Spicy Pickle - 40 & Counting

The march continues for Spicy Pickle Franchising Inc. (OTCBB: SPKL). Having taken a breather after getting their 39th store up and running, yesterday afternoon they announced the growth has resumed. Store #40 was opened in Denver, Colorado. This newest one is a company-owned restaurant...their 7th (though more are on the way). 

As mentioned in previous editions, company-owned units are radically different than franchised units. Franchise royalties are smaller on a per-store basis, but royalties are higher-margin on a percentage basis. Company-owned store revenues are totally added to the corporation's cash flow, but store expenses are also paid by the company. Company-owned stores also require a little more work to manage, but they're worth it. 

By having a mix of both - 7 company-owned stores and 33 franchised units - Spicy Pickle can take advantage of both sides of the coin. 

The basic metrics are still the same as before...the average franchise contributes about $50K to the company's top line, while the average store does about $600K to $700K in annual sales. So, the new Denver store will boost corporate revenues by somewhere around $650K per year. 

As for the stock, SPKL has provided a good example of range-bound trading for the last couple of months. The low end of the range has been 82 cents, while the high end has been around 90 cents. 

Yesterday, up until a few moments before the news came out, the stock had really started to drift to the downside. Once the news was released though, the stock popped immediately to the middle of the range again. More importantly, it was the highest volume day we've seen in a while. Based on the higher-volume move, we have to wonder if the market just needs a gentle push to get things going. 

On that front, we believe the key to more upside is getting and staying above the 90 cent level. 
 

Speaking of Progress...

For those of you following the progress of Universal Delivery Solutions (UDSG.PK) and their march towards a bulletin board listing, you may be glad to know they've hired a consulting firm to help them through the last stages of the process. They're aiming to have the job done by the end of summer. 

The required auditing for a bulletin board listing should be completed by now. The last task to finish is the filing paperwork. However, that can also be a mountain of paperwork to tackle. It's not particularly hard to do, but it will require manpower. 

Their upside in hiring experts to do the job is the likely elimination of do-overs. The SEC has to process and approve the application. They may sit on it for days (if not weeks) before sending it back for modifications or clarifications. Rather than delay the event by mailing any edited documents to and from the SEC, it's easier - and faster - to get it perfect the first time. 

The company they've contracted to complete this last phase is Small Cap Consulting, LLC. 

Universal Delivery also announced in the same news release they're close to opening yet another SUBWAY(r) delivery market. All we know for now is it's going to be on the East Coast. 

This is big deal for the company - one so philosophically 'big' that the market could miss the impact. THIS IS WHAT UNIVERSAL DELIVERY SOLUTIONS SET OUT TO DO! The fact that they're generating interest at all is proof of their concept. Simultaneously, the fact that they've been doing successful deliveries for Manhattan's SUBWAYs since February serves as proof of viability. 

In May we learned the delivery operation would be replicated in California. Now they're telling us another East Coast market is being added to the mix. Perhaps it's time to take the growth hint. 

As we've mentioned before, they key to the success of the concept is one phone number for an entire restaurant chain. For SUBWAY, dialing 1-888-SUB-TO-GO from anywhere in Manhattan or certain parts of California will let you order a sandwich from the shop that's closest to where you are at the time. UDS figures out the logistics - the restaurant just makes and delivers the sandwich. It's a symbiotic relationship. 

Not that we've heard anything about other chains yet, but setting up numbers like 1-800-BURGERS or 1-800-ITALIAN - and managing delivery logistics for other restaurants - would be relatively simple now that the model has been tested. 
 

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Click Here or go to http://www.microcappress.com/disclosure/ to view our compensation on every company we have ever covered, or visit the following web address: http://www.microcappress.com/disclosure/reports_disclosure.php

The Managing Member of Pacific Shores Investments, LLC purchased 200,000 shares of Spicy Pickle at $.25 per share. This purchase was made in a Spicy Pickle private offering back in November of 2006. The Managing Member of Pacific Shores Investments, LLC has also purchased 50,000 shares of Spicy Pickle in the open market with an average cost basis of $.55 per share. Additionally, Pacific Shores Investments, LLC has been paid a fee of $30,000 cash and 250,000 shares of newly issued restricted stock by Spicy Pickle Franchising, Inc. for coverage of the Company.

Pacific Shores Investments, LLC has been paid a fee of $50,000 cash and 1.5 million shares of newly issued restricted stock by Universal Delivery Group, Inc. for coverage of the Company. Additionally, the Managing Member of Pacific Shores Investments, LLC has purchased 730,000 shares of Universal Delivery Group, Inc. in the open market with an average cost basis of $.044 cents per share. Additionally, Pacific Shores Investments, LLC has also purchased 1,000,000 free trading shares in a private transaction from a third party at an average cost of $.051 cents per share and 2,000,000 shares of newly issued restricted stock at $.03 cents per share in a private placement transaction.

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