Valuation can be puzzling – particularly when it comes to penny stock companies. Often, the financial markets and investors place a value on the company that is far beyond its evident worth. To borrow a thought from the late Henny Youngman - take Amerossi EC, Inc. (Pink Sheets: ARSS), please. The Company, whose stock traded at $2.55 a share on
Perhaps even more striking is the fact that ten days earlier, on October 16th, Amerossi shares hit $4.40 – bringing the Company's market cap to more than $23 million.
Not bad for a business that had $235 to its name as of
Where, we wondered, was the value in that?
Deep End of the Gene Pool
Amerossi says that it wants to become a "major player" in the development of natural resources around the world. The Company claims that it is engaged in "natural resource development in the oil, gas, and precious metals areas including the exploration and drilling for itself and other companies." As a practical matter, there is no indication that Amerossi has any material operations.
Amerossi has the sort of curriculum vitae that is typical of many tiny penny stock companies with big ambitions and few bucks. Until May 2006, the Company was known Microgenix Filtration Systems, Inc. Microgenix set out to become a distributor of "specialized filter systems" for residential use, but "shut down" that operation and began looking for new opportunities.
Neither Microgenix nor Amerossi filed regular financial reports with the Securities and Exchange Commission, but both entities filed financial disclosure documents with Pink Sheets. Those filings reveal one intriguing similarity; as of
The Company has changed more than its name in the past year: the place of incorporation has changed; corporate offices have shifted across the Pacific; and a new management team is in place.
In January 2006, before changing its name to Amerossi, the Company moved its corporate home from
The Company's management changed as well. Sandy Winick had been the sole officer and director of Microgenix, serving as CEO, President, Secretary and Treasurer. According to the Company, Winick had been employed in "several enterprises" over the past fifteen years, had managed a non-alcoholic wine facility in
Winick, however, apparently is gone – at least from active management of the Company. In his place are Nimit Khongsombom (President and Director) and Poranee Tanomlak (Secretary and Director) – both of
Investors may wonder how this experience would qualify the new management team to help the Company as it seeks for "new opportunities in the oil and gas exploration, production and distribution fields."
And then there is the question of shares and, more importantly, who controls the Company. Neither Mr. Khongsombom nor Ms. Tanomlak owned any stock in the Company as of
The Company implemented a 3 for 1 forward stock split on
The Spin-Off We're In
The transformation of Microgenix into Amerossi is only the most recent development in the Company's colorful corporate history. Microgenix initially emerged from another obscure public company, First Canadian American Holding Corp. – courtesy of Sandy Winick.
A brief look at First Canadian American – now called Blackout Media Corp. (Pink Sheets: BKMP).
First American Canadian was only one, temporary, incarnation of an entity that began its corporate life as MegaVision LLC in October 1995. The results have been consistently disappointing.
The first corporate change occurred in February 1997, when MegaVision merged into HealthCore Medical Solutions, Inc. HealthCore Solutions set out to establish and market a healthcare benefits program that would allow participants to benefit from discounts on ancillary healthcare products. HealthCore struggled to develop its business plan; expenses far outpacing revenues. For the year ended
Not surprisingly, the Company decided to shift direction. On
By the end of 2000, those plans had fizzled as well and Adatom's management team had resigned. Then, in January 2002, Adatom engaged in another reverse-merger, ceding control to a "foreign corporation" called The International Monetary Reserve (IMR). A Form 8-K filed on
Adatom now was a shell company – and it was about to give birth to a basketful of baby shells. Starting in July 2002, and continuing until May 3, 2004, Adatom (and its successor First Canadian American) filed approximately fifty nine Forms 8-K with the SEC, most of which alternatively announced, cancelled, or resurrected, dozens of spin-offs and proposed spin-offs. Most of the newly formed and spun-off companies had no assets, liabilities or operating businesses. Some had "plans" – ranging from repackaging bulk candies; to generating power from windmills; to producing master CDs and DVDs – but none of the documents filed by the Company demonstrated that any of the newly formed companies had the financial resources or management expertise to develop the planned operations.
In September 2002, Adatom changed its name to First Canadian American Holdings Corp. and moved its corporate home from
A July 11, 2003 spin-off gave birth to Microgenix Filtration Systems, Inc., a Canadian company that had been "set up to distribute bonded carbon filtration products in North America." First Canadian American did not provide any further material information about Microgenix, although a Proxy Statement filed in connection with the Microgenix spin-off indicated that Winick owned 25 million shares of First Canadian American – 83% of the outstanding stock.
