Penny Stock Parlay Pump of Smack Sportswear (OTC:SMAK) Crashes Hard

Yesterday Smack Sportswear (OTC:SMAK) dropped hard in the wake of a pump campaign run primarily by Penny Stock Parlay. The pumpers were silent as the stock closed 36% down.

The pumping of SMAK started on December 12 with promoters Penny Stock Parlay comparing the company to large NASDAQ player True Religion Apparel (NASDAQ:TRGL). SMAK is sadly a company that is not even a far cry from such businesses.

The company recently announced the purchase of Team Sports Superstore (TSS). Before this deal SMAK had zero cash and never generated a dime of revenue since its inception as Reshoot Production Company in 2007. The so-called purchase of TSS was really a reverse merger in which TSS acquired 78% of SMAK stock as payment for the deal and Mr. Sigler, the major shareholder of TSS became CEO, President and Director in SMAK.

The company was kind enough to provide some sort of update on what the merger brought to SMAK. The picture painted by Team Sports Superstore financials is not a pretty one. Here is an excerpt from the consolidated data for TSS, found under item 99.1:

This is basically saying that SMAK was a company with no cash and revenues and moderate monthly losses that reverse merged with a company that has very little cash and is generating much more loss. In addition to all this, Mr. Sigler’s insider ownership amounts to 60% of SMAK stock, or 24.3 million shares. Yesterday that may have changed as over 1 million shares changed hands at a price that was still inflated by the pump.

While Penny Stock Parlay bagged $25 thousand to pump the stock, yesterday many traders lost a lot of cash as SMAK crashed. Investors are advised to do their own research and check all facts around any company, especially when it’s a pumped penny stock as those are often the most likely candidates for a spectacular drop once the pump stops and people start offloading their shares.