Alternet Systems Inc (ALYI)

[jimrockford]

Below is a section of a blog that I wrote last week on another site, concerning ALYI:

ALYI

Fundamentally, Alternet is in great shape and I expect we will see VERY profitable deals coming down the pipe ASAP. Currently the company trades at near shell-price, as the SP fell from 14 cents to 2 cents quite quickly a while back - and is only now just recovering. Why did this happen? Well, the President, a shrewd businessman, but a securities newby, trusted a long-time friend for a financing and was hoodwinked into signing a death-spiral financing. In essence, a loan was made that could be paid back in shares. As there was no floor as to what the SP conversion would be, the SP was shorted down by the group that made the loan – in order to make get a large amount of shares and make the spread.

Luckily for the company – and shareholders – the shorters were too clever by half. They sold the heck out of the shares short, but sold more than 5 million too many – USING THE WRONG CONVERSION PRICES. In a nutshell, they used the OTCBB price for converting the debt into shares instead of using the Bloomberg price, as was written in the contract. Bloomberg uses the Reuters feed, which uses otcMarkets. It is a huge difference – and one that will prove very costly to the shorts.

The shorters are desperate to get a huge block of shares cheap in order to get their short position back onside. It’s not happening, though – and in very polite words have been told to “f-ck off,” by the ALYI brass. These shorters bagged the SP and will now have to pay the price by doing their short-covering in the market.

ALYI is a real company with many real deals in the pipeline. Watch for NR’s and a very profitable next couple of years. I think we’ll see financings at much higher prices done by entities that care about the technology and the company’s abilities. I also personally am betting that the space they occupy (mobile commerce and communications) and the growth they are achieving will allow they and their JV partner Utiba (utiba.com) to be bought out in a couple of years.

IMHO, take a punt here, as I believe the SP will take off as more than 5 million shares must be bought back in the market by the shorters.

Jim

Here's a link to where you can find more of my blogs that contain sections on ALYI.

http://www.stockhouse.com//Blogs/ViewBlog.aspx?b=1435