Alliance Creative Group, Inc. (OTCMKTS:ACGX) Soars Even Higher, Hires Pumper

Yesterday their stock surged upwards with renewed strength and added the massive 81% to its value closing just below a penny at $0.0096, price last visited by the company last August. Investors were so enthusiastic that they managed to shift the record for the last 5 months volume of 132 million shares. 

The current upwards trend was sparked by the impressive results achieved by ACGX for the fiscal 2013. According to the annual report they had:

• $265 thousand cash
• $4.2 million total current assets
• $2.6 million total current liabilities
• $10.7 million revenues for the year
• $266 thousand net income

By now you must be wondering why a company that not only has more than 10 million in revenues for both 2012 and 2013 but actually managed to finish the period with a positive bottom line has been struggling to leave the double zero prices ranges. Well, there are a couple of very good reasons.

First of all more than half of their current assets consist of accounts receivable, $2.5 million to be precise, that may not be collected in full. Next come the $1.3 million in notes and debentures that could be converted into more than 750 million shares. The CEO of the company Mr. Steven St. Louis owns 100 million restricted common shares and 4 million preferred shares that prior to January 7, 2014 could be converted on 100 to 1 ratio into common shares. On that date though the preferred stock were amended and now each one can be turned into 200 common shares. 

For the moment ACGX have been able to keep the dilution at manageable levels but they are nonetheless approaching the 750 million authorized shares with 566 million outstanding as of yesterday. 

Another serious red flag is the email alert sent by the paid pumper Blue Horseshoe Stocks right before the start of yesterday’s trading. According to the disclaimer the newsletter received a compensation of $10 000 directly from ACGX for a whole month of email touts. 

If the company continues to expand its operations it might be able to offset the negative effects of the pump and the dilution of the common stocks and for now the signs are positive with $2 million in revenues announced for just the first two months of 2014. Still the risks around the stock are serious enough to demand caution as ACGX has made similar positive runs in the past that didn’t last for too long. 

Yesterday the marijuana sector finally showed some signs of recovery after nearly a week of devastating corrections caused by the shocking suspension of Growlife, Inc. (OTCBB:PHOT) by the Securities and Exchange Commission. Primco Management, Inc. (OTCMKTS:PMCM) bounced by exactly 20% and returned to $0.003 per share while Plandai Biotechnology, Inc. (OTCMKTS:PLPL) managed to save itself with a last minute surge that brought them 14% in the green at $0.57.