We knew both were in the works for micro cap stock Challenger Powerboats (CPBI), but it became official on Tuesday - what used to be CPWB is now CPBI. And, a stock that used to be worth 3 cents is now worth 60 cents…all thanks to the 1-for-20 split.

Technically speaking, this should have no effect on the company’s valuation. A stock split is the equivalent to making change - no net difference.

In reality though, this does make it easier to pull the stock in an upward direction. A 60 cent stock is more palatable than a 3 cent stock. More importantly, institutions that have a hand in micro cap companies may be able to own a stock trading at 60 cents, where a 3 cent stock may be impractical or even impossible to own. So, from that perspective, the reverse split really is a good thing, even if the effect isn’t immediately evident.

That being said, I don’t look for this split to salvage the company. Challenger had a lot of promise a year ago. However, I think the company has fallen a little short of the promise. I do still think they could get there (sales greater than $10 million), but it’s been tough so far.

It looks like the old symbol has stopped working for most data vendors, so be sure to adjust your watchlist if you haven’t yet. 

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We always try to answer all legitimate questions from individual readers, but after thinking about these three specific ones, I wanted to share my answers with all our readers…..so everyone can get a good feel for how we’re seeing things. Just remember they’re opinions unless otherwise noted.

1) The latest on challenger boats–real co. or scam?

Challenger Powerboats (OTCBB: CPWB) isn’t a scam - just a disappointment. The factory and boats are real, and they’re well-respected within the boating world. They just aren’t selling enough of them. I believe that problem can be overcome, but it’s apparently going to take longer than we first thought….maybe until 2008 to really get things rolling. What do investors do in the meantime? Your discretion.

Ideally, I feel the company needs to do $12 million (annually) to prove their mettle. Why $12 million? That’s what the pre-merger combined sales total was between Challenger and IMAR in 2006.  Anything beyond that is growth. Anything less than that is contraction. I still think it’s possible for CPWB to pay off eventually…..just not sure when - perhaps not soon enough. It does concern me that they don’t even seem like they’re even close to being on track to reach $12 million by year’s end.

2) CPNE.OB???I am shocked. You have recommended Commerce Planet (CPNE.OB), I believed in it from September, but I am shocked with price in last three weeks. Any comment?

Commerce Planet (OTCBB: CPNE)….good company - not so good stock. I think the early ‘exponential growth’ phase may be winding down, which is a tough act to follow. Also, I’ve heard consistent whispers that this company can get new customers, but just can’t retain them. There are only so many willing buyers out there, and then you run out of them. Still though, this company can and does put up some nice sales and earnings. I think CPNE may be undervalued, but unless the rest of the market agrees, it doesn’t matter - the stock won’t budge. Momentum is half the battle….a battle that CPNE is losing right now. As far as this stock is concerned, I think a rebound with upside follow through is possible, but watch the chart more than the news. But, I don’t look for the same kind of growth going forward.

3) Dear Editor What’s with WBTO?????? I believe this was one of your prior recommendations. Any idea why the bottom is falling out? Thank You.

I believe the bottom is falling out for Web2 Corporation (OTCBB: WBTO) shares because eventually you have to achieve some sort of monetary success. For months now we’ve heard about how much revenue Web2 could draw, or what kind of money they could make. Yet, we’ve not yet heard how much they’ve actually done, which makes me think they’re not doing much in the way of sales - if anything. They were late on their SEC filing as well, which is a red flag. Maybe the company is prepped to make a fortune, but they really need to go ahead and do it rather than just talk about it. Till then, I’m not surprised the stock is headed lower.

Other thoughts

Yeah, it’s definitely a tough time to be involved in the small cap world right now. These names have not traded well recently, but then again, no small caps have. I think it’s important to distinguish between general market tides and individual stock weakness. The recent overall weakness may be what’s wrong with CPNE. I’m not sure about CPWB. And WBTO? I think it may have been headed lower no matter what was going on in the market.

Be sure to check out Saturday’s edition for more recent small cap perspective.

Though our coverage of Challenger Powerboats (OTCBB: CPWB) is getting a little long in the tooth, we’ve continued to monitor the company’s rebuilding progress….it just seemed like such a compelling turn-around story.

According to today’s quarterly numbers, we may be right. In Q1 of 2007, the company did $1.6 million in sales versus only $758K in sales during Q1 of 2006. That’s a pretty nice 110% increase. It gets even better though (I think). The 6.8 cent per-share loss from last year was whittled down to a 4 cent loss per-share this time around.

