DNA Brands, Inc. (OTCMKTS:DNAX)’s CEO Resigns After PR Fiasco
As you probably know, DNA Brands, Inc. (OTCMKTS:DNAX)’s shareholders have been through quite a lot over the last couple of days. On Monday, the company announced that it has signed a distribution agreement with an entity called Trenton Coca-Cola and in a matter of around four hours, the ticker gained a whopping 525%.
A 38% correction followed on Tuesday which got some people concerned, but unfortunately, the worst was yet to come. A couple of hours after the closing bell, DNAX issued another press release and said that there was no deal with Trenton Coca-Cola.
Investors were understandably outraged and yesterday, the ticker took a dive. More than 184 million shares changed hands while DNAX burned through 65% of its market cap. Currently, the stock stands at $0.0032 per share which is 78% below the $0.015 peak reached because of the non-existent distribution agreement.
The company, however, wants to make amends. After yesterday’s closing bell, DNAX announced that Eric Fowler is stepping down from his position as President and CEO. DNAX will be headed by its founder, Melvin Leiner until the Board of Directors find a highly qualified person willing to take the helm.
Mr. Leiner promised that he will do everything he can to stop similar mistakes from happening in the future while Mr. Fowler announced that the whole thing has been caused by a misunderstanding of a phone conversation and said that he’s taking full responsibility for his actions.
We’re not quite sure if this will change the fact that quite a lot of people lost a huge amount of money over the last couple of days. Still, is there even a glimmer of hope for them?
Only the future will tell us. Unfortunately, things are not looking particularly good at the moment.
Many investors predicted that DNAX was going to be suspended because of the PR farce and a large portion of them suspected that the order would come before the start of yesterday’s session. That didn’t happen, but DNAX is not out of the woods just yet.
Posters around the message boards say that they have informed the SEC about the issue which means that an action from the regulatory organs is still not out of the question. If DNAX does get suspended, people who are still in could lose even more money, but even if trading does resume uninterrupted, there will still be some other things that could cripple the stock.
The worst of which is the dilution. Here’s a snapshot of the transformations that the O/S count went through over the last couple of months:
- November 2013: 105 million shares
- April 2014: 195 million shares
- May 18, 2014: 239 million shares
- May 29, 2014: 318 million shares
As we mentioned on Tuesday, some people thought that a 20-for-1 split is about to be effectuated (apparently, they also thought that it was a good idea), but you can see from our article that we had our doubts. A couple of hours later, DNAX proved us right by amending the controversial Schedule 14 form and omitting the paragraph talking about the split.
The number of authorized shares, however, will be increased which will leave a lot of room for further dilution. This, we reckon, is something you should definitely keep in mind while making your investment decision.
