Soul and Vibe Interactive Inc (OTCBB:SOULD) Crashing after Reverse Split
On Aug. 1 Soul and Vibe Interactive Inc (OTCBB:SOULD) announced a 1-for-3 reverse split. It became effective on Monday. Since then SOULD has lost more than 40%.
Yesterday it closed down 37.5% at $2 per share on approximately 259 thousand shares.
When the split was announced, Peter Anthony Chiodo, CEO and President of SOULD, said the aim was to improve the capital markets of the company and better the company’s position for up-listing. The immediate market reaction, however, was negative.
A few days prior to the announcement Mr. Chiodo had cancelled 64,459,292 of his own shares in exchange for 130,000 Series B preferred shares. That action in effect boosted the ownership of the rest of the shareholders, but it didn’t do much for the market performance of SOULD.
One detail about the split which can be seen in the 8-K filing may be of some concern to shareholders. The reverse split didn’t affect the number of authorized shares. That could potentially be interpreted as a sign that SOULD may need to issue a large number of shares and the potential dilution could scare some of the current shareholders.
On the other hand, this shouldn’t come as much of surprise since the financial report for Q1 clearly showed the company had insignificant assets and in need of additional financing.
The quarterly report for Q2 should be filed any day now. It may shed light on more details of interest for current shareholders and potential investors.