On the flipside, what I don’t get is where all those IMAR sales went. The attractive part of January’s IMAR acquisition was that IMAR had done $12 million in sales the previous year, which had the potential to provide some cash flow and flexibility for the combined company (which Challenger alone was struggling to do). At their current annualized run rate, looks like they’re on track to do a little over $6 million this year. Where’d the rest of last year’s dollars go?

One thing I do know that may be a small factor in that discussion is seasonality. Q1 is not the heavy season - I think the spring and summer months are stronger for the industry. How much stronger I’m not sure, but I have doubts about it being firm enough to keep the merged companies doing $12 million between them. Maybe I underestimate the strong season.

In any case, this is a step in the right general direction. Let’s see if they can keep the growth pace up….they’ve got some $12 million shoes to fill, and I’m still skeptical based on these numbers.

For more on the quarterly results, click here.

A few weeks ago we mentioned Challenger Powerboats (OTCBB: CPWB) had hired CCRI Financial to handle investor relations. In general we saw it as a positive for current investors, as it allows a full-time, devoted effort to be given to keeping interest stirred up - something most companies don’t have the time to really do themselves. Though I wasn’t familiar with CCRI at the time, we all may have a chance to ‘get to know’ CCRI as we get re-acquainted with Challenger….CCRI will be hosting a conference call, with Challenger as the focal point.

Honestly, I have no idea what the call’s going to be about. I don’t even know that it’s supposed to be a ‘public’ call (though they have it posted on their site, so it can’t be totally private). I can only assume it’s going to be general/introductory, presenting Challenger to CCRI’s followers - whoever they may be. Like I said, I see it as a good thing, though I’m not quite sure how good it will be.

In any case, here are the details…..

Tuesday, May 1st
11:30 am EST/8:30 am PST
Dial 1-641-297-5700 (sorry, no toll free number)
Code: 1313#

According to the CCRI site, there will also be a Challenger profile available at some point. I doubt it will tell you anything we haven’t already told you, but it’s worth a look.

Hope everybody had their stops updated - or at least took a little profit a while back - on Challenger Powerboats (OTCBB: CPWB). The stock seemed to stabilize after the company turned in a less-than-great Q4 of last year, reported on April 16th. Based on the selling we saw a few days prior to the announcement, I kind of figured the dissappointing news was already priced into CPWB. Guess not. CPWB got whacked over the last few days.

Did the stock deserve it? In my eyes, yes and no. I still like the turnaround story. I don’t like how long it’s taking the company to get traction.

The company reported seven boats were sold in Q4 of 2006, which should have been good for about a million bucks in sales. They reported only $280K in revenue for Q4. What happened? (That wasn’t entirely rhetorical.)

Now that said, you’ve heard me say this more than once….you own a company for where it’s going - not for where it’s been. So is CPWB worth owning going forward? Here’s my take - the whole point of the IMAR acquisition in January was to add $12 million in annual revenues, provide some cash flexibility, and add the 100+ dealer network to Challenger’s marketing army.

Between then and now, I’ve not heard or seen of a significant number of Challenger boats being sold. I’ve not even heard much about a decent number of Sugar Sands or Gekko boats (IMAR’s boat lines) being sold. By my math, the company should be averaging about $1 million a month - more in the strong season, and less when out of season - but roughly a million a month. In reviewing the number of boats sold in Q1 of 2007 so far, I don’t think they’re even on track to do $3 million.

Or to summarize, it seems like the company is going backwards.

With Q4’s numbers being delayed, and Q1’s results feeling lackluster, I just feel like there are better ideas out there than CPWB right now. I intend to keep it on my watchlist, as I really do think this IMAR deal could be something big. But, I’m kinda’ losing patience too. I don’t mind speculating, but Challenger is going to have to ’show me’ before I do it with CPWB shares again.

Short-term traders - you might find a decent bounce in all this mess.

Investors - the February peak of 12 cents might be the beginning of a ’show me’ move.

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We finally heard the word - Challenger Powerboats (OTCBB: CPWB) has filed their annual accounting statements, which includes full-year sales, expenses, and earnings data.

