Dewmar International BMC Inc (OTCMKTS:DEWM) Skyrockets After an Update from the CEO
It’s not uncommon for a triple zero stock to make a single day run of over 100%. It is uncommon, however, for such tickers to rack up a dollar volume in excess of $680 thousand. Dewmar International BMC Inc (OTCMKTS:DEWM) did just that yesterday which meant that we had to check what’s going on.
Before we get to the reason for the unprecedented rally, we should point out that DEWM isn’t your typical triple zero company that has little more than an interesting business plan and bright promises of a successful future. They have a product – the Lean Slow Motion Potion relaxation beverage, they have been producing it for quite some time, and they have some figures under the revenues section on their financial reports. The beverage is even endorsed by some famous hip-hop stars which might lead you to believe that business is going along nicely.
Unfortunately, things aren’t quite so simple. The chart at the beginning of the article shows that not everything is going according to plan and there are several reasons for this.
The first one can be found in our database. Back in July 2012, the ticker was hovering well above the $0.10 per share mark, but for some reason, someone decided that a pump is needed. The results were absolutely catastrophic – it took DEWM just a month to drop to around $0.02 per share bringing the total losses to over 80%. The price continued on the downward slope after the pump as well and if you check out the company’s SEC filings, you’ll see why.
The dilution that the shareholders have had to endure is absolutely devastating. When you compare the 10-Q covering the period ended September 30 with the report for the second quarter, you’ll see that between August 19 and November 14, the company issued a staggering 586 million common shares. The newly issued stock has been printed in exchange for services as well as a conversion of notes and we read in the 10-Q that there’s still plenty of debt that can be turned into common shares which could put even more pressure on the price.
Yet, despite the fact that they have borrowed quite a lot of money, DEWM‘s management team simply can’t get the company out of the financial mess. Here’s a quick summary of the most important figures found in the latest 10-Q:
- cash: $12 thousand
- current assets: $79 thousand
- current liabilities: $1.1 million
- quarterly revenue: $51 thousand
- quarterly net loss: $340 thousand
When you compare the results above with the one registered a year ago, you’ll see that they now have less cash and more debt to deal with, but, perhaps more worryingly, the revenues have declined by as much as 53% while the net loss has more than tripled.
All things considered, DEWM resembles a sinking ship at the moment, but despite this, the ticker jumped by no less than 350% yesterday. It stopped at $0.0009 per share and even managed to (briefly) climb out of the triple zero territory. So, what caused the run?
It was an update from Marco Moran, the company CEO, in which he informed his shareholders that, after a successful test run back in July, DEWM‘s Lean beverages will soon be available in at least twenty-nine Wal-Mart Stores, Inc. (NYSE:WMT) stores across three states. This will undoubtedly bring more exposure to the brand and it will probably result in some increased sales but will it be enough to justify all the excitement?
The terrible historical performance, the threat of future paid promotions, and the catastrophic dilution certainly warrant some extra caution. And since we mentioned the dilution, we might as well give you one more peculiar fact. According to the latest 10-Q the total number of issued an outstanding shares comes in at exactly 1,010,858,175. The records show that 1,371,814,171 shares changed hands during yesterday’s session. Does that mean that some more stock saw the light of day after the publishing of the report? Not necessarily, but you should probably bear in mind that daily trading volumes rarely exceed the number of outstanding shares.
