Amerossi EC, Inc. and Amerossi International Group, Inc. - Separated Before Birth

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 October 26, 2006, has at least 5,318,251 shares of common stock outstanding.  At least that is the number of shares Amerossi said it had issued as of June 30, 2006.  Assuming that the Company has not issued any additional stock since that date, Amerossi would have a market value of approximately $13.6 million.

 

Perhaps even more striking is the fact that ten days earlier, on October 16^th, 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 June 30, 2006 – and no revenues.

 

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 December 31, 2005, March 31, 2006 and June 30, 2006, each of the entities claimed to have $235 in cash and no other assets.  There also was one significant distinction; the unaudited financial statements filed with Pink Sheets indicate that, for the year ended December 31, 2006, Microgenix had gross revenues of $276,144 and expenses of $255,556.  The Pink Sheet filings do not reveal why the Company abandoned a revenue-generating business to search for "new opportunities"- or why it would soon morph into Amerossi.

 

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 Canada to Wyoming.  The Company's offices soon were on the move as well – but Wyoming was from their destination.  Microgenix maintained offices at 6021 Yonge Street in Toronto, Canada.  After becoming Amerossi, the Company moved its headquarters to 369 Moo 10 Kheha Nakhon 1 (Soi 9) Soi Chelermprakiet Sukhumvit 103 Rd. Nongbom Prawate, Bangkok 10250 Thailand. 

 

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 Ontario, Canada, and had acted as a liaison between companies, lawyers and regulatory bodies.  Winick's history is intriguing – but more about that later.

 

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 Bangkok, Thailand.  Mr. Khongsombom graduated from the University of Thailand, spent five years as a Navy pilot, and has been in sales since 1963.  Most recently he has been involved in real estate sales, development, management and appraisals.  Ms. Tanomlak studied business and computer science, managed for a grocery chain, and owns a health club.

 

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 June 30, 2006.  Not a single share.  Mr. Winick, on the other hand, held a substantial position in the Company when he was in charge.  Winick owned 250,000 shares of Microgenix's common stock as of December 31, 2005, roughly 15% of the 1,709,428 shares then outstanding. 

 

The Company implemented a 3 for 1 forward stock split on January 28, 2006, but that hardly accounted for a sudden, dramatic increase in the number of outstanding shares.  Between December 31, 2005 and March 31, 2006, the Company issued 718,918,316 shares of common stock – but the reports filed with Pink Sheets do not indicate who received the additional shares. 

 

On May 9, 2006, the Company declared a 1 for 25,000 reverse-split of the common shares, thereby reducing the outstanding common shares from 720,627,744 to 5,318,251.  Have Mr. Khongsombom or Ms. Tanomlak acquired any shares?  If not, who has?  The Company's public reports fail to answer these questions.

 

 

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 September 30, 1999, for example, revenues were $163,000, while expenses totaled $2,572,000. 

 

Not surprisingly, the Company decided to shift direction. On October 13, 1999, HealthCore entered into a reverse-merger with a California corporation called Adatom Inc.  Adatom planned to market products over the Internet by developing an online shopping network.  Unfortunately, profits again proved elusive and losses mounted - at an even faster pace than before.  For the six months ended June 30, 2000, Adatom's modest net sales revenues - $17,000 – were far overshadowed by its losses - more than $4.2 million.  Net losses for the nine months ended September 30, 2000, were over $8.4 million.  In September 2000, Adatom said it would discontinue its online retail operations in order to focus exclusively on potential international business partnerships with entities based in the People's Republic of China.

 

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 January 28, 2002 did not indicate where IMR was incorporated or whether it was engaged in any business.  An individual named Elvira Gamboa, identified as IMR's President, became the surviving Company's new President and joined the Board of Directors.  In April 2002, Adatom spun off all of its assets and liabilities to AQ Corporation, an Oregon corporation.

 

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 Delaware to Ontario. A month later, a Form 8-K revealed that Winick had become First Canadian's President and Secretary. 

 

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 September 30, 2000.  In June 2004, First Canadian American filed a Form 15-12G indicating its intention to terminate public SEC filings.

 

In January 2006, First Canadian Holdings changed its name once more – to Blackout Media Corp. (Pink Sheets: BMPP).  On August 14, 2006, Blackout Media filed a financial report with Pink Sheets reflecting net income of approximately $16,000 for the six months ended June 30, 2006.  According to Pink Sheets, Blackout Media is "a holding company with subsidiaries that conduct operations in areas of digital television, VOD, PPV, radio the internet and print."  Winick remains at the helm.

 

 

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 North America.  In September 2003, First Canadian American Trust changed its name to Suncrest Energy, Inc. and its place of incorporation from Canada to Wyoming.

 

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 Bangkok, Thailand, apparently in close proximity to those of Amerossi EC - at 367 Moo 10 Kheba Nakhon 1 (Soi 9) Soi Chelermprakiet 22 Sukhumvit 103 Rd., Nongborn Prawate Bangkok, Thailand 10250.

 

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 Russia, owns oil and gas lands in Russia, and is in the process of securing an oil rig manufacturing company in Romania. 

 

As of June 30, 2006, Amerossi International had no assets and no revenues. 

 

 

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 5^th, 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.

 

 

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