They did $280K in sales the last quarter of last year, and ended up doing $238K for the year. Yes, that means without Q4, they would have had negative sales. In Q2, they had to book a major return-to-vendor, which is deducted from revenues. They were able to increase their inventory by the same amount though. They lost 16 cents per share in 2006, versus a loss of 14 cents per share the year before.

As a reminder, the attraction to CPWB wasn’t their 2006 results. They spent the majority of last year rebuilding their name and product line, in addition to planning a key acquisition and dealer network. We still like where the company is going, which isn’t reflected in anything filed today.

On the other hand, the IMAR acquisition was supposed to be worth $12 million in business per year. Maybe they’re pulling in the same kind of figures this year, but it doesn’t seem like it of they are. Of course, we’ve heard nothing about Q1’s total yet. Guess we’ll see.

For the complete filing data, click here.

The march continues for the recently-revamped Challenger Powerboats (OTCBB: CPWB). In the fall of least year we learned the old Xtreme Companies would be re-named ‘Challenger Powerboats’, reflecting the decision to focus exclusively on the performance boat line using the same moniker. And early this year, the acquisition of IMAR added the Sugar Sands and Gekko lines to the company’s mix.

Since then, we’ve seen tremendous success from the new Challenger, with more evidence coming today.

We don’t have Q4’s results yet - you might recall they announced a delay a few weeks ago. However, we’re ball-parking about a million or so in revenue for the last three months of last year. We also saw a lot of new sales come through in Q1 of this year. In fact, here’s our tally…….

• 2/22 - $330,000 in Challenger orders
• 3/1 - $120,000 in Gekko orders
• 3/6 - $725,000 in Sugar Sands orders
• 4/10 (today) - $450,000 in Sugar Sands orders

That’s at least $1.1 million in Q1 sales on top of our Q4 estimate of $1 million. Today’s order will go into Q2’s revenue total. And, we have a feeling we’re only hearing about the big orders….there may be smaller ones received every day. The point is, however, that we’re seeing some life here. Had it not been for Q4 of last year, Challenger’s net sales would have been basically nil (IMAR did about $12 million in sales last year). So far we’re seeing good results stem from the combined companies, and it’s not even the busy boat season yet.

On top of that, four more Sugar Sands dealers were added recently, further widening the Challenger net. All in all, we still see a company making good progress post-paradigm shift.

In our view, despite getting sold off in a big way yesterday, the stock has a huge amount of upside potential. We feel our edge is knowing and understanding the story behind the story, which the rest of the market may not yet. But once they do, don’t be surprised to see CPWB run.

No big deal, but we saw yesterday where a couple of 10K’s (annual reports) you may be interested in had been delayed. One of them was for Challenger Powerboats (OTCBB: CPWB), while the other was for Web2 Corporation (OTCBB: WBTO).

The Challenger delay we’re not concerned about at all. The company has been very vocal about the kind of results they’ve been getting recently, and we’re pretty confident their Q4 of last year is good for roughly a million bucks in sales, with no earnings yet. Between acquiring a company, initiating a boat-show marketing plan, and merely rebuilding the company, they’ve got enough to do already. So, we’re not sweating the postponement.

Web2, on the other hand, is a curious delay. We’ve mentioned a couple of times that their Q4 was likely to be the first ’sign of life’, as most of their better revenue-bearing sites were only launched late last year. Ideally, we should start seeing results in last quarter’s numbers….even if the progress was minimal. Instead, we know nothing yet, and have no explanation or known reason for the delay. That’s a red flag to us, unless somebody can tell us what the hold up is. For what it’s worth though, the falling stock doesn’t suggest the results are going to be anything to rave about.

Anyway, just wanted to let you know case you were waiting for the year-end figures.

With the exception of the folks at the helm of Challenger Powerboats (OTCBB: CPWB), there’s probably nobody more enthused about today’s news than us. The company has hired an investor relations firm. Not that they weren’t serious about keeping their stock’s valuation intact, but this is a very progressive step in getting the story told more thoroughly, as well as more frequently.

No, you won’t find this news on the front page of any newspaper, or on a magazine cover. You probably won’t even find it wedged between two tiny box ads on the back page of the ‘Local News’ section. By most measures, this announcement is likely to be ’skipped’ by most of the investment community, but trust us - this is a big deal. (Sometimes we find the most important stuff in what seems trivial at the time.)

Why? Obviously the nature of our role puts us in contact with a fair amount of investor relations outfits. Though not true in all cases, more often than not, a stock with an IR team supporting it is more likely to perform.

