Brokers require investors to put up collateral to guarantee against potential losses in the form of margin requirements. Often times, brokers will require OTC investors to have $2.50 of margin per share to short a stock under $2.50, which can make shorting penny stocks very costly.
For example, if an investor shorted 2,000 shares of a stock at $0.50, you have to have $5,000 in your account. All along, the maximum profit for this position would only be $1,000, if the stock went to zero. Some may think the risk/reward at this level might be worth it.
However, in our case, with DOMK trading at +/- $0.0037/share, lets say if you wanted to short 1,000,000 shares (assuming you could find a broker to find the shares), you would have to have $2.5 million dollars in your account to cover the margin requirements, all just for the opportunity to make a maximum profit of $3,700. You begin to see why no one in their right mind would be shorting this stock at this price level.
Which brings us to the conclusion, that the current price drop is simply more selling by those with large chunks of shares - most likely the convertible notes beginning to hit the street and/or insiders who have lots of cheap shares. It is also likely those who loaded up last week now taking their profits.
