Dynamic Response Group Inc. (fka DRGZ)

[RandyKCMO]

Seif79, I think you're question/concern is rightly asked and stated.

I have had a theory about the increase in Authorized shares that was confirmed by CEO Rice during the conference call.

The debt holders, $2.45 Million worth, have recently extended their notes for 18 months in exchange for reducing their conversion rate to an average of 60 cents per share. This is not the least bit dilutive to us...it's actual accreditive. If they would accept shares at that conversion level our debt would go away with a minimal amount of dilution

During the Conference call (if you've not listened to both of them you should), the company was very clear...we will not reverse split this stock at any where near current levels....then she said something that I've been thinking all along. Part of the debt agreement includes a covenant that limits dilution and/or the increasing the authorized shares. This came out when she mentioned that they were not able to increase the authorized without the consent of the longterm debt holders.

So both company and debt holders are between a rock and a hard place....apparently we're negotiating with potential employees and/or product patent holders who would be willing/would like to accept stock as part of their compensation packages. So do we want to limit potential dilution and possibly hinder the growth of the company OR do we risk some dilution in exchange for potentially accelerating the company's growth and increasing its ability to attract top talent? Oh the choices to be made.

I believe State of Florida corporate law would allow the consent of a majority of shareholders to decide whether or not to increase the authorized shares. The rest of the shareholders would most likely find out about it after the fact.

To me the choice of increasing the Authorized, say to 150 Milion shares is better than doing a reverse split. My reasoning, if company is in fact going to continue growing at the rate it is, I've made a case where a $4-5.00 stock price is not out of the question.
See my post: 4/14/2008 Addressing Long Term Potential: Is $4-5.00 Possible? (and noticed my projections were adding $50 Million to revenue annually--not doubling them):
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=28492322

If we end up doing a mild reverse split, I think it is entirely possible (maybe even probable) that we would eventually do a forward split once we grow and appreciate for a while on NASDAQ or AMX.

Yeah, I'm wearing rosy colored glasses...but I don't think anything I've stated is too far from realistic.





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