Want to briefly elaborate on some our AMFE due diligence. Seems there was some misunderstanding when we called sell and want to make clear it was for the dip that did indeed happen. In no way do we intend to take them off our main list.
$AMFE is a very stable and well managed company run by a very intelligent CEO that recently made an incredible acquisition, Snakes & Lattes. This acquisition is in a geographical market that has witnessed continuing phenomenal growth to the tone of 25% to 40% increases annually over the last decade, has topped over $1.2 Billion in annual sales in 2016, and shows no signs of slowing down. We discovered a global trend in this area that is growing from university campuses, to store fronts, to online groups, right down to families staying home and playing table top games, and all in record numbers. Another interesting trend we found is over the last few years, well known celebrities are coming forward showing their enthusiasm of table top games from people such as Will Wheaton (who I suggest to follow online if interested in this market), Woody Harrelson, Seth Rogan, Jessica Alba, Kris Allen, Jerry Seinfeld, Rich Sommer, Jorge Garcia, Simon Helberg, and even the Green Bay Packer's locker room to name just a few. This has drawn even more attention to the table top game industry and has fueled even further a cultural shift and demand unlike we've never seen before in this market.
Snakes isn't just another place to eat and hangout. It's a lifestyle brand. This brand brings the people who live this lifestyle together under one roof any given day of the week. And though the Snakes 'concept' is nothing new, their version of this 'concept' is catching on like wild fire in an entirely new market. It's a concept that can be dated back and compared to markets such as playing card rooms of the 1800's all the way to pinball and video arcades that successfully prevailed through and up to the early 1990's. There was a quiet period of 'out of the home' interactive entertainment of such when home consul video games exploded in the mid 1990's, but this period is also when establishments such as Applebee's, Hooter's, Bennigan's, and TGIF increased immensely in popularity. By the early 2000's though home gaming was and still is very popular and growing in record numbers, younger generations began to prefer to simply get out and interact with people of their own culture as opposed to being planted in front of the TV or computer at home but, until the last decade or so, they had nowhere to go. This is where this 'gap' is being filled by businesses such as Snakes to meet this incredibly fast growing demand and so far from what we have found, Snakes is no doubt one of the first out there and so far, the only publicly traded one of it's kind.
In a recent email I sent to the CEO, I expressed my concern of the overwhelming interest in his GROZone sub over Snakes and the competition his GROZone sub will face. In short, he told me he was indeed overwhelmed by inquiries pertaining to GROZone by almost 9 out of 10 emails. He also said he too was at a loss to the sudden interest in GROZone and lack of inquiries to Snakes. He did assure me that Snakes is their number one priority and the company's main focus and will be for years to come. He also assured me they are well aware of the competition in the MJ arena and are still looking further into them. He explained the GROZone update released the other day is simply because he's a man of his word and followed through with an update as promised to shareholders in previous press releases and, hopefully to answer the emails he's receiving pertaining to that sub. That being said and through further communication, I learned he is definitely able to easily and successfully multi task several profitable subsidiaries. And though I still believe that GROZone will not be a major source of their income, I believe that they will run it efficiently and on a profitable level but there is no question of a doubt, hands down, Snakes is their main priority.
As an avid investor in high risk stocks, I have no choice but to use filings as the main tool to evaluate the performance of my investments. What I depend on is their ability to increase eps, which usually indicates revenues are increasing while operation costs are being well managed, and watching how well they manage liabilities to assure they are trending lower compared to increasing assets. And though it's a timely process for a growing company to reflect true book value, as long as share issues are limited and these factors are trending nicely quarter over quarter, sometimes year over year, eventually it will all come together and true company value will be reflected in the pps.
Going through their filings, revenues being reported before Snake's numbers were on the books were not impressive compared to the share structure and were very inconsistent when compared to previous filings. But, there was zero toxic debt and very minimum liabilities which became very attractive with the 'then pending' acquisition. For the periods ending June 2016 and Sept 2016, they reported zero assets which along with the Nov 16th PR addressing debt reduction, was taken as a signal indicating that they're cleaning up the books to make room for Snakes numbers. During the corresponding time frame of the Snakes acquisition and the announcement of addressing debt reduction, it's noted in filings they issued roughly 120 million unrestricted common shares for debt reduction since last August. This signal along with current events, could indicate that the business is on the brink of nice expansion, very confident in their future, and believe they will indeed be able to create a market in order for debt holders to sell their shares at required prices and they can move forward with their business plan. This debt can be figured to amount to roughly $1.4 million as outlined in their last reported liabilities and though the CEO would not comment on this, I estimate with the additional 120 million shares issued, at $1.4 million that would be an average pps of .011 which, could explain the seemingly endless selloff in this range if these are indeed debt holders cashing in. Once the debt is done if that is indeed where the shares are coming from, and if the company can continue to increase revenues while well managing assets, liabilities, and expenses, over the next few quarters or maybe into next year they may be ready to start looking for some real investment capital. Another strong signal of company confidence, are the shares recently flipped into preferred positions.
One last item I wanted to point out is the increase in accounts payable and accrued liabilities in the amount of $3.5 million. Though I inquired about this number in detail with the CEO as well, for apparent reason he was not able to comment. But it can be concluded that this is the debt the company inherited from Snakes which, would explain why they were able to acquire this amazing business for a mere 20 million shares when the pps was well under a penny. Speculating, it appears the CEO saved Snakes from possibly going under and from inexperienced previous management and is already well into the process of turning it around. This also shows that the CEO is no doubt a very intelligent and savvy businessman who just brought tremendous value to his company over night.
So now we're waiting for the next Q to grade the company on their progress. We're going off a bottom base of revenue at $1.542 million for the three months ending Dec 31st, an EPS of .0004, current assets of $5.007 million, and current liabilities of $4.880 million. As well and even though it has been PR'ed, we're still waiting on the company to officially update their OTC Website profile or produce a filing to confirm the share reduction.
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