SOUL is chiefly of interest for its rather dramatic chart and its colorful history of brief pumps.
What is now SOUL began its public life as Victory LG, Inc.; it filed its initial S-1 registration statement on 25 March, 2011. Victory LG's intended business was to develop liquid-gel capsules called “Victory LG 8-hour Energy Liquid-Gels”; what they were meant to do, and to what audience they were meant to appeal, are unimportant, as they never came to market.
The company's sole officer and director was Pauline Carson, who in the S-1 was described as a “marketing professional and an accomplished business leader, with over 12 years of progressively responsible experience directing as many as 5,000 employees in companies with revenue in excess of $300 million.”
The registration statement was deemed effective by the SEC on 9 June 2011. The stock was added to the OTCBB on 29 September under the ticker VRYG, but did not begin to trade immediately. Carson evidently had trouble getting her new enterprise off the ground. No press releases were issued, no money was made. After a year of what must have been a struggle to keep up with the expenses attendant on maintaining status as an SEC filer, Carson began to look for a way out.
She found it in the person of Peter Anthony Chiodo, the owner and sole officer of a company called Soul and Vibe Entertainment, Inc. Soul and Vibe Entertainment was (and is) a Nevada corporation located in St Louis Park, Minnesota.
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| Tony Chiodo |
These changes were implemented on the following day, 25 October. Rather oddly, the Schedule 14 failed to explain the reasons for any of the corporate actions. A little more than a month later, the company's trading symbol was changed from VRYG to SOUL, and Chiodo was, again without explanation, named vice president and appointed to the board of directors.
The company's name change was duly reflected in its Nevada corporate record.
It was not until 28 January 2013 that the company got around to making what might be construed as an important announcement: Soul and Vibe Interactive (the public company) would be acquiring Soul and Vibe Entertainment (Chiodo's private company). To provide the necessary detailed information about the business combination to the SEC, SOUL filed an 8-K on 7 February. This document explained Chiodo's plans for the public company, and described the terms of the deal. Chiodo had exchanged 18 million shares of the private Entertainment company for 37 million shares of the public Interactive company. Carson resigned from all of her previous positions and became vice president; Chiodo assumed the titles of CEO, president, treasurer and secretary.
According to a glitzy presentation, at that time SOUL had 103 million shares outstanding, and insiders owned 80% of the company. The share price was $0.33.
The 80% insider ownership seems a bit of a head-scratcher, but it was not to remain a mystery for long. In mid-February, Chiodo belatedly filed a Schedule 13 in which he announced that on 2 November he'd purchased 50.4 million shares of the public company from “existing shareholders” for $25,200, or $.0005 per share. He then, of course, picked up another 37 million at the time of the business combination, for a total of 87.4 million, or 80.2% of the public company.
This carelessness—or perhaps cluelessness—raised eyebrows at the SEC. In early March, Corporation Finance reviewers began a correspondence with SOUL that would continue until mid-July. They started by asking why Chiodo's very large stock purchase in November had not been announced in an 8-K, and why Chiodo had failed to realize he needed to file that Schedule 13 within ten days, and then went on to demand a variety of exhibits proving the existence of licensing and other agreements claimed to have been entered into by Chiodo when his company was private. Eventually, what was required was produced, and the SEC declared the matter closed.
SOUL's next move was unexpected and stupid. In the midst of a pump-fueled run—on 1 August, the day after the stock hit its historic intraday high—a 1:3 reverse split was announced. The reason given was one familiar to penny circus fans: “As we continue to build our Company we believe that creating a more attractive capital markets profile is important. This move will put Soul and Vibe in a better position for up-listing to a national exchange,” said Chiodo.
The reverse split was a bold ambition for a company making no money; a company that seemed—and seems—to be doing nothing at all, and, of course, a slap in the face to the newly minted bag holders.
The Pumps
Penny players appear to have expected SOUL to be pumped and dumped even before the acquisition of Soul and Vibe Entertainment was made public. On 15 January 2013, a message board poster presciently remarked, “SOUL is my pick for BDPS.” “BDPS” is, of course, Eric Cusimano's pumping machine, Best Damn Penny Stocks. That promo would indeed come, but not for several months.
Our enthusiastic poster was not the first to predict some form of pump job. As early as 3 November 2012, Promotion Stock Secrets noted the name change, did a little poking around, and made the (then undisclosed) connection to Soul and Vibe Entertainment.
