TheDirectory.com (OTCMKTS:SEEK) Rallies Again

There’s no getting away from the fact that, according to the latest official reports, TheDirectory.com (OTCMKTS:SEEK) is a company with four full-time employees, an accumulated deficit of $8.5 million, and a quarterly net loss of around $11 thousand compared to a net income for the same period of 2012 of more than $26 thousand.

Yet, despite all this and despite the turbulent performance from November, SEEK seems to be on a winning spree. In fact, the ticker registered just one red session since the beginning of the month and the upward momentum was particularly strong yesterday when the price jumped by 21% while the dollar volume exceeded $500 thousand. It’s clear that investors are excited, but will all the enthusiasm result in actual gains in the longer run?

Unfortunately, it’s still way too early to say for sure. As we mentioned numerous times in our previous articles, SEEK‘s management team, led by the company CEO, Mr. Scott Gallagher, don’t seem too keen on publishing their financial statements on time. There was a period of nearly two years when we saw absolutely no reports, then, in July and August, they published two quarterly statements covering the period between December 2012 and May 31 and in November, they filed two more documents – the annual results for the twelve months ended November 2012 and the quarterly ones for the three months ended August 31, 2013.

As is often the case with penny stocks, there can be some good news and some bad news to be found in the aforementioned documents. The filing for the quarter ended August 31, for example, tells us that there’s been a year-over year decrease in revenues while the net income has been turned into a net loss. The annual report, on the other hand, shows some revenue growth and it does contain a positive bottom line, but when you compare it to the same period of 2011, you’ll see that the income has decreased by a whopping 98%.

On the whole, there are definitely a few things to be wary of when you are contemplating a potential investment and yet, traders don’t seem bothered at all.

The reason for this is to be found in the optimistic press releases that have been coming out of SEEK‘s HQ over the last couple of months. A $5 million financing facility has apparently been set up, new appointments to the management team have been made, and even a national marketing campaign should start during the first quarter of 2014. All things that should help SEEK grow, but the thing that interests shareholders and potential investors the most is the publishing of the documents that should turn the company into a fully reporting enterprise and should drag the ticker out of the Pink Tier on the OTC Markets.

Last Monday, Mr. Gallagher said that the preliminary results for the fiscal year ended November 30 will come online after the closing bell on December 19. He also said that the form 10 that will uplist the ticker to the OTCQB or OTCQX tiers should be ready by the end of the month and it’s clear that this announcement has had a tremendous effect on the stock performance. So, what can go wrong?

Well, Mr. Gallagher speaks about the fifth consecutive year of top line growth and he said numerous times in the past few months that 2013 has been a resounding success for SEEK. Unfortunately, not a word has been said about the bottom line. If traders see a net loss in the upcoming filings, the price could take a tumble.

Then there’s the matter of actually sticking to the deadlines for the publishing of the documents. As we wrote back in October, SEEK have been willing to get the ticker out of the Pink Tier for quite some time and back in December 2012, Mr. Gallagher said that the company will become fully reporting “in early 2013“. Now, a year later, he is telling us much the same things and it’s up to you to decide whether you should trust him or not. Be sure to keep in mind, however, that Mr. Scott Gallagher was once at the helm of a company called FTS Group, Inc. (OTCMKTS:FLIP) whose stock that got revoked by the SEC due to delinquency in their periodic filings.

And while SEEK was gaining ground yesterday, other tickers like Marani Brands, Inc. (OTCMKTS:MRIB) were losing it. MRIB fell by no less than 23% while shifting nearly $850 thousand worth of stock. At 9%, Axion International Holdings Inc. (OTCBB:AXIH)’s losses weren’t quite as painful, but the ticker still managed to generate a significant trading volume (around 472 thousand shares).