In other words, we see this as very good news for current and future shareholders.

We doubt the news will incite an immediate rally - though it could. We do expect good things to come of it sooner or later…..and probably closer to sooner.

For more details on the news, and a brief background on the IR firm they hired, be sure to click here for the full press release.

The march continues. This morning, Challenger Powerboats (OTCBB: CPWB) announced they’ve added six more dealers to their Sugar Sands and Gekko distribution network. Already 100+ strong, this latest batch of additions will put the two boat lines in front of new customers from coast to coast.

As a quick reminder, the Sugar Sands and Gekko franchise was good for about $12 million in sales last year with roughly 100 dealers. Having added six new ones in just the first couple of months after Challenger acquired the company, we have to think this is the shape of things to come. If they can add six new dealers every two months, that’s 36 new dealers per year…..about a 30% increase. Maybe that’s low, or maybe that’s high. But, we don’t think it’s unrealistic.

And let’s not forget that Challenger - as it stands right now - only has two dealers (though more are in the works). Previously, the company sold boats directly to consumers….a tough way to go. So, for these higher-end Challenger boats, the sky really is the limit in terms of getting more people to push them.

The company (Challenger) did about $1.7 million in sales in 2005, and we’re guessing about $1.0 million in 2006…..with no dealers. With a built-in 100+ dealer pool to market themselves to, we feel the Challenger footprint could grow at an even stronger pace than the Sugar Sands/Gekko network could.

For more on the additional dealers, click here for the press release.

Every bit of publicity helps, right? Well, Challenger Powerboats (OTCBB: CPWB) got a little help recently by being featured in a St. Louis (MO) area business publication. The St. Louis Business Journal took a nice, focused look at Challenger - based near St. Louis - in the March 2nd - March 8th edition.

It’s a little bit of a different venue than Hotboat Magazine, Powerboat Magazine, or the boat shows the company hast started to attend, but hey, getting the name out there for free doesn’t cost a penny, and you never know who may be reading.

You can get a portion of the article by clicking here.

They’re on a roll! Challenger Powerboats (OTCBB: CPWB) just announced more big sales results….this latest batch coming from the recently-acquired Gekko line. Three Gekko tow boats were ordered, to the tune of $120,000.

If the tow boat story rings a bell, it’s because this is the same line of boats that got dual approval from the ‘barefooters’ club as well as the waterskiing association…the same groups that administer sanctioned tournaments in their respective sports.

By the way, if you were waiting on a pullback to jump in the water (no pun intended), you may want to take a close look right now.

For more on the Gekko boat sales, click here.

Looks like the acquisition of IMAR is turning out to be a good one for Challenger Powerboats (OTCBB: CPWB), as it included the Gekko brand name. Why? One of the Gekko boats - the GTR 22 to be precise - has been approved for tournament use by the overseers of water skiing competitions as well as by the folks who administer ‘barefooting’ tournaments.

Not this is a cure for cancer or the end to world hunger, but this is actually a pretty big deal. See, there were only two boats approved for use by both sports (barefooting and water skiing). Though we’re not sure how much crossover there is in this particular slice of athletic competition, we have to think that kind of flexibility makes the GTR 22 more attractive to the people who may participate in both. 

For more, click here.

Looks like Challenger Powerboats (OTCBB: CPWB) is still making the most of those boat show appearances. The company announced they’ve signed five new dealers after attending shows in Miami, Los Angeles, and Fort Lauderdale. That’s better than one new dealer per show, and actually picks up the pace set in the latter part of last year when Challenger signed two new dealers after two different shows in Florida. Better still, the dealers signed are interested in the high-end (six figure) ‘go fast’ boats.

Frankly, we don’t think the press release (link is below) does the news justice. We see this as huge news - just huge. The footprint is getting bigger, and combining that with the nice mentions in a couple of industry mags, what we think you have is a big sales catalyst. Just for perspective, in 2005, Challenger’s sales totaled about $1.8 million. We doubt it will be hard to top that figure, given all the new dealers signed on in the last four months.

We’ve said it before and we’ll say it again…..in our opinion, CPWB is going to surprise a lot of people.

Here’s the release.

No need to get into the same details we did last week after Challenger Powerboats (OTCBB: CPWB) got a nice write-up in Powerboat Magazine…..the basic idea was how getting uncompensated third-party accolades is just plain good publicity.

