Alliance Creative Group Inc (ACGX)

[RDG013]

Pian0wire, as long as there is convertible debt out there and no restrictions on converting other than the max shares anyone can hold at any single time, conversions will continue. To this point, it appears ACGX prefers to allow the debt to fully convert into shares, rather than paying the debt down with any available company funds. As long as that remains the case, larger hits of dilution from new conversions can be expected and will continue to put ACGX in a long term downward PPS Trend.

Keep in mind that this is not necessarily a bad thing for the company, as the company can let the debt convert into shares, then once it is all converted, R/S the share structure, then have a nice low O/S without the convertible debt hanging over it. That being said, those holding long would obviously be hurt by that, but those buying after the R/S(assuming convertible debt gone at that time probably at least a year down the road)should be able to trade on the actual income statements, as the PPS would be more reflective of any net income at that time with no convertible debt weighing down the equation.

That being said, what if ACGX took the $300K that they stated was unused on their new bank line and made an offer to the debt holders for a sizeable paydown in exchange for a 12 month moratorium on new conversions? For at least the next nine months, you would see the stock trading higher, then depending on what new arrangements had been made after nine months, could be longer. Of course, that would mean using company funds to pay down the convertibles, rather than converted shares. While this would be the best option for the shareholders,this may not be the best choice for the CEO and the company in the long run.