Selectica, Inc. (NASDAQ:SLTC) Surged as the Company Promised More Dilution

[[tagnumber 0]] [[tagnumber 1]] [[tagnumber 2]]Selectica, Inc. (NASDAQ:SLTC) got excessive trading volume yesterday and the otherwise highly illiquid stock surged out of the trading range. First quarter financial report is still not available, though last week the company filed an 8–K to inform it has issued more shares to its management at prices far below market value.[[tagnumber 1]] [[tagnumber 2]][[tagnumber 5]][[tagnumber 1]] [[tagnumber 2]]Yesterday, SLTC closed trading with a solid 10% gain at $6.55 for a share on over 260,000 traded shares, much higher than the average amount of around 6,000. Now, it looks like an even more abrupt reversal could take place in the next few sessions.[[tagnumber 1]] [[tagnumber 2]] [[tagnumber 1]] [[tagnumber 2]]For now, technical indicators on SLTC chart suggest the stock could gain more on the short–term, and possibly break the previous 52–week high from March. 10– and 20–day moving averages which just turned bullish after a crossover could provide support for the share price this month.[[tagnumber 1]] [[tagnumber 2]]According to the latest SEC filing of SLTC, the company has just issued common shares plus warrants to purchase additional common shares to its management and directors for an amount of $310,000. The price per share paid is $4.70, and it might take some time until the new shares hit the market as the buyers are accredited investors and registration will be required first.[[tagnumber 1]] [[tagnumber 2]][[tagnumber 16]][[tagnumber 1]] [[tagnumber 2]]Another point in the filing is the approval of SLTC 2015 Equity Incentive Plan which authorizes the issuance of another 1,500,000 common shares as a form of non–cash compensation for employees and managers.[[tagnumber 1]] [[tagnumber 2]] [[tagnumber 1]] [[tagnumber 2]]Looking at the company‘s financial reports, such planned shareholder dilution is not the best signal that SLTC could give right now. SLTC financial condition has weakened consequently over the past four quarters until the working capital turned negative in the third quarter of last year. Sales are not growing fast enough, operations are unprofitable and there are notes and other long–term debt which must have become payable during this year‘s first quarter.[[tagnumber 1]] [[tagnumber 0]] [[tagnumber 1]]