Patrick: Even if DHMG were totally honest and legitimate, I would think that the Universal acquisition would increase the amount of insider stock for sale. Because of the overlaping ownership, many shareholders of DHMG may find that they now own more DHMG than they might want, and reduce their positions.
This happened to me a little more than a year ago. I had a big position in company X and also in a smaller company Y in the same industry. X bought out Y for stock (marketable, not restricted), and I found myself with a lot more X than I felt comfortable with, and unloaded the excess.
The real reason why I expect increasingly heavy insider selling is that the insiders know the truth about DHMG. Until audited results are filed for the year, if ever, outsiders looking at the company's news releases might believe that the company is nicely profitable. Combining its figures with Universal's will wipe out most of the profits, and an honest accountant will probably take away all of the rest of the earnings; insiders (and people that read this thread) know this, but the public doesn't, so that will give the insiders someone to sell to.
Speaking of accountants, there was this line in the 12/19/97 8-K:
"The Registrant is currently negotiating with several accounting firms and should retain a new accounting firm on Monday, December 22, 1997, which will be announced in by the Registrant in a press release as well as by filing another Form 8-K."
Looks like the company is a little behind that schedule. It will be interesting to see how DHMG will ever have an audited financial report for 12/31/97 if it doesn't have auditors. |
