Jet-Life Penny Stocks Pull the Plug on Southern Products Inc (OTC:SNPD)

SNPD.pngThe competition in the consumer electronics market is stiffer than ever. Huge companies are working around the clock to get the newest piece of technology out and to outtrump each other. But is there a place for smaller businesses like Southern Products Inc (OTC:SNPD)?

To some extent, yes. A lot of people around the world can’t afford the newest models offered by the premium brands, and some are just not willing to pay extra cash for a TV or an audio system. That’s why there are many small companies that are trying to develop their own budget-priced brands. SNPD are striving for the same thing but it seems that someone might have put a spoke in their wheel.

Here are the mechanics of the business: Chinese manufacturers produce cheap LCD and LED TV sets for SNPD. Once that’s done, they ship them to the USA where they are branded by SNPD‘s subsidiary, Sigmac, and they are sold at a fraction of the price of the big companies’ models. That’s the plan, anyway.

The problem until about a year ago was that they just couldn’t turn a profit. The statement for the quarter that ended in November 2011, for example, reveals revenues amounting to $1.3 million, which, is quite respectable for a small company. Even so, when the line was drawn, there was $513 thousand in net losses.

But Jet-Life Penny Stocks are promoting SNPD right now, so we should be looking at the current financials, not the ones from years gone by. We have summarized the most important figures from the 10-Q for the period that ended on November 30, 2012:

  • cash: $66
  • current assets: $11 thousand
  • current liabilities: $2.1 million
  • revenue: $10 thousand
  • net loss: $113 thousand

SNPD_logo.pngYou’re probably thinking: “Where did all the revenue go?”. Well, in June 2012 there were some conflicts between the former CEO of SNPD, Mr. Edward Wang and the Chinese manufacturer of their products, Zhuhai Yuehua Electronic . They went to court and at one point even SNPD were involved as defendants. Zhunai later dropped the charges against the company and the legal argument is now fought only between Zhunai and Mr. Wang but at the end of the day, SNPD were left without a Chinese manufacturer for their cheap TV sets. As a result, they have been unable to meet customer demand and the revenues have tumbled dramatically.

In the financial report they say that they are currently carrying out negotiations for a new supplier, but there is still no assurance that a deal will be signed. If they do manage to secure a contract, they will also need to make sure that the terms are more favorable than before if they want to turn a profit. Until they do it, Jet-Life Penny Stocks’ (JPS) email seems like nothing but an attempt to artificially pump SNPD‘s shares with empty promises of huge profits.

3ITNS.pngYou can’t say that JPS are new to this sort of practices. Back at the end of January they put ITonis Inc (PINK:ITNS) through the same procedure and, as the chart on the right shows, ITNS crashed heavily once the pump was over. Although SNPD are around their 52-week low at the moment, a similar drop could still occur, rendering the stock virtually priceless. That’s why we would advise you to be careful when weighing the risks.

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