This month has been a month of heavy promotional alerting for Smart-Tek Solutions, Inc. (OTC:STTN) stock. The results have been modest, though as now the company plans to get rid of the losing security technology business, the prospects might look at least potentially positive.After Wednesday’s catastrophic crash down of Smart-Tek’s stock, yesterday a small part of the losses have been gained back. The price rose by 5.68% and settled at $0.465 on a trading volume, nearly twice the average. As investors agreed easily on the price yesterday, it seems that consolidation has been reached now, but still on its high volatility, the stock remains risky.
One thing that could improve investor ability to predict its value though, is that Smart-Tek’s stock appears to correlate strongly with the number of promoting alerts sent out and the number of press releases published by the company. The first ones mentioned cannot be counted this month, but yesterday one of the promoting websites alerted again, providing also the explanation for Tuesday’s remarkable jump of the sock price.
The large number of PRs also reveals Smart-Tek’s urgent need to market the redirection of its business. According to the latest quarter report, the company operates two lines of business over two subsidiaries: the security technology hardware and software products line and the commenced last summer outsourcing services business. The first one did not manage to make the company profitable over the past five years and now Smart-Tek plans to sell out the subsidiary to its current President and founder.
If approved by the shareholders, the sale will relief Smart-Tek balance sheet, as the largest part of the price to be paid consists of setting off the debt, owed by the company to that subsidiary. And then, all hopes for profitability will be set on the outsourcing business line, which has already provided for larger consolidated revenues and finally positive operating cash flows.
Though, despite the tremendously sounding dilution over the past year, most of the newly issued shares remained by one particular insider. Nearly 69 million shares have been issued over the nine-month period ended March this year, 45 million from which to Brian Bonar, who is among other thing, the new CEO and CFO of Smart-Tek. He has been awarded for “the achievement certain milestone targets for annualized sales as set out in the Marketing Partner Agreement [with the new outsourcing subsidiary] dated June 17, 2009”.
