Dewmar International BMC Inc (OTC:DEWM) Kept us Awake All Night
College students from all over the world, at one point or another, have had the unpleasant experience of having to study all night because they were too lazy to do it on time. The best friends at times like these are most likely a cup of coffee, an energy drink or a pair of matchsticks wedged between your eyelids to keep them from closing (we haven’t tried the last method, but cartoons suggest it’s extremely effective). But what if you want to fall asleep and a glass of fine wine or a beer is not your cup of tea (pun not intended)? Well, Dewmar International BMC Inc (OTC:DEWM) are on hand to help.
Apparently, DEWM have been watching TV and saw how huge companies like Red Bull made millions by keeping people awake and they decided that they are going to get rich by making people fall asleep. DEWM developed and started production of non-alcoholic drinks that are supposed to relax you and make you drift off. They called he concoctions, that come in different tastes “LEAN Slow Motion Potion” and are now extremely proud of the way they manage to associate them with hip-hop artists who abuse the word “gangsta” in their songs.
This probably isn’t the reason why DEWM skyrocketed yesterday, registering 65 million shares in volume (around 86 times the average) and a mind-boggling 305% increase in share price. So, how did they do it?
Well, TheStockScout sent out some emails, telling us how much potential the Slow Motion Potion has, so that might have helped. In addition, DEWM themselves, recently announced that they have signed a contract with a distributor that is going to help them set the shops on fire in… Trinidad & Tobago. We have nothing against the Caribbean country (populated by just 1.3 million people) but we doubt that this is the biggest market for soft drinks that make you go to sleep.
What we think, however, is not important and, in any case, a sale is a sale, so we decided to check how DEWM have been doing so far. The latest financial report covers the third quarter of 2012 and it doesn’t look good. The company has a big working capital deficit and it has been operating at a loss for quite a while. Our biggest concern is, however, that when compared to their previous filings, the latest 10-Q looks much worse. Here’s a comparison with the same period of 2011:
- cash (2012): $4 thousand
- cash (2011): $91 thousand
- current assets (2012): $163 thousand
- current assets (2011): $289 thousand
- current liabilities (2012): $938 thousand
- current liabilities (2011): $501 thousand
- revenue (2012): $405 thousand
- revenue (2011): $1 million
- net loss (2012): $652 thousand
- net loss (2011): $134 thousand
The fact that DEWM are losing money by the day and more, importantly, they’re losing more and more money every day is enough to put most experienced investors off. The ones that are still not convinced should probably take a look at what happened the last time they got pumped. It was back in August 2012 and you can see on the chart the massive drop they experienced once the hype subsided.
Even if history is not about to repeat itself, the management team won’t be able to get themselves out of the financial mess so easily. Throughout the years they have issued convertible notes worth millions of dollars, and their primary financing institution is Asher Enterprises, who, according to one of their latest 8-Ks, now own about 10% of DEWM with a lot more debt waiting to be converted in the future. Ahser, we should point out, are well known among investors and are regularly flagged as a source of toxic financing for small cap companies.
You have already seen how DEWM perform after a pump, so now, we want to show you that they are not the only ones who suffer after a promotion. MAXWELL RESOURCES (OTC:MAXE) got the same treatment from TheStockScout, the people who pumped DEWM yesterday, just a couple of days ago. The chart on the right shows how they lost a total of 62% in just 3 trading sessions.
