The market became astonished at Soupman Inc. (OTCMKTS:SOUPQ), a manufacturer and seller of soups under the “Original Soupman” brand, after its share price jumped in the month of August. Shares have gone from a fraction of a penny to over $.04 a share in just a few days. On the top of it, more than 40 million shares changed hands some days.
For what reasons?
According to a filing given to the SEC, an investment firm has acquired approximately 51% of the voting power of Soupman, Inc. and is trying to remove the current directors of SOUPQ. The interest of this investment company seems to have created an increase in the demand for SOUPQ’s shares.
We will give you all the details about the letters that the company and the investment firm exchanged and also about the voluntary bankruptcy that SOUPQ filed in June. But, first have a look at the astonishing share price movement:
Soupman Inc. manufactures and sells soups under the brand name “Original Soupman”. National supermarket chains, like Kroger, Publix and Safeway, help the company distribute the soups in shelf stable Tetra Recart packaging. The market is quite big. In the US alone, the annual market size is approximately $6.4 billion.
Additionally, Soupman sells directly to the company’s franchises in Connecticut, Atlantic City New Jersey, New York and to educational institutions such as the New York City Public school system. Soupman also sells other products, such as “Mexicali Beans, Stewed Pinto Beans, and Curried Chickpeas with Tomatillos.”
On June 13, 2017, the company announced that it had filed for Chapter 11 bankruptcy protection. The news was accompanied by an interesting announcement; $2 million debtor-in-possession credit facility (“DIP”) from an independent third-party private investment firm had been secured. This money would help the company operate normally. Jamie Karson, CEO, was quoted:
“The ongoing support from our lender through our new DIP facility will allow us to continue business operations as normal. We anticipate that there will be no disruption in the quality of our product or service that we provide to our vendors and customers during this transition period” Source
Additionally, the press release said that Michael Wyse of Wyse Advisors, LLC would be the Chief Restructuring Officer and Interim Chief Financial Officer of SOUPQ. Following this announcement, we could read in the SEC filings that WealthColony SPV II, L.P. acquired a large amount of shares of the company. In addition, the market received some information regarding the DIP Loan Agreement to finance the company’s operations. Soupman used the same communications to warn the investment community:
“The Company’s stockholders are cautioned that trading in shares of the Company’s common stock during the pendency of the Chapter 11 Case is highly speculative and poses substantial risks. Trading prices for shares of the Company’s common stock may bear little or no relationship to the actual recovery, if any, by holders in the reorganization. Accordingly, the Company urges extreme caution with respect to existing and future investments in its common stock.“ Source
Finally, on August 18, 2017, the company received a letter from WealthColony, wherein it was stated that the investment firm had acquired 51% of the company and was asking to remove the current directors. The company responded as follows:
“The Company is in receipt of your letter dated August 18, 2017 (the “Letter”). The Company cannot acknowledge the actions you have taken because we are unable to verify, based on the information provided, that you have obtained the affirmative vote of the holders of a majority of the outstanding shares entitled to vote in order to remove a director.” Source
We could not yet find the response from WealthColony to this letter, thus we will be alert. Any new information could make the share price move quite a bit. Those having access to the announcements first will be able to act faster. Thus, we encourage readers to follow the company closely .
Our opinion and Conclusion
WealthColony’s acquisition of shares seems to have created an increase in demand for the stock. That’s how we explain the share price increase. Thus, the company does not seem to be quite dead in the water, as outside investment firms are interested in the company. In our opinion, checking the response from WealthColony may be very beneficial, as it may explain what its plans are for SOUPQ. The investment firm obviously sees value and is trying to stop insiders from selling the company on the cheap. To sum up, the battle for Soupman is far from over and might just be getting started.
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Image courtesy of Lisa via Flickr
Disclosure: We have no position in SOUPQ and have not been compensated for this article.