DNA Brands Inc (DNAX)

[Ed the Trader]

"Wouldn't news tho give the company the chance to dilute at a higher pps to get more bang for their buck. Diluting in the teens or higher gives them substantially more money to work with than diluting billions at this level."

Sure it would. That would be a better deal for everyone.

To drive the stock price up, DNA management would need some good news that is creditable (and therefore, preferably verifiable).

Unfortunately, here is the reality:

1) DNA is overextended on inventory such that it has adversely impacted their liquidity.

2) Current distributors are not moving product very fast (although they are moving it) because DNA spends virtually nothing on advertising. As a consequence, even people who work in stores that carry DNA products often have never heard of it.

3) Current distributors are not doing much reordering, and will ultimately cease carrying DNA products, because they do not move it fast enough.

4) Prospective new distributors are going to be hesitant to take DNA products as a new line because when they look at DNA financials, they don't see volume. If they contact existing DNA distributors, those distributors are not going to report good sales.

5) Because DNA spent so much money to acquire inventory, they don't have money to spend on advertising.

6) Without adverting, people are very slow to discover that DNA products exist, let alone why they would like them better than the competition.

7) If unchecked, this will turn into a negative feedback loop that will lead to the end of the company.

If people actually try the products, they will continue to sell themselves because people will come back for more, but first, DNA management has to make people aware that their products exist.

DNA management MUST find a way to do effective advertising so they can generate awareness and thus, generate sales.

One way to generate cash to allow purchase of advertising is sell additional shares of stock. At this point, it may be one of DNA management's only ways to generate the required cash.