DNA Brands, Inc. (OTCMKTS:DNAX) Gets a Volume Spike and a Mysterious Bounce
DNA Brands, Inc. (OTCMKTS:DNAX) is a fully reporting company that files its financial statements in accordance with the SEC standards and yet, if you check out the company profile, you’ll see that it’s currently traded on the Pink tier. That’s because OTC Markets recently placed a minimum bid price of $0.01 on OTCQB stocks and at the moment, DNAX is not able to reach it.
After a prolonged slide, the ticker dropped in the sub-penny levels on April 25. It then failed to break the fall and on Friday, it hit its 52-Week low of $0.0021 per share. Fortunately for the shareholders, this week is proving to be much more positive. On Tuesday, DNAX managed to wake up and regained some of the lost ground and yesterday, it doubled its value and registered a dollar volume of around $581 thousand. Currently, it stands at $0.0058 which isn’t much, but on the bright side, the penny per share mark seems to be within reach once again. The question is: “Can DNAX make it?“.
The bounce doesn’t seem to be caused by anything immediately obvious. There are no paid promotions at the moment and the latest press release, though optimistic, is now more than a week old. This means that predicting the future performance of the stock is extremely difficult.
Unfortunately, the same can be said about the company’s operations. Unlike the majority of sub-penny enterprises, DNAX actually have some revenues and they’ve been working on getting the ball rolling for quite some time. Sadly, the latest 10-Q reveals that they have quite a lot of issues. Here’s a summary of the figures recorded at the end of Q1:
- cash: $110 thousand
- current assets: $428 thousand
- current liabilities: $3.2 million
- quarterly revenues: $48 thousand
- quarterly net loss: $793 thousand
The problems are quite obvious – the working capital deficit is huge, year-over-year revenues are growing, but the progress is somewhat slow, and profitability is still nowhere in sight.
There is one more thing you need to consider – dilution. The 10-Q tells us that during the first quarter of 2014, DNAX issued a total of 35.5 million common shares. 24.1 million of them were sold for cash proceeds of $193,500 ($0.008 per share) and the rest were issued as a conversion of debentures at a rate of $0.009 a piece. A quick comparison between the latest 10-Q and the 2013 10-K reveals that between April 9 and May 18, DNAX issued an additional 44.1 million common shares.
The convertible debt that we see in the report could suggest that the dilution is far from over. As is often the case, the notes and debentures carry a discount in their conversion features which, in the case of DNAX, ranges between 20% and 50%.
With that in mind, let’s get back to our original question: “Can DNAX break through the $0.01 per share barrier once again?“. Nobody can say for sure, but the facts that we listed above clearly show that there are some things you need to consider well before putting your hard-earned cash on the line.
DNAX wasn’t the only OTC stock to register some high volumes during yesterday’s session. A press release about a potential buyout sent Mktg, Inc. (OTCMKTS:CMKG) flying. The ticker managed to gain as much as 156% while the trade value at the end of the day stood at nearly $1.5 million. Things weren’t quite as optimistic at Green Cures & Botanical Distribution Inc (OTCMKTS:GRCU)’s camp. GRCU logged a dollar volume of around $935 thousand and lost nearly a quarter of its market cap.
