Dewmar International BMC Inc (OTCMKTS:DEWM) Still Surging
Dewmar International BMC Inc (OTCMKTS:DEWM) published its latest quarterly report on November 14, 2013. That’s 370 days ago. The latest financial information concerns the third quarter of last year and under normal circumstances, the stock would be anchored to the bottom and nobody would be interested in it.
As you can see from the chart on the right, however, this is definitely not the case with DEWM. Out of the last six sessions, only one ended in the red and the total gains now amount to a whopping 300%. During yesterday’s trading alone, DEWM added another 30% and finished the day at $0.006 per share for the first time since June. That’s quite the performance, especially in light of the lack of any current financial information. So, what’s causing the surge?
It is a letter from Dr. Marco Moran, DEWM‘s CEO. It was published on November 11 and it’s pretty clear that it has had a massive effect on the market’s attitude towards the stock. The increased volumes that we’ve seen over the last few days suggest that plenty of people are ready to trust Dr. Moran with their money. But what did he say?
Lots of things, actually. The letter is quite long and it concerns a lot of aspects related to DEWM‘s historical performance as well as its future outlook. He says, for example, that the sales have been growing year-over-year. He also says that some new contracts have been negotiated and he even hints about future acquisitions. Last but not least, he promised that from now on, the company won’t be burdened with any toxic debt.
He’d better be right. If you go through the outdated SEC filings, you’ll see that convertible notes have been a major problem for the company. DEWM never really had the money to pay off the debt with cash which means that the shareholders’ investments have been diluted beyond recognition.
Back in March 2013, for example, the number of issued and outstanding shares was sitting at just under 120 million. On September 30, 2013, it was hovering around 790 million and by November 14, 2013, it had already reached 1 billion. According to DEWM‘s OTC Markets profile, it was approaching the 2.4 billion mark a month and a half ago. At the same time, the discounts embedded in the notes’ conversion features meant that some people had the opportunity to flood the open market with a huge amount of cheap stock which, in turn, made for some scary drops. If DEWM is to sustain the current upward trend in the long run, the dilution must be kept in check. Any other problems?
Well, Dr. Moran is telling us that the revenues have grown year over year, but he’s reluctant to give us an idea of how big the jump is. It better be huge. During Q3 of 2013, DEWM logged just $52 thousand in sales and it finished the period with a net loss of around $340 thousand. These are not really the sort of fundamentals that can extend the current run in the months to come.
All in all, if DEWM is to continue surging in the right direction, the company will have to sort out a myriad of issues. The SEC filings, which, Dr. Moran said, will be out before the end of the year, should tell us if they’ve managed to do it. In the meantime, you just have to take his word for it.
And at this point, we should probably note that he has promised some things in the past that didn’t really materialize. On February 28, 2014, for example, he said that DEWM, along with Hemp Inc (OTCMKTS:HEMP), will launch the Kush Cakes “in Q2 2014”.
If last week’s letter to the shareholders is anything to go by, that didn’t happen. Right now, Dr. Moran is telling us that they have just contracted a certified food manufacturer who is supposed to deal with all the documentation, establish a testing procedure, and produce the cakes. Apparently, Dr. Moran decided that disclosing the reason for the delay is not that important.