StockPromoters.com offers a surprisingly long list of promotions for what was not a particularly interesting or high-profile stock: a total of 214, though as usual many individual notices are repeated. Stock Guru was the first up, on 18 February 2013; he expected to be paid $6,600 for three-months' work. By early March, Odd Marketing, publisher of Penny Stock Crew and other newsletters, was disclaiming compensation of $100,000 from “Fry & Grand” as a “total production budget” for a one-day promo (or, in other notices, for a three-day promo). Very strange indeed: according to HotStocked.com, Fry & Grand (which a Google search identifies only as a street corner in Katy, Texas) has been recorded as a third party payor for only this SOUL tout. Penny Stock Crew and Odd Marketing, LLC of Boca Raton, Florida are real. So is Stock Publisher, another Odd Marketing newsletter, which disclosed the same compensation from “Fry & Grand”. Odd Marketing also farmed the pumping out to Jeff Bishop's Blue Wave Advisors, and its newsletters, among them Stock Roach and Stock Hideout, as well as Safe Penny Stocks and its associated newsletters.
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| Drew Ciccarelli |
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| Christopher Nix |
By April 2013, Odd Marketing, LLC and Penny Stock Crew were back at it, this time claiming they were compensated $145,000 by “Hunter Marketing,” a name too generic to be traceable. At the end of the month, Odd Marketing was once again picking up the bill for the efforts of a number of minor tout sheets.
None of this activity really paid off. There were occasional blips in SOUL's stock price, but no giant runs. In early July, Cambridge Consultants turned up as the named payor, funding promotional efforts by, among others, Penny Stock Prophet and its sister newsletters, which are run by someone who says he's a 19-year-old college student named James Connolly, but probably isn't. Another July payor was “Cybernet Inc.,” an equally common company name, making it difficult to trace. A few promoters claimed to paid in euros, though none disclosed the name of entity footing the bill. As the action heated up, Global Marketing Media returned to the fray, this time as the payor rather than the pumper.
Ciccarelli and Nix might be said to have set the stage for Cusimano's BDPS promotion of SOUL. Reportedly, BDPS did not pump SOUL using traditional email blasts at first; it instead sent out text messages to subscribers who'd signed up for the service. The first arrived on the afternoon of 24 July.
The stock had already spiked on the 23rd, and for the next few days it was every penny trader's dream: a rocketship. Finally on 31 July it hit that historic high. The next day, the pending reverse split was announced, and shares of SOUL began to sink. When the split became effective on 12 August, it completely collapsed.
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| Eric Cusimano |
Under Cusimano's direction, BDPS was considered one of the “major” promo sites, but not one of the best. Some picks fizzled, others shot up only to fall with equal velocity. In the wake of the sudden demise of the Awesome Penny Stocks group and the SEC's newfound penchant for suspending trading in stocks undergoing suspicious promotions, promoters are nervous, and BDPS is said to be up for sale for $3 million.
Why did SOUL crash and burn?
Obviously the reverse split couldn't have been timed more ineptly. First, players were shaken by the announcement, and then, once the action became effective, current investors' stock was tied up for days while old certificates were exchanged for new. Everyone who could do so, headed for the exits.
Two articles, both published at Seeking Alpha, also had an effect. Interestingly, one was negative, the other positive. The negative effort was contributed by “Infitialis,” who describes “himself” as a short selling collective. Written on 29 July, as SOUL was peaking, the article savaged the company, calling it a “worthless pump and dump.”
The Seeking Alpha article, is extremely critical of Tony Chiodo, and many of those criticisms are justified. Infitialis points out that the company website seems to address itself more to investors and potential investors than to people interested in video games, which is SOUL's purported business. There are no games for sale, for the simple reason that SOUL hasn't created, or even licensed, any. Chiodo has worked in the business for 20 years, but his experience seems to be more as a marketer and sometime “project director” than as a designer. The company's slogan is: “Games as fun to talk about, as they are to play.” Who can judge? There aren't any games to talk about or to play. Depressingly, the website seems not to have changed at all since Infitialis wrote about it six months ago.
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| Home Page of SOUL's Website |
It's beginning to look as if we may never learn who Gurk Burkle is.
Infitialis especially detested an interview Chiodo did with a perky young woman called Lauren for a site called “Corporate Profiles.” Lauren mispronounced the CEO's name excruciatingly (unless, God forbid, he mispronounces it too), and invited him to talk about his Xbox and PlayStation 3 licensing agreements. The article, however, wrongly concludes that Chiodo couldn't possibly hold those licenses, because of the way he described them. That's incorrect. The SEC made the company cough them up as exhibits to that frequently-amended 8-K. They are real, and may be inspected here and here.
