In general, OTC traders are so short sighted its incredible.
Most OTC traders react extremely negatively to reverse splits. I too hate reverse splits. But in some instances they are almost necessary.
For example, how does a company buy equipment and materials to produce products to sell and generate revenues? How does a company make deals with other companies? These things are generally NOT FREE.
Equipment, material and sometimes deals require cash, either up front or in the form of company shares (if publicly available).
SNWP seems to have generated much interest in cooperating with other companies/organizations. SNPW has almost no room left to issue new shares to others. They also have minimal cash on hand (less than $100K according to their last 10-K).
So what can they do to resolve the situation. Here are some of the possibilities:
1) They can borrow money from a bank or issue promissory notes to known bad actors (a device all too common with scam OTC companies).
2) They can expand their ability to issue shares either by increasing their AS limit or by doing a reverse split and keeping their AS unchanged (this may be what SNPW has in mind currently).
3) They can try crowdfunding.
4) They can sell preferred shares to accredited investors and other wealthy persons looking to invest in this sector (solar energy, eg.)
etc., etc.
So what would people have them do? I know which method I would choose if I were a CEO of a company that apparently already has many deals in the works or already agreed upon except for closing them.
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