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Replies to post #69286 on Drinks Americas Holdings, Ltd. (DKAM)
The second example we'll look at is Drinks America Holdings, Ltd. (DKAM), which last filed financials for the quarter ending January 31, 2013, making it delinquent in its filings for two quarters at the time of this writing. OTCmarkets has tagged this ticker with a Yield sign, for supplying limited information and will change the Yield to a Stop sign if financials are delinquent for much longer. DKAM provides us with a perfect example for the importance of current financials. Within its last financials, the company reported having 29,405,304 shares outstanding. That is the number OTCmarkets continues to show on the Company Info page, below.
On November 20, 2013, DKAM conducted the seemingly aboveboard act of Filing a Form 8-K to make public the number of shares currently outstanding. We're not sure why the company suddenly felt compelled to make this information public, but it could have been at the behest of the SEC, as a Pump & Dump campaign was just ending. Apparently, the company didn't feel like a 500% increase in the number of shares was worthy of a press release, in spite of the fact that it had issued 7 press releases in November coincident with the promotion. Instead it took the easy way out with the 8-K filing, where it knew that the less sophisticated investor, so relied on during a Pump & Dump campaign, would be less likely to discover the increase to 171,398,373 shares. And of course, the gesture did nothing to help those who had already bought into the two week old Pump & Dump campaign, many believing that there were only 29 million shares outstanding.
The point that is well illustrated with the two examples above is that it is especially foolhardy to invest in a penny stock with delinquent financials. The dual deception of a Pump & Dump campaign with a lack of full disclosure is a fraudulent and negligent act whose responsibility is shared by the officers that fail to keep the filings current, the perpetrators of the Pump & Dump, and the regulators who should not even allow these companies to trade without current filings. It is up to you the investor, to be vigilant and protect yourself from these unscrupulous acts.
