Drinks Americas Holdings, Ltd. (DKAM)

[Drugdoctor]

Why DKAM's DEATHSPIRAL FINANCING killed the STOCK!
The reason this company has failed miserably has nothing to do with their products. Most everyone agrees, that the Rheingold is a good, generic beer product. Their Olifant, Whisky River, Damania, Trump Vodka, etc. are all good products. The problem is that they are deep in debt, and did not use the restructuring opportunity they obtained with the Reverse Split to do any new financing and get rid of the deathspirals.

The way a deathspiral works is like this... Suppose a company owes a finance company $1,000,000. They usually have a high interest rate on this debt of over 10%. So the payments come due, and the company can't pay back either principal or interest, but there is a clause that says that the company owed the money can convert shares for the debt at maybe 50% below the market closing price to satisfy a portion of the debt. There is also a stipulation that the finance company can't own more than 10% of the outstanding shares.

So the price is .05. The outstanding is 50 million shares.

The finance company will convert 5 million shares (10%) at .025 and will sell them into the float. Now they have payed down $125,000 of the debt. As long as the company will have PR's and the shares are dribbled into the float... it's not a big negative.

But now the company makes a 30 million share S8 filing. Now the finance company has 30 million shares to compete with to dump. And there are other legal settlements that will issue shares, so now the finance company begins to agressively whack the bid to unload their shares, so they can convert more debt and dump.

Suddenly the outstanding shares are up to 100 million shares... Now the finance company can convert 10 million shares at a time (10%). And if the company will occasionally make PR's with good NEWS, this facilitates the conversion and dumping process.
It's great for the company, they get rid of debt for paper. It's great for the finance company, because they get their money back, but it's death for the investor because the huge dilution and dumping overwhelms any logical demand for the stock, therefore the price goes down, and down... Now look at the prices of conversions out of the last 10Q. I added the share price at conversion date, and also added the NEWS and date of release...



in excess of the apportioned costs previously incurred by LG.
On March 11, 2011, in connection with the June 18, 2009 Drinks Debenture financing by an investor, the investor submitted a Notice of Conversion, to convert $28,170 of the outstanding balance of the Debenture in exchange for 9,000,000 shares of our common stock.

.00313 conversion price
close 3/11/2011 .0027

Drinks Americas Wins Arbitration Judgment Against Liquor Group
Date : 03/08/2011 @ 1:49PM



On March 7, 2011, in connection with the June 18, 2009 Drinks Debenture financing by an investor, the investor submitted a Notice of Conversion, to convert $40,800 of the outstanding balance of the Debenture in exchange for 12,000,000 shares of our common stock. .0034 conversion price
close March 7, .0037 -

Drinks Americas Rheingold Beer Continues Expansion, Now to Be Distributed in Texas
Date : 02/28/2011 @ 8:00AM

On February 25, 2011, an investor who purchased our 8% convertible promissory note dated October 1, 2010, in the amount of $45,980, submitted a second Notice of Conversion to convert $4,800 of the principal amount of the convertible promissory note for 2,400,000 shares of our common stock.

.002 conversion price
.0041 Close Feb 25


On February 18, 2011, we issued 4,000,000 shares of our common stock under our 2011 Stock Incentive Plan with a fair value of $20,000 for marketing services. The shares vested immediately on the date of grant.

.005 was the conversion price
.0046 was the close


On February 18, 2011, we issued 2,000,000 restricted shares of our common stock with a fair value of $10,000 for marketing consulting services.

.005 was the conversion price
.0046 was the close


On February 17, 2011, we issued 4,444,444 shares of our common stock under our 2011 Stock Incentive Plan with a fair value of $20,000 for business consulting services. The shares vested immediately on the date of grant.

.0045 was the conversion price
.005 was the close


On January 18, 2011, in connection with the Olifant Promissory Note (See Note 10 (b) Notes and Loans Payable) the Company amended and restated the a portion of the debt under a Wrap Around Agreement dated January 19, 2011, providing for the assignment and issuance of the Restated Convertible Promissory Note (the “Restated Note) in the principal amount of $75,000 to an investor.



