Dethrone Royalty Holdings, Inc. (OTC:DRHC) Squished Post-Promotion
Yesterday Dethrone Royalty Holdings, Inc. (OTC:DRHC) slipped and slid over 46% down to a close of $0.055 at the bell. A round of promotions was launched last Monday that ran for only a couple of days but still managed to bring the stock price down.
We covered DRHC on the day following the pump. Even while the $55 thousand promotion was still fresh, the stock closed down on the next day. A more drastic drop followed, then DRHC simmered for a while, trying to bounce back. Yesterday seems to have sealed the deal, as DRHC dropped to roughly 66% from its pump peak.
The company came out with several press releases this week but they seem to have had zero effect on investor confidence. DRHC‘s name may lead some to think this is Dethrone Royalty, Inc. – a different separate entity, manufacturing MMA apparel, founded by Nick Swinmurn who previously ran the successful Zappos business. DRHC on the other hand was known as Exclusive Building Services, Inc. until the summer of 2012. A wholly owned DRHC subsidiary was renamed to Dethrone Beverage, Inc. as part of a licensing deal under which DRHC gets the right to use the Dethrone apparel maker brand to produce and market alcohol-free drinks.
A merger deal with Dethrone Royalty, Inc. described in a letter of intent filed by DHRC obviously didn’t go through and the company settled for licensing the name only. DRHC will have the right to produce and sell soft drinks branded with Dethrone Royalty over a period of 5 years. The troubling part is, per the contract the license can be rescinded unless Dethrone Beverages can churn a minimum of $3 million in sales over 2 years starting from the date of the contract, April 2012.
The last available financial report of DRHC contains some underwhelming numbers as well:
- $2 thousand in cash
- zero revenues since inception
- $145 thousand in quarterly net loss
Given the insignificant resources DRHC has at its disposal, investors may be left wondering how it plans to roll out its beverage production operations and reach its defined targets of $3 million in sales by 2014.
Promoters Penny Stock Guru who last touted DRHC have a history of pumps going downhill or not taking off at all. The pumpers ran a $40 thousand promotion on Greenway Technology, Inc. (PINK:GWYT), hyping traders that the already failing stock price would bounce. It didn’t. GWYT is now at under $0.01, 75% down from the promotion values.
Even if it looks like the commotion around DRHC is over for now, traders are advised to be extra careful with promoted OTC stocks as they tend to crash just as fast as they go up.
