Frozen Food Gift Group Inc (OTCMKTS:FROZ) Sinks Below $0.01

Many people believe that right now, Frozen Food Gift Group Inc (OTCMKTS:FROZ) is not the company it used to be a couple of months ago. Back in 2013 FROZ was nothing more than a no-revenue OTC-listed enterprise that had an interesting business plan and nothing more.

A reverse merger was apparently completed though, and the company is now advertised as a producer of the Motovox mini bikes and the developer of a clever piece of carburettor technology. According to the press releases from a few months ago, APT Group (FROZ‘s new subsidiary) registered tens of millions of dollars in revenues during 2013 and expects the growth to continue during 2014. More recent announcements tell us that there are some positive results from market tests which could suggest that the predictions might not be too far off the mark.

As you can see, all the prerequisites for an impressive climb are there, and indeed, a few weeks ago, this was exactly what FROZ was experiencing. The news about the acquisition hit the wire in February which resulted in the ticker surging out of the triple-zero levels. A month later, it dealt with the $0.01 per share mark with ease and it seemed like there was nothing to stop it from going further up. Many people were extremely excited about the run and predicted that levels of $0.10 or maybe even $0.50 are not that far-fetched. FROZ‘s current situation is a little bit different.

Of the last ten sessions, only one ended in the green. On April 17, the stock was hovering around the $0.02 per share mark, but yesterday, it dropped back to the sub-penny levels. Forty-five minutes into today’s session, it’s trying to recover, but unfortunately, it doesn’t seem to be extremely successful. So, what’s the reason for this?

It would appear that although there’s no shortage of people who are highly supportive of FROZ, there are some skeptics. On April 16, and entity called Broker Bank Securities issued a report with which they urged investors to “steer clear” from FROZ. Apparently, their biggest problem is the lack of official financial statements for the surviving company.

You can have a good look through the report and decide for yourself whether there’s any merit to it, but the fact of the matter is that according to FROZ‘s latest 10-K, they will publish the required comprehensive disclosures (including the audited financials) in an amended 8-K form “on or before June 6“. Until then, a potential investment can only be based on press releases.

And if you are indeed excited about the forward-looking statements and projections, you should bear in mind that the company’s past might be coming back to haunt it. Ironridge Global IV, Ltd now owns nearly 10% of the common stock after it filed some complaints against FROZ.

A quick look at the latest 10-K reveals some more disconcerting facts. The report doesn’t contain APT Group’s financials, but it does show us that back on December 31, FROZ had nearly $200 thousand in convertible notes all of which can be turned into common stock at a hefty discount.

What will happen to the notes? Nobody knows for sure, but bearing them in mind might not be a bad call.