For More Information... For more information regarding Spicy Pickle Franchising as an investment opportunity, be sure to review the entire research report in a printable PDF format by clicking the link below:  Spicy Pickle Franchising Inc. Report  Or, to discuss Spicy Pickle, contact:  The Micro Cap Press  15233 Ventura Blvd.  Suite #310  Sherman Oaks, CA 91403 http://www.microcappress.com  1-800-277-9081

Spicy Pickle's Snowballing: Quantity & Quality

As if Friday's news of a $5.7 million financing to set up 12 to 15 corporate-owned restaurants wasn't enough, Spicy Pickle (OTCBB: SPKL) put the icing on the cake Monday. The company signed a new franchisee who'll be opening the first stores in Michigan. As a result, a key milestone was also reached...not to mention the revenue potential just jumped.

Yesterday after the market's closing bell rang we learned a franchisee has committed to opening ten Spicy Pickle restaurants in select Michigan cities. 

For those of you keeping score at home, we knew 35 units were opened as of last week, and 3 to 5 more were on schedule to be opened before the end of calendar 2007. Additionally, there were agreements in place for more than 50 other units above and beyond the ones opened or on the verge of opening. Adding yesterday's ten into the equation brings the total number of stores either open or committed to up to 10...past the celebration-worthy 100 store mark.

Congratulations are in order, but the number of stores has taken a back-seat to perhaps a more important reality. 

As more and more stores are added to the network, it seems as if the franchisees are committing to a greater number of units within their respective area. Sometimes they're making multiple-unit commitments even before they get their first one up and running. 

The first Indianapolis, Indiana store is a good example; the one that opened in Fishers (an Indianapolis suburb) was just the first of ten the same franchisee intends to establish. In mid-November the company announced a lease for a store in San Diego had been signed, but the same franchisee had already committed to 12 units before the first one was opened there. Now the same can be said for the Michigan stores.

While the quantity is nice, the quality of the franchisees may be an even bigger clue that this chain is something special. The caliber of people choosing to open their own Spicy Pickle restaurants speaks highly of the menu and model. Take for instance the folks in Michigan who signed the ten store commitment. They already have restaurant experience with Qdoba, Little Ceasars, and Big Apple Bagels - some impressive names in the food service business. Now these same people - who have to know full well by now what works and what doesn't - chose Spicy Pickle from probably dozens of restaurant franchise opportunities. 

Ask yourself this not-entirely-rhetorical question...why do you think the seasoned industry vets are willing to make such a big financial commitment before they've made their first penny on the franchise? 

While our editorial staff tends to focus on numbers and potential growth, the quality of the franchisees here is an important factor, as they will ultimately be instrumental in the success of the stock (the company's revenue is entirely linked to the revenue of each store).
 

A Double Bottom For Shares?

And speaking of the stock, many investors may have realized over the weekend just how good Friday's news was. Of course, a little technical pressure may have helped the stock too.

Even with just a passing glance at the chart, most traders would probably say there's a support level around $1.10. That's where the stock bounced following October's selloff, and that's where it bounced again on Monday after a fairly steep dip on Friday. In fact, we see a lot of similarities between SPKL's prior two days and November 8th and 9th. Both upside reversals were born of a good-and-bearish jolt, and both were prompted right around the same price. We think this bodes positively for the near-term. 

There is one pretty stark difference between now and then though...volume. The bulls may have sent a loud and clear message yesterday when they bought just under 1 million shares (the highest volume day since mid-October). The likely message? Just that they feel SPKL is undervalued at $1.10. And, they may be right.

Those same traders might also say a move above $1.40 would make an even stronger bullish argument. A move above $1.65 may be viewed as the technical clincher. The downside to such a 'wait-and-see' strategy, however, is missing the 11 cents or 36 cents between there and where we are now. 

Regardless of what the stock does in the short run though, the company is still doing their part. Franchises are being added at an almost-exponential rate, and as of Friday, the company will be working on getting corporate-owned stores up and running. We have to believe the stock's trading level will eventually reflect the company's underlying success. 

To that end, another question...if the stock is worth $1.29 with 105 stores in the works, what could it be worth if there are a few hundred in operation? It's a real possibility in the foreseeable future. 

Here's the press release. Also, if you haven't seen the Spicy Pickle video yet, we recommend you click here. It should more than explain what all the buzz is about.
 

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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.

From time to time PSI sells shares received as compensation for coverage of client companies. Shares received are sold in the open market. Since the shares are received as compensation for services as previously disclosed, and not for investment purposes, PSI does not view the sale of the shares as contradictory to any opinions delivered in the content. This should be viewed as a conflict of interest by shareholders or prospective shareholders of the client companies.

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