Agrieuro Corp (OTCBB:EURI) Stays Calm on Day Two
Agrieuro Corp (OTCBB:EURI) started its life as Artex Corporation and its original business plan involved selling popcorn through mobile carts in Poland. Not the most conventional of ideas for a public company, but the SEC didn’t seem to mind. On September 16, 2014, Artex’s S-1 registration statement was declared effective – an action that, as we’ll find out in a few minutes, could shape the stock’s future.
It became apparent very quickly that the popcorn business isn’t going to work. Less than a year after Artex became a public entity, it went through a reverse merger which was accompanied by a 40-for-1 forward split. The headquarters was moved from Poland to Romania, the new name and ticker symbol went into effect, and the company entered the agriculture and hospitality sectors.
The management team (also new, of course) say that they eventually want to develop a luxury resort on the Danube Delta, but for the time being, EURI‘s revenues are generated through the sale of reed. And the business is not exactly blooming.
During Q3, for example, they expected to sell 250 thousand bundles of reed at approximately €1.60 per bundle, but in reality, they only managed to shift about 99 thousand at around €1.30 apiece. As a result, the financial statement looked like this on September 30:
- cash: $13 thousand
- current assets: $188 thousand
- current liabilities: $2.3 million
- quarterly revenues: $151 thousand
- quarterly net loss: $96 thousand
The management team say in the 10-Q that the next reed harvest isn’t due until March 2016 and they admit that in the meantime, sales will probably be quite slow.
The pumpers will tell you none of these things. Instead, they’ll tell you that it’s worth investing in EURI and by the looks of things plenty of people are ready to trust them. The promotion is carried out by some of the smaller newsletters and, for the time being at least, it’s a bit hard to keep track of. Nevertheless, the effects are rather profound.
On Friday, EURI logged a dollar volume of almost $1 million and it gained a massive 95%. Yesterday, trading was a bit slower, but with more than $600 thousand in dollar volume, the ticker was still among the hottest OTC offerings. A 7% jump resulted in a close of $0.44 per share. Overall, the performance so far has been impressive, but you should be careful not to get carried away because the red flags are plentiful and they’re flying high.
Quite apart from the fact that EURI‘s market cap currently sits at $112 million which isn’t really in line with the company’s business operations, there’s the matter of the people paying for the pump. If they’re willing to shed money on a promotion, they probably stand a good chance of profiting from it.
Which brings us back to the S-1 registration form we mentioned in our first paragraph. As you can see, it registered 10,000,000 shares which were offered to the public at a price of $0.01 per share. Of those 10,000,000 shares, some people whose identity hasn’t been revealed bought a total of 2,100,000. Thanks to the forward split from September, those unidentified people woke up one morning holding on to as much as 84,000,000 EURI shares for which they originally paid a little over $20 thousand.
Whether that has anything to do with the ongoing promotion is for you to decide.