Well, it looks like lightning has struck twice for Challenger; one of their DDC-33 boats was given rave reviews in the most recent edition of Hot Boat Magazine. As we said last week, all these readers are self-qualified as boat enthusiasts, and this is the kind of publicity that can quickly create a buzz - and put people in the showroom. We anticipate a few extra sales stemming from these two magazine articles, which would be a huge deal for Challenger.

By the way, do we even need to point out the stock is up 194% since we renewed our bullish opinion on December 20th? Man-o-man we hope you were listening at the time. If not, then we don’t necessarily think you should avoid getting in. It’s just that the earlier the position is initiated, the more ‘exponential’ your return is.

It’s not a very scientific explanation, but here’s the idea….the 6 cent move from 4 cents to 10 cents is a 150% gain. The next 6 cent move from 10 cents to 16 cents would be a 60% gain for the folks who owned it at 10 cents. For the lucky blokes who were in at the original 4 cents, their return is actually 300% on their position.

The lesson to be learned is simple - in small cap trading, waiting can cost you big time. No worries though, as we have a couple of other trade-worthy ideas in the works that have that same sort of ‘ground floor’ aspect to them. More on those soon.

In the meantime, if you’re waiting for a dip to buy CPWB on, we’re not all that certain you’ll get it. We think the most likely shot at a pullback was the brief stall last week. Even then though, the stock was creeping higher the whole time. Again, it just re-enforces the idea that the biggest rewards are dished out to those who are willing to act quickly.  

Here are more details on the Hot Boat Magazine feature.

Success is contagious it seems. Most - if not all - of our readers will know we’ve been singing Challanger Powerboat’s (OTCBB: CPWB) praises for several weeks. This time around though, someone else is doing the singing.

Remember a little more than a week ago when Challenger announced they had acquired the Sugar Sands and Gekko brands when they bought IMAR Group? Well, it looks like they made a good choice. One of the Sugar Sands dealers - Crystal-Pierz Marine - was awarded the honor of ‘Best Show Display’ at a recent show in Minneapolis. Considering there were 220 exhibitors, it’s actully a pretty impressive award.

As far as shareholders are concerned, we know it may not pay monetary dividends tomorrow. However, we think it should be re-assuring to see associates with this kind of caliber. Like we said last week, the acquisition created a lot of opportunity, and it appears as if the dealer network is serious about the business.

Just one day after announcing the news about a major acquisition, Challenger Powerboats (OTCBB: CPWB) is back to work. Starting this weekend, the company will be highlighting their performance boats at the week-long Los Angeles, California boat show. This is a big show, and a major opportunity to garner some West Coast exposure.

We’re particularly excited, but not necessarily for the same reason. We’ve just seen the last couple of shows turn out really well for Challenger. For instance, after attending a Fort Lauderdale, Florida show, Challenger sold seven boats to a dealer, and eventually signed a major international distributor. So, if history is any indication, attending yet another show could mean another major boon for business.

And in case you’re wondering, yes, Challenger will be featuring the recently acquired Sugar Sand and Gekko lines as well. If you happened to miss that news, be sure to click here.

For more on the L.A. show, click here.

Challenger Powerboats (OTCBB: CPWB) unveiled the highlights of their 2007 plan this morning, in addition to re-capping their 2006 achievements. The themes laid out were consistent with what we’ve been saying for a while…..that the current Challenger is a totally-overhauled company. Better still, the new Challenger has already become viable in our eyes.

The link to the full press release is below; we’ll hit the key ideas right here.

In 2006, Challenger Powerboats…

• Dropped Fire-Rescue and Patrol boats to focus entirely on performance boats
• Underwent a major marketing/advertising campaign that’s still in motion (and probably will be in perpetuity)
• Sold seven performance boats thanks to a partnership forged at a recent boat show

In 2007, the company…

• Plans to keep adding effective dealers and distributors (they’ve gotten two on board in just the last few weeks)
• Will build brand-awareness via boat-testing, coverage in boating magazines, and attendance at boat shows (which has been very effective so far)
• Continue to add efficiencies in the manufacturing process in order to boost bottom lines

We’ll be looking at Challenger in detail in an upcoming edition, as we suspect this turn-around story is just going to keep getting better and better.

For the complete press release, click here.

As a reminder, we have an active trading alert on CPWB shares. Our suggested target is 20 cents, with a suggested stop of 2 cents.