Pleasant Kids Inc (OTCMKTS:PLKD) Runs Into a Hurdle
In yesterday’s session Pleasant Kids Inc (OTCMKTS:PLKD) finally had a headfirst clash with reality and dropped nearly 16%. After shifting its second-heaviest volume for the past month, the ticker slid to stop at $0.11 per share. The positive news the company dropped at the opening bell yesterday did little to prevent this slide.
PLKD announced that the company is cutting down on its max authorized shares issuable. The old AS of 9.5 BILLION was cut down to 360 million. This seems like great news, except it was something that should have been done a while ago and does not really put a definitive stop to any dilution worries investors might have.
As a matter of fact, PLKD‘s old 9.5 billion authorized share figure was from the time the company had 7.3 billion issued and outstanding common shares. There was a massive 1-for-500 reverse split in July 2015, which sliced those 7.3 billion to just 14 million. However, the company is adjusting its AS by a divisor of 26, while the split used a divisor of 500, which in turn means there is still tons of spare room for new dilution even after the devastating split.
Speaking of the split, the July portion of the chart shows well how the market reacted to it.
In the company’s latest quarterly, there were details of a share exchange reverse merger agreement. An entity called Next Group Holdings Inc – a communications equipment company, is to reverse merge into PLKD. It seems the closing of the agreement got delayed, as PLKD‘s latest 8-K informs the date was pushed back to Nov 30, leaving the door open for another 60 days of delay if both parties agree on it.
The merger was the one breath of fresh air that possibly had some investors interested, even if there was no information on Next Group’s financial performance or balance sheet. This delay does not make things any easier for the company.
By the time it crashed in yesterday’s session, PLKD had been heavily overbought for multiple days. With the price sitting 747% up from its lows just a month ago, PLKD has a lot to lose, so caution is advised.