F-25
--------------------------------------------------------------------------------



On February 3, 2011, in connection with the Olifant Promissory Note (See Note 10 (b) Notes and Loans Payable), the Company issued to the original note holders 2,000,000 shares (1,000,000 shares each) of its common stock with a fair market value in the aggregate of $20,000.

.01 was the conversion price
.0066 was the closing price

So I won't go through the rest of these conversions, you see what was happening... Now... I have added the NEWS in RED
On February 4, 2011, the investor submitted a first Notice of Conversion to convert $10,000 of the principal amount of the Restated Note for 3,448,376 shares of our common stock.

On February 9, 2011, the investor submitted a second Notice of Conversion to convert $6,000 of the principal amount of the Restated Note for 2,068,966 shares of our common stock.

On February 14, 2011, the investor submitted a third Notice of Conversion to convert $10,000 of the principal amount of the Restated Note for 3,571,429 shares of our common stock.

On February 23, 2011, the investor submitted a fourth Notice of Conversion to convert $6,000 of the principal amount of the Restated Note for 2,400,000 shares of our common stock.

On March 1, 2011, the investor submitted a fifth Notice of Conversion to convert $9,000 of the principal amount of the Restated Note for 3,750,000 shares of our common stock.


On March 8, 2011, the investor submitted a sixth Notice of Conversion to convert $10,000 of the principal amount of the Restated Note for 4,761,905 shares of our common stock.


On March 11, 2011, the investor submitted a seventh Notice of Conversion to convert $6,000 of the principal amount of the Restated Note for 3,157,895 shares of our common stock.

Drinks Americas Rheingold Beer to be Distributed by Ben E. Keith, Fourth Largest Beer Wholesaler in U.S.
Date : 03/16/2011 @ 7:21AM




On March 14, 2011, in connection with the Olifant Promissory Note (See Note 10 (b) Notes and Loans Payable) the Company amended and restated the a portion of the debt under a Wrap Around Agreement dated March 14, 2011, providing for the assignment and issuance of the Restated Convertible Promissory Note (the “Second Restated Note) in the principal amount of $75,000 to an investor.


On February 14, 2010, in connection with the June 18, 2009 Drinks Debenture financing by an investor, the investor submitted a Notice of Conversion, to convert $50,670 of the outstanding balance of the Debenture in exchange for 9,000,000 shares of our common stock.

Drinks Americas Rheingold Beer Completes First Phase of Initial National Marketing Expansion Plan
Date : 02/10/2011 @ 7:00AM


On February 10, 2011, in connection with the Socius CG II, Ltd. (“Socius”), litigation settlement (See Note 18 –Litigation), we issued 8,925,000 shares of our common stock with a fair value of $48,195 to Socius in compliance with the September 9, 2010 court approved settlement agreement as partial settlement of the outstanding obligation.


On February 10, 2011, we issued 3,448,275 shares of our common stock under our 2011 Stock Incentive Plan with a fair value of $20,000 for business consulting services. The shares vested immediately on the date of grant.


On February 3, 2011, an investor who purchased our 8% convertible promissory note, in the amount of $45,980, submitted a first Notice of Conversion to convert $5,482 of the principal amount of the convertible promissory note for 2,300,140 shares of our common stock.

So finally, let's look at one particular event during this period.

I have listed the chart below, to see the huge spike on the great NEWS.... only to see it beat back down by the huge dump of converted shares... Any wonder on the timing of that PR now?

Here are the conversions preceding the March 8 NEWS...

On March 1, 2011, the investor submitted a fifth Notice of Conversion to convert $9,000 of the principal amount of the Restated Note for 3,750,000 shares of our common stock.


On March 8, 2011, the investor submitted a sixth Notice of Conversion to convert $10,000 of the principal amount of the Restated Note for 4,761,905 shares of our common stock.

On March 7, 2011, in connection with the June 18, 2009 Drinks Debenture financing by an investor, the investor submitted a Notice of Conversion, to convert $40,800 of the outstanding balance of the Debenture in exchange for 12,000,000 shares of our common stock.


.0034 conversion price
close March 7, .0037 -



and here is the NEWS...
Drinks Americas Wins Arbitration Judgment Against Liquor Group
Date : 03/08/2011 @ 1:49PM

And here is the chart... Can anyone see where the 20 million shares turned on March 8th may have come from??