The Stephan Co. (OTCMKTS:SPCO) With a Mysterious Climb

SPCO.gifBack in 2009, The Stephan Co. (OTCMKTS:SPCO)’s stock was listed on the NYSE-AMEX exchange and they were reporting their financial results regularly following the strict SEC standards. Then, in November 2009, they decided to voluntarily delist the shares from AMEX and transfer them over to the Pink Tier on the OTC Markets. In the 8-K that they filed, they said that they’re going to try and go up to the OTCQX level.

Now, nearly four years later, they’re still on the Pink tier and they even have the limited information warning because they sill haven’t published an attorney letter in respect to current information regarding their financial report covering the second quarter of 2013. Back in 2009, they explained the delisting as a cost-cutting measure, but quite frankly, having looked through the most recent 10-Q that we could find (the one covering the period ended September 30, 2009), we can’t really see what was bothering them so much. They had plenty of cash, a working capital of nearly $13 million, about $5 million in quarterly revenues and a net income of approximately $320 thousand. You can see that they weren’t really in such a deep financial hole, but they still decided to proceed with the delisting.

So, what has trading on the OTC Markets resulted in? Unfortunately, things seem to have changed quite a bit over the last four years. As we mentioned, SPCO‘s latest financial statement covers the quarter ended June 30 and it contains the following figures:

  • cash: $2.9 million
  • current assets: $6.9 million
  • current liabilities: $1.6 million
  • revenue: $3.3 million
  • quarterly net loss: $529 thousand

You can see that the revenues have shrunk, the profit has been turned into a loss and quite a lot of cash has gone down the drain. Still, in the interest of fairness, we should point out that SPCO‘s statement does look a lot better compared to some of their small cap counterparts. What’s more, the fourth quarter of 2012 ended with a profit and they informed us that a restructuring plan is underway which could suggest that there might just be a light at the end of the tunnel.

The share price currently stands at around $1.45, which might sound like a lot for some traders, but because the number of outstanding shares hovers around 4.4 million, the market cap is just $6.3 million. As the figures found in the financial statement suggest, this sort of capitalization is not that preposterous. What’s interesting, however, is the way the ticker reached its value over the last couple of days.

During Tuesday’s session, SPCO managed to shift just 100 shares resulting in no price movement whatsoever. This has been pretty much the norm for the ticker – over the last couple of months it has barely moved and nobody seemed all that interested. On Wednesday, however, 210 thousand shares changed hands and the ticker jumped by about 13%. Yesterday was even more unusual – a total of 311 thousand traded shares pushed the price by a whopping 27.19%.

This wouldn’t have been strange if there was an exciting piece of news coming from the company HQ. We wouldn’t have even been surprised seeing the movement come from a paid promotion. We can find traces of neither of these things, however, ALAS.gifwhich means that the next few days will be interesting and quite unpredictable. And that warrants a lot of extra caution while contemplating a potential investment.

Another ticker that moved quite a lot during yesterday’s session is Urban Ag Corp (OTCMKTS:AQUM) who gained as much as 75% after being promoted by a number of influential outfits. Alas Aviation Corp (OTCMKTS:ALAS), on the other hand, weren’t so lucky. Their stock plummeted by as much as 34% even though they announced that they are about to refinance some of their debt.

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