America Asia Petroleum Corp. (fka AAPU)

[stervc]

AAPM**Fundamental DD to Consider…

Having Financials filed to show on the pink sheets website is good. It would be much better and considered more legitimate if it is filed with the SEC. Just getting them done and filed with pinksheets.com is at least a start in the right direction compared to your average pink sheet stock.

I read in previous PRs and their filings that they have hired an SEC Law Firm, preparing to file their 15c2-11, had net profits of nearly half a million, had over $29 million in Revenues from a 9 month period, scheduled to meet their goal of $35 million by the year ended, and has a patent on their technology that is generating these Revenues to keep them a profitable company. Maybe it’s me, but I really think AAPM is fundamentally worth being researched by all investors. Although this is the pink sheets market and you just never know, I find it hard to believe that a company would go this far to have made all of those things up. If I am wrong, then I will just stand corrected.

Before reading any further, please understand some things. Huge volume going through any stock with no significant movement can mean dumping of shares, naked shorting, or just flat out accumulation of the float no matter what anyone says or posts. Personally, I don’t know. I’ve put together some fundamental thoughts based upon what we do know from some facts filed by AAPM that could logically support why AAPM should be trading at .00846 per share.

The figures below are derived from what I see as logical deduction which might be considered very illogical to many. I really don’t feel like repeating some of my old experiences so please consider these only as speculative in nature. (Believe me, it’s a long story as I have been wrong before.)

Although I do not think the OS is as filed right now, I see where the outstanding shares/OS is 1,020,250,000 since their last filing of their financials on pinksheets.com as of 30 Sep 06. The Company stated that AAPM had over $11 million in shareholder equity which represented approximately $0.005 per share.

The .005 per share is actually a Book Value (BV) and not the Earnings Per Share (EPS). The BV is the value of the assets sold and considered to be awarded to shareholders if the company went Bankrupt with no debt. This is what the amount of .005 per share represented in their PR. Keep in mind that since AAPM is profitable and debt free, such logic should apply.

Consider the basic formula below given what the company has told us to derive the OS:

Assets – Liabilities = Equity
Equity ÷ OS = BV

Since we don’t know the OS and it’s what we are trying find out, then we must solve for “X” with “X” being the OS. So…

Equity ÷ X = BV

Which is the same as below to solve for X…

Equity ÷ BV = X

So…

$11,000,000 ÷ .005 = 2,200,000,000 shares outstanding

OS = 2,200,000,000

From going back to research the volume history of AAPM since the 13 Dec 06 time frame in which that release of equity was announced, I will have to guess that the OS is 3,000,000,000 shares for a worse case scenario. I like the thoughts Cargo_hauler displayed. Taking into account their 120 million OS before their 10-1 forward split that was done months ago and this would be like AAPM going from 120 million shares outstanding to 300 million shares outstanding. So the increase is not bad in my opinion since we are still taking about a profitable company. I do think the OS is 2.2 billion, but let’s stick with 3 billion for the rest of these considerations.

If Net Income for the period nine months ending 30 Sep 06 equates to $426,098 or about $142,032 per quarter for 3 quarters, then I am guessing that for the year ending 31 Dec 06 Net Income equates to $142,032 x 4 = $568,128 for 4 quarters or Annually. I think this because their announcements of Revenues still increasing as scheduled.

Consider below for an Earnings Per Share (EPS) derived from what they publicly made known for profits.

From what was filed with pinksheets.com as of 30 Sep 06 the EPS is as below:
$468,098 ÷ 1,020,250,000 = .00041 per share

I do not believe that their EPS is that high, but I do believe that AAPM is profitable still. Please consider what I derived for an annual EPS as from explained above using the annual amount of Net Income to be $568,128 for 4 quarters given what was made in 3 quarters and an OS of 3 billion shares:

$568,128 ÷ 3,000,000,000 = 0.000189376 per share

So with rounding, below is what could be considered its annual EPS:

EPS = .0002 per share

The .0002 EPS is a more fair assessment, annually, in my opinion. The first thought that should come to mind is that most stocks usually trade 15 to 30 times higher than their EPS. Go to any stock on the major market and compare its stock price to what they announced as their EPS. For the market that AAPM is in, it would be expected to trade 42.30 times higher than its EPS as indicated in the link below:
http://biz.yahoo.com/p/125conameu.html

This is what as known as its growth rate or PE ratio for those of us who are still trying to learn these fundamentals a bit more like myself. The PE ratio is 42.30 for the market AAPM would reside to trade once trading on a higher exchange as we expect. This would mean that its market would grow to see them as indicated below:

PE Ratio x EPS = Where a Stock Should be Fundamentally Trading

42.30 x .0002 = .00846 per share

Given from what was filed on pinksheets.com, AAPM should very well fundamentally be trading somewhere in the area of .00846 per share. Even if I am half right or even a third right with what I considered above since 42.30 is a high PE Ratio, you still can considered that AAPM in being a profitable company might be significantly undervalued at .0002 per share.

These are only my thoughts that made me decide to take the risk for rewards with AAPM. Much was derived not so much from speculation, but more from facts that was publicly released by the company as Net Income, Equity, and their Book Value. These are all key fundamental variables for assessing the valuation of a stock. I appreciate your correcting of anything seen wrong and the sharing of your thoughts.

v/r
Sterling