Lauren closes by unsubtly urging viewers to buy, buy, buy the stock. Needless to say, as the screen fades to black there's a brief disclaimer informing us that Corporate Profiles is compensated for its work.
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| Steven M. Mandala |
Whatever good things Mandala may have had to say about SOUL can no longer be read. He asked Seeking Alpha to remove the article. Its publication on 31 July—the stock's best day ever—provoked sharp criticism from skeptics who declined to believe the disclaimer in which Mandala said he hadn't been paid for his glowing praise.
Worse yet, it turned out that S. Michael Mandala is also known as Steven M. Mandala. In his former incarnation, as Steven, he worked as a broker for Merrill Lynch. FINRA's Broker Check reveals that when he filled out his employment application with Merrill in 2010, he falsely represented his compensation in a former job. Worse yet, he used falsified documents to obtain a $780,000 loan from his new employer. When confronted, he refused to pay the money back. He was fired, and permanently banned as a broker by FINRA. He agreed to accept the sanction without admitting or denying wrongdoing. In the same year, a New York state court found him guilty of identity theft in the first degree, grand larceny in the second degree, money laundering in the second degree, and criminal possession of a forged instrument in the second degree.
He was sentenced to 2 to 6 years' incarceration, but must have got lucky and obtained an early release. That didn't help him with Seeking Alpha readers; his article about SOUL was the last he chose to contribute.
What's next for SOUL?
Unsurprisingly, the paid pump jobs died with the stock at the beginning of August. For the next several months, the few random alerts claimed to be uncompensated, except, strangely enough, for a BDPS declaration to StockPromoters.com from 5 November.
If Cusimano promoted it again, nobody noticed, and it had no effect on stock price. Perhaps he was making a very tardy disclosure.
The latest Pump & Dump campaign that began in the second half of December, seems to have been once again funded by Star Media and Hunter Marketing. It continues as we speak.
Generally speaking, stocks are promoted because someone with a large position wants to liquidate. In the case of SOUL, it's difficult to guess who that person or those persons might be. Chiodo appears to have purchased all, or nearly all, of the seed shareholders' stock in November 2012. At the end of July, he cancelled 64,459,292 shares of his common, replacing them with 130,000 shares of non-convertible Series B preferred that carry voting rights only, albeit more votes than the cancelled common shares provided. This is a common ploy for companies that are the subject of Pump & Dump campaigns, feigning increased value to the retail investor. In reality, these common shares are restricted and would never have been sold into the market anyway, as some control must be maintained. Think of it as a shell game.
Carson, who as far as we know is still vice president of the company, hasn't had a significant amount of stock since the business combination was finalized. The issuance of any additional preferred stock was not registered. It's difficult to imagine how anyone could issue gouts of stock on the sly, given that Chiodo is very much in charge. Yet there remains the tantalizing fact that Cusimano said he was paid $500,000 euros, a very considerable sum, which suggests an offshore interest. Or perhaps shorting against insider stock. Or whatever other schemes these guys can come up with these days.
There are two recently-issued convertible debentures. They're owned by two unnamed institutions, and were issued in late October and late November. The purchasers got a very good deal: “the 'Variable Conversion Price' shall mean sixty percent (60%) of the lowest trading price of the Common Stock as quoted by Bloomberg L.P. for the ten (10) trading days immediately preceding the Conversion Date. Notwithstanding the foregoing, in no event shall the Variable Conversion Price be less than 40% of the trading price of the Common Stock on the date prior to the date hereof...” The debentures may be converted at any time, though the debt would not be properly aged until six months from the date of issuance.
Meanwhile, Tony Chiodo soldiers on. As a year's end thank-you to shareholders, including, he says, his “personal friends and family members,” he posted a letter at the company website. In it, he announced the expansion of the “new” Strategic Advisory Board. How can something new be expanded? He continues with vague promises of progress toward a partnership with Larva Game Studios, originally announced last July, and assures his readers that “fiscal year 2014 is going to be exciting for Soul and Vibe as a company and for you as a shareholder."
We'll see. That's also what he said almost 6 months ago and a year ago, yet we still haven't seen a single penny in revenues. Unless you can count stock sales. Somebody does.
Tony Chiodo did not respond to efforts to ask him pertinent questions prior to publishing this article.