Although First Canadian American was availing itself of the EDGAR system by filing Forms 8-K and Proxy Statements reflecting the spin-offs, the Company does not appear to have been current in its financial reports. First Canadian American has not filed any audited annual financial statements since November 2000, when it submitted a quarterly report for the period ended
In January 2006, First Canadian Holdings changed its name once more – to Blackout Media Corp. (Pink Sheets: BMPP). On
By Any Other Name
The genesis of Amerossi EC might end there – if not for another wrinkle. Amerossi EC was separated at birth from its twin - another "hot" stock that had its origins at Winick's First Canadian American. In June 2003, First Canadian American spun-off an Ontario Canada corporation called First Canadian American Trust Company – just another one of its myriad spin-offs, and one which was seemingly unrelated to Microgenix. First Canadian American Trust was intended to become a registered transfer agent for public companies in
The relationship between First Canadian American and Suncrest apparently survived the spin-off and name change. In December 2005, First American Canadian Holdings announced that it had sold "its interests in Kachina Gold Corporation and Terrablock Development JV Inc. to Suncrest Energy Inc." Terms of the transaction were not revealed, although a press release indicated that First Canadian American had received an undisclosed number of shares of Suncrest Energy. Those shares reportedly were subsequently distributed to First Canadian American (Blackout Media) shareholders
In January 2006, Suncrest changed its name to Amerossi International Group, Inc. (Pink Sheets: AMSN).
The similarities to Amerossi EC do not end there. Amerossi International also claims to be in the oil and gas exploration business. Its corporate headquarters are in
And, while the two companies have different telephone numbers, Amerossi EC and Amerossi International share the same fax number – (662) 711-1015.
Here again it is unclear how the Company's management team is qualified to manage an international oil and gas exploration business with interests in Eastern Europe. The President of Amerossi International is Winay Sangsombom. Mr. Sangsombom previously ran companies that developed housing and environmentally safe chemical products. Panatda Namprai, Amerossi International's Secretary, has a background in sales, marketing, business administration and office management and owned two retail companies.
And then there is this other unusual coincidence. The officers and directors of Amerossi International – like their counterparts at Amerossi EC – do not own any shares of the Company.
According to financial disclosure forms filed with Pink Sheets, Amerossi International has an interest in an oil exploration company in
The Touts Are Out and About
So who owns and controls Amerossi EC and Amerossi International if the officers and directors of those companies hold no shares? Someone evidently is intent upon promoting the two companies.
In recent weeks, dozens of spam e-mails have touted Amerossi EC and urged investors to jump aboard if they are "sick of hedge funds and flippers getting all the great new issues." One recent e-mail predicted a short term target price of $6 to $8 for the Company's shares – and a long term price of $10 or more."
The e-mails provided no meaningful facts about the Company; indeed, there does not seem to be any information that would justify even modest enthusiasm for this stock – much less its current valuation. So promoters have fallen back on a time-tested technique – trying to make their readers believe they are getting a "hot" tip.
"IF YOU ARE RECEIVING THIS EMAIL, YOU ARE AMONG THE FIRST PUBLIC INVESTORS TO KNOW ABOUT ARSS !!!," one promoter declared.
Of course, the promoter neglected to mention that millions of these e-mails, and variations on this theme, have been circulating to every potential investor who does not have a spam filter on their computer.
Other spam e-mails recommend shares of Amerossi International – although the price projections have been far more modest since Amerossi International stock has been selling for around $.0015 a share. One promoter has been calling Amerossi International a "Strong Buy," while predicting a "5-day" target price of $0.10 a share and a "60 day" target price of $0.50 a share. Another tout called for a "best case scenario" of $1.55 a share.
Amerossi International's stock price has barely moved in response to the aggressive campaign, but volume has soared. For example, over 12 million shares traded on October 5th, at the height of the e-mail promotion.
Not surprisingly, none of the promoters focus on the activities of these two companies or their financial condition. And none of the e-mails reveal whether their authors have been compensated for touting the two stocks, and, if so, by whom.
IF YOU HAVE QUESTIONS OR COMMENTS FOR STOCKPATROL.COM, CONTACT US AT firstname.lastname@example.org