Stock Preacher

Dynamic Response Group Inc. (OTCBB: DRGZ)

Dynamic Response Group Inc. (DRGZ) is a marketing company engaged in the business of Electronic & Multi Media Retailing, including print, radio, television and the Internet, and considers itself in the use of direct response transactional television programming, known as infomercials, to market consumer products. The Company is a developer and distributor of personal development, wellness and entertainment consumer goods and services through print catalogs, radio, direct mail, direct response television programming (also known as DRTV or infomercials) and the Internet. The Company uses the Internet to sell its products and to provide information for each product to consumers. The Company offers each of its products through their respective Web sites and promote its Web sites through visual media, print publications, product packaging and Internet links. The Company discontinued its NASCAR product offering and Turbo Cooker.

The Company is based in Miami, Florida.

Source: http://www.reuters.com/finance/stocks/incomeStatement?stmtType=INC&perType=INT&symbol=DRGZ.OB, https://trading.scottrade.com/quotesresearch/ScottradeResearch.aspx?symbol=DRGZ , http://www.dynamicresponsegroup.com/

Financial Summary

Net revenue decreased $4,616,945 or 64% to $2,631,227 for the three months ended June 30, 2009, as compared to $7,248,172 for the six months ended June 30, 2008. The decrease in net revenue was due primarily to the aforementioned fewer product offerings during the second quarter as compared to the same quarter in 2008. By eliminating these underperforming products, the Company realized a 92% decrease in returns and allowances, down to $192,813 for the three months ended June 30, 2009, as compared to $2,304,120 for the same three months 2008. Returns and allowances during the second quarter of 2009 were 7% of DRGZ’s gross revenue as compared to 24% for the second quarter of 2008.

As a result of the Company’s reduced product offerings in late 2008 and the first two quarters of 2009, its cost of revenues decreased $1,177,280 or 71% to $475,496 for the three months ended June 30, 2009, as compared to $1,652,776 for the three months ended June 30, 2008. Cost of revenues, as a percentage, remained consistent at 17% of the Company’s gross revenue during the three months ended June 30, 2009, and for the same period in 2008. As a result of the decrease in its sales, gross profit decreased $3,439,665 or 61% to $2,155,731 for the three months ended June 30, 2009, as compared to $5,595,396 for the same three months ended June 30, 2008.

Total assets decreased $686,990 or 17% to $3,301,206 as of June 30, 2009 from $3,988,196 as of December 31, 2008. The decrease was primarily associated with a $153,717 decrease in cash; a $517,839 decrease in accounts receivable; a $387,780 decrease in inventory and a $318,584 decrease in other current asset, which was offset by an $187,846 increase in direct response advertising cost.

As of June 30, 2009, DRGZ owes $6,703,406 in accounts payable and accrued expenses to vendors and media providers and $74,507 to officers, employees and consultants to the Company for accrued wages and consulting expenses. The balance due to officers, employees and consultants accrues interest at 12%.

The Company has incurred recurring losses from operations, has limited cash and cash equivalents that raises substantial doubt about the Company’s ability to continue as a going concern. As of June 30, 2009, the Company had cash and cash equivalents of $1.5 million, current liabilities of $6.8 million and stockholders’ deficit of $3.5 million; however, during the six months ended June 30, 2009, the Company recognized a net profit of $59,959.

Given the Company’s results from operations, current forecasts, and financial position as of June 30, 2009, its present capital resources may not be sufficient to fund its planned operations through and beyond 2009, and/or the Company may require significant additional funds in maintain operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. If DRGZ is not able to reduce or defer its expenditures, secure additional sources of revenue or otherwise secure additional funding, it may be unable to continue as a going concern, and may be forced to restructure or significantly curtail operations, file for bankruptcy or cease operations.

The Company cannot assure shareholders that it will successfully defer, reduce or eliminate certain operating expenditures or that it can obtain additional funding on reasonable terms, or at all. Further, if DRGZ raises additional funds by issuing equity securities, the stock price may decline, existing stockholders will experience significant dilution, and the newly issued securities may have rights superior to those of existing shareholders.

Source: http://ir.stockpr.com/dynamicresponsegroup/sec-filings

Analyst Consensus

Chart not available.

Source: Financial Times.com

No consensus analysis data available.

Source: http://www.reuters.com/finance/stocks/estimates?symbol=DRGZ.OB

Investment Highlights

DRGZ announced on October 19, 2009, it will start the national media campaign to roll-out its Medico Express diabetic supply products to the Hispanic market. The Company will begin airing television infomercials on Univision, Telefutura and Telemundo the three most watched Hispanic speaking stations. As the only company nationally addressing this niche, DRGZ projects revenues from Medico to reach $13 million in 2010 more than tripling to $40 million by 2011. The Hispanic market for diabetic products is estimated to be $748 million in the continental U.S. and is expected to surpass $1 billion in the next few years according to the Center for Disease Control. DRG’s Medico Express offers the core products that are used regularly by diabetics. According to the Company, studies show that Hispanics are almost twice as likely to develop diabetes as Caucasians of similar age which supports the fact that the Company’s actual market test results far exceeded management’s initial expectations.

Last month DRGZ announced that the test results for its subsidiary Medico Express have met or exceeded all Company projections and Medico’s diabetic supply products will be ready for mass distribution immediately. Dynamic Response Group is now hiring call center personnel for both English and Spanish speaking representatives to begin its national roll-out in coming weeks. Strong results in the Spanish demographic led Dynamic Response Group to also test in the English speaking market. Mirroring the Spanish results, the Company discovered extremely healthy demand among this demographic as well. Medico Express now has the authority to sell its products in all 50 states. The Company recently received Medicare approval for Medico product reimbursement.

DRGZ last month announced that it has entered into an investment banking agreement with Gemstone Securities LLC of Clearwater Florida whereby Gemstone will advise the company on merger and acquisition strategies, capital raising activities and corporate development opportunities. In the Company’s constant endeavors to increase shareholder value, it feels the investment banking arrangement with Gemstone will help leverage existing opportunities to expand its business.

Source: Scottrade.com, Reuters.com, http://www.dynamicresponsegroup.com/index3.html

Technical Analysis

Source: www.stockcharts.com

Moving Average Price Compare

No current signals.

Bollinger Bands

DRGZ is trading above its upper Bollinger Band. Relative to recent price action, the stock is currently overextended and due for either a pause or retracement.

MACD

The MACD for DRGZ currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9day moving average. Second, the MACD is above 0 which implies that the underlying moving averages are trending higher.

Comparative Analysis

Source: Reuter.com, Nasdaq.com

Insider Trading Activity

Net Share Purchase Activity

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