DNA Brands Inc (DNAX)

[Ed the Trader]

In 2015, FINRA started clamping down on the ability of corporations to execute reverse splits. However, reverse splits still happen. There have been 16 reverse splits already this month in 8 trading days.

Reference: https://www.securitieslawyer101.com/2014/finra-uses-rule-6490-stop-wash-rinse-repeat-issuers/

Reference: https://www.linkedin.com/pulse/sec-supports-finras-rule-6490-authority-over-actions-anthony-esq-/

MDFI had a 1:200 reverse split. SSGI had a 1:100 reverse split. PTOAF had a 1:12 reverse split. BCDA had a 1:12 reverse split. ARGYF had a 1:10 reverse split. DCTH had a 1:350 reverse split. NCRA had an effective reverse split of 1:200. FTNW had a 1:25 reverse split. HAGE had a 1:50 reverse split. STTH had a 1:15 reverse split. LACDF had a 1:5 reverse split. SNBP had a 1:10 reverse split. BDGN had a 1:300 reverse split. SHDNF had a 1:10 reverse split. GLLK had a 1:5000 reverse split. SOUM had a 1:500 reverse split.

Reference : http://otce.finra.org/DailyList/Archives

That is an average reverse split of 1:412 which demonstrates that FINRA still has a tolerance of reverse splits of significant ratio. FINRA even approved a 1:5000 reverse split.

This clearly establishes that a reverse split for DNAX cannot be discounted based on an automatic FINRA rejection.

Based on the split ratios that FINRA has recently allowed, if we then look at feasible reverse split ratios, and what they would do to the O/S and the PPS, the following is seen:

The current O/S is 19,942,827,289 and the current PPS is $0.0001.

If DNA executed a reverse split of the average of the 16 reverse splits (1:412) that have occurred so far this month, the new O/S would be 48,404,920 shares and the new PPS would be $0.0412 or a bit over 4 cents.

This is interesting although it is actually unlikely that Adrian would choose such an unusual ratio. A more round number is more likely.

If DNA executed a reverse split equal to the maximum ratio seen so far this month (1:5000), the new O/S would be 3,988,565 shares and the new PPS would be $0.5000 or 50 cents.

I suspect that Adrian would not select such a large ratio because it would attract alot of negative attention when he does not need such a large impact on the O/S or the PPS.

If DNA executed a reverse split of 1:50, the new O/S would be 398,856,545 shares and the new PPS would be $0.0050 or half a penny.

If DNA executed a reverse split of 1:100, the new O/S would be 199,428,272 shares and the new PPS would be $0.0100 or a penny.

The problem with these reverse split ratios is that they put the PPS just at or below the minimum PPS ($0.01) required to qualify for shifting the ticker from OTC Pink to OTCQB. Adrian has already telegraphed in his press release that he intends to execute a reverse split, and that he intends to use an uplist maneuver as camouflage to leverage against any FINRA objections:

"Finally, DNA Brands has no plans or intentions to reverse split its stock either now or in the foreseeable future, unless warranted to uplist to a higher exchange."

Adrian's addition of that prepositional phrase to the end of the sentence completely negates the assertion earlier in the sentence that "DNA Brands has no plans or intentions to reverse split its stock...." If Adrian intended not to execute a reverse split under any circumstances, he would have just said, "There will be no reverse split," not "There will be no reverse split unless my special condition occurs (which will occur or else Adrian would not have mentioned it)."

Reference: https://www.accesswire.com/479382/DNA-Retains-Veteran-Rainmaker

Everyone including FINRA, knows that a ticker has to have a PPS of at least one penny for at least one day each month to remain in the OTCQB. Everyone also knows that the post-split trend for a PPS is downward, so targeting a post split PPS of one penny is just plain stupid, and suggests a lack of sincerity that the reason for the reverse split is to qualify for the OTCQB.

So, Adrian needs a post split target for the PPS that is sufficiently over one penny that it seems feasible that the PPS could have a chance to remain above one penny for the duration post split. At the same time, he also needs to reduce the O/S to a level that is low enough to make it easy to continue to support his dilution machine, yet not so high that he risks raising the eyebrows of FINRA.

So, let's look at reverse split ratios that could achieve those goals.

If DNA executed a reverse split of 1:500, the new O/S would be 39,885,654 shares and the new PPS would be $0.0500 or five cents.

If DNA executed a reverse split of 1:1000, the new O/S would be 19,942,827 shares and the new PPS would be $0.1000 or ten cents.

These are probably the most likely reverse split ratios for Adrian to choose.

So, a million share position would be reduced to either 1,000 or 2,000 shares.

Of course, the PPS will not actually ever hold over one penny. Having DNAX remain in the OTCQB is not something of interest to Adrian. He only cares about continued dilution to continue to fill his pockets. The only tickers that retain most of their post split value are corporations which have actual performance from producing things like revenue and profits.

Adrian has produced not a single penny of revenue or profit in nearly two years of controlling DNA Brands, Inc.

Adrian has not even produced a single product or service which could be sold in nearly two years of controlling DNA Brands, Inc.

After the reverse split of DNAX, the PPS will drop like a plane with no wings and no engines.