Drinks Americas Holdings, Ltd. (DKAM)

[sneaky_peaky]

In the liquor industry, companies take every measure they can to gain further business. They form alliances, joint ventures, and sub distribution agreements to further their presence in the marketplace and gain more sales and visibility. With that said, Drinks cannot be concerned "on face value" whether a company is a reporting company, or a private company. When the LIQR contract with DKAM first came about and was formulated in its initial stages, LG was a small private company operating predominately in Florida and some mid western states with their so called bailment method as their hook to gaining a presence in the Control States.

In 2003, East Coast Beverage Corp filed for bankruptcy and was in receivorship. The company then attempted to emerge from Chapter 11 bankruptcy by changing its name to North American Food and Beverage Corp. They moved their headquarters to the residential community of The Villages in Florida. The two principals of NAFB were William Smith and Arnold Rosen.

In 2007, the company of East Coast Beverage Corp, which was now known as North American Food and Beverage, was notified that pursuant to their deemed bankruptcy, and being deficient in reporting financial results to the SEC for more than 6 years, they were being ordered to cease trading in any fashion on any exchange.

http://www.sec.gov/litigation/admin/2007/34-55205.pdf

From that order, the NAFB company then worked a deal with Liquor Group to reverse merge and reappear as a publicly traded company under the symbol LIQR. This also included the roll in of VIGOR, a company solely held by C.J. Eiras, President of Liquor Group. With that, came the carry over loss provisions of well in excess of $20 million from NAFB, and the same basis for business operations that led to their previous bankruptcy filings. All that changed was the cast of characters with Rosen and Smith remaining in the shadows as board members and directors.

http://www.secinfo.com/duWA1.t8w.htm?Find=Arnold+Rosen#3rdPage

From there, LIQR was born, as a publicly traded PINK SHEET company, as a liquor and beverage wholesaler. It should be noted that the company was still not a fully reporting company, and not in compliance with the SEC. They emerged as a Pink Sheet company as a result. Further, it should be noted that all financial results for Liquor Group are prepared by Jason Bandy who is domiciled in the Cayman Islands. Numerous precedence exists to indicate financial reports prepared offshore are not to be relied upon for actual conditions of any company when they are not audited results for a US reporting company.

It is then a natural course of action to assume that a company operating under this sort of checkered past, with current reporting guidelines that could be deemed as "less than accurate" could use tactics to bolster their own presence in the marketplace at the expense of their customers and other reporting companies like DKAM.

To this end, it is not impossible to assume the following:

1. At the most recent financial filing for LIQR, they list charges as: "We experienced increases in professional, consulting, and administrative costs related principally to our operating as a publicly traded company."

This could easily be a payment not listed for a financial reporter to write positive articles about the company. Since the company has not been forthright in providing who their payments went to, it could be for a very specific reason like paying a financial reporter to tout the company under the guise of "a media consultant."

2. At the most recent filing for the company, they list Other Income in that filing. The process is quite simple. The company forms vendor agreements/contracts with various companies. In those contracts, there are certain marketing costs that are associated with not only distributing those products through LG but also for promotion of those products either through print or their website.

Companies then ship their products through LG for distribution in various states, including Control States. Monies are received through LG as they are paid by their customers for those products. LG then is required to pay their suppliers for those products they received. In this case, one of those major suppliers is DKAM.

It was also noted in the most recent financial report for LIQR that several of their vendors were deficient in shipping to LIQR products that were sold by LG that their customers were waiting for. Of those, DKAM was singled out specifically for not shipping products that LG had orders for.

3. In this most recent economic meltdown, many companies were forced to become creative with the way they did business. Most companies saw a dramatic increase in both their Accounts Receivable and Accounts Payable balances held on their books. Everyone needs to be aware that DKAM has no obligation to pay LIQR ANY monies, I repeat ANY monies beyond those monies contractually agreed upon as "marketing costs" for promoting DKAM products. DKAM then provides product only for which it expects to get paid.

It would be natural to assume that LG had a number of their customers that were deficient, and/or delinquent, in paying for their orders of which they had received product. Yet, LG was responsible for paying their suppliers for the products shipped to their bailment warehouses that had been sold.

As of the most recent filing for LIQR, LG had $460 in cash. Cash that is required to pay their suppliers. Yet, they had six figure sales reported. Where did the money go?

In that same filing, the company DOES NOT show its sales from this period, or the year ago period. Rather, they report all their numbers in increases and decreases versus a year ago. They cite $123K increase in sales. They also cite a $130K increase in Gross Profit. Nowhere is it possible to show a Gross Profit in Operations higher than your actual Sales increases. Especially since the cost of sales only decreased by $7K for the reporting period. They do show $96K in "Other Income", which essentially is "stolen money" where they terminate vendor contracts and keep their inventory for themselves.

It is only natural then to assume that LG is using the monies received from sales to their customers for other purposes. Therefore, they would be highly deficient in paying their suppliers, including DKAM. If DKAM is due a substantial amount of money by one of its vendor customers, it is a natural course of business, as with any company, to cease to provide additional shipments of product to that vendor, and in this case LG, until they are paid the balance due from that vendor.

