Frozen Food Gift Group Inc (OTCMKTS:FROZ) Surges on Acquisition News

In their press releases, Frozen Food Gift Group Inc (OTCMKTS:FROZ) seem insistent on pointing out that their business focus is extremely diversified. They say that they have invested in numerous enterprises and are looking to acquire yet more revenue generating entities. What they don’t say, however, is that so far, they haven’t been very successful.

We read in the latest 10-Q that there are numerous notes that can be turned into common stock with a 50% discount. More than 100 million shares saw the light of day between February 15, 2013 and September 30, 2013 and the majority of them were issued as a conversion of debt.

This suggests that they have managed to satisfy some of the liabilities, but during the same period, they issued yet more convertible notes which means that FROZ‘s financial situation looks worse than ever. Here’s a summary of the most important figures as of September 30:

• cash: $71
• current assets: $96 thousand
• current liabilities: $1.2 million
• no quarterly revenue
• quarterly net loss: $132 thousand

The triple-zero levels that the stock occupied until a couple of weeks ago are hardly a surprise considering the facts above. But why has it been moving towards the higher end of the charts lately? And why do some people around message boards reckon that FROZ should be a $0.03 ticker?

The reason for the surge is a press release dated February 10. According to it, FROZ have signed a letter of intent to merge with a private company called APT Group, Inc. The announcement says that APT register an average annual revenue of around $8 million and that they expect some significant growth during 2014.

Truth be told, APT does look like a solid venture. There are plenty of reviews on their MotoVox mini bikes and go-karts and most of them seem positive. Their small engine technology also looks clever enough and if FROZ actually manage to close the acquisition, their future financial statements should look a lot better. But will they be able to do it?

We’ll probably find out in a few weeks, but while we’re waiting for a confirmation, we should note that this is not APT’s first attempt at going public through a merger with a penny stock company. ProTek Capital Inc (OTCMKTS:PRPM) issued a similar press release back in August 2013 and the figures in it sounded just as exciting. In fact, if you put the two announcements side by side, you’ll see that they’re almost word-for-word identical. Unfortunately, a few months later, PRPM informed us that the merger has been called off.

Of course, the fact that this deal fell through doesn’t necessarily mean that the current one is about to suffer the same faith, but we reckon that keeping this little piece of history in mind might not be a bad call. Especially considering FROZ‘s previous optimistic announcements.

In February 2013, they issued a press release with which they informed us that they have completed the acquisition of a private enterprise called Miami Ice Machine Company (MIMCO) (another seemingly solid entity). Some shares saw the light of day as part of the merger, but according to the latest financial report, disputes around the validity of the deal have arisen which means that FROZ are now looking at ways of getting the issued stock back.

Will the same thing happen with the APT Group deal? Only time will tell.