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.