It is also natural to assume, as has been already reported by LG, that during this process of no product being received by their suppliers, that LG is still charging those customers for the marketing costs associated with promoting their products. LG has already reported that they have been liquidating their suppliers inventories to defray these costs that they feel they are due. Of course, of which they have not paid the supplier for, so therefore in breach of their own contract with their supplier.

The bottom line here is LG forms supplier agreements. Those suppliers then ship product to bailment warehouses so LG carries no inventory. As product is sold, they then are required to pay their suppliers with the monies received. LG was not getting paid accordingly, or in fact, used the monies they received for product sold for other purposes. They in turn were and are not paying their suppliers for those products as they are sold. As a natural course of action, the suppliers will be forced to seek other methods to secure the monies they are due as a course of doing business. This will include certified letters and the threat of legal action against LG. LG then reciprocates by, one, offsetting their books by charging the supplier with marketing costs, so they can "create" a way to keep as much money as they are due on THEIR DELINQUENT ACCOUNTS PAYABLE, and, two, preemptively striking back against their suppliers with a lawsuit for Breach of Contract. In other words, to draw attention away from not paying the monies due their suppliers, and citing the supplier for not providing products LG has orders for from their customers. Rather than incite a long drawn out court battle, LG simply hopes to settle the case whereby they can keep any or all of the money they stole from their suppliers without having to pay, and in the process they cite all these orders that were not filled as a result of their own delinquencies to pay their own suppliers. This in no doubt will be a case DKAM will vigorously defend, and will win.

4. It should also be noted that LG, or LIQR, has received a Going Concern rating which, for all intents and purposes, is issued to those companies that are one step away from bankruptcy. They are suffering from losses and do not have the cash to sustain operations for the foreseeable future.

http://sec.edgar-online.com/liquor-group-wholesale-inc/sb-2a-securities-registration-small-business/2008/02/01/Section27.aspx

In reviewing this filing, one can easily see that NAFB, and LG, have a track record of being DEFICIT in paying their suppliers for monies they are due.

4. This year, LIQR, or LG, began a new game of seeking to "grow by acquisition." They are looking for small, underfunded liquor distributors that they can acquire to grow their business. They have nothing to offer these companies except stock in LIQR for the express purpose of rolling their organization into LIQR. It should also be noted that the main principles of LIQR, who hold a substantial amount of LIQR stock, saw their shares come off restriction at the identical same time the company announced they were seeking to offer shares to would be acquired companies in a market where their stock price is severely depressed.

5. There is a Financial Reporter who operates under the name of Brandy Christine who claims to be representative of a number of alcohol and beverage companies within the beverage sector. However, this reporter has not published ANY articles other than for the public visibility of LG or LIQR. This would include, and is not limited to, published articles proclaiming trade shows for those companies interested in being acquired by LG, as well as, promoting the substantial growth prospects for LIQR.

http://www.realpennies.com/home/BCInvestor/profile.html

http://www.realpennies.com/home/groups/viewbulletin/1-Substantial+Distribution+Companies+Prepare+To+Merge+Into+Liquor+Group.html?groupid=2

This reporter owns shares in LIQR, as well as moderates more than a dozen beverage related message boards on the internet, where she has been documented to be touting LIQR on those other forums.

In addition, this reporter was a self proclaimed holder of DKAM stock until about a month ago wherein she attended a conference that deemed her to sell her shares in DKAM and further proclaim herself as a devout LIQR stockholder. In the past two months, DKAM has not participated in any alcohol or beverage conferences. In the past two months, however, LIQR has participated in conferences whereby they have solicited other distributors to "let them have their company" by issuing them shares in their pink sheet company that is still deficient in reporting to the SEC.

http://www.globenewswire.com/newsroom/news.html?d=164409

Subsequent to visits to these "trade shows" was a follow up article written by Brandy Christine whereby she visited the offices of LG.

http://www.liquorgroup.com/press/2009/06/substantial-distribution-companies.html

Since one Brandy Christine, as a self proclaimed shareholder of LIQR stock had visited the headquarters of LIQR, it is natural to assume that outside of her normal journalism duties, she may have been privileged to information relating to DKAM, and the current situation of LG's relationship with DKAM. She was a shareholder of DKAM and then something changed to warrant the sale of DKAM stock. These individuals at LG could have told her anything and it crossed the line from investigative journalism to inside information. Her position in DKAM was completley sold. It is natural then to assume she could have had prior knowledge that a lawsuit against DKAM was being prepared, and was subsequently filed on July 1, 2009.

As a final note to DKAM shareholders. Regardless of assumed sales that we have no knowledge of never being filled, or the fact that they ever even existed, it is with merit that our CEO has and will maintain our best interests in doing business with any company that does not pay us for services rendered. Additionally, anyone can immediately argue that there is no evidence to suggest that DKAM was not getting paid by LG. However, DKAM has a line of credit, they hae product available, they have replenished inventories, and they have cash. The company is shipping products to Israel and to other customers. Therefore, it is natural to assume then that they would ship $830,000 of product to LG, and LIQR, for those orders they had received. That is of course, unless something prevented them from doing so. That one thing is that our CEO will not ship ANY orders to ANY customer where they have a blatant and with malice track record of not paying DKAM, or their other self proclaimed "deficient" vendors for products received.