped the bleeding - I'll give the stock its due attention
and put it back on my radar. It'll take a lot more than that to get it
back in my portfolio, but.... |
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