It has been more than a year since we reported on
AuGRID Corporation (Pink Sheets: AGRI). Little seems to have changed –
at least in several critical respects. The Company has stopped filing
quarterly financial reports with the SEC and still is searching for a
viable business. There is a disquieting sense that this Company is
running in place – if it is running anywhere at all.
AuGRID continues to announce new business ventures, but there is no
sign that any of them have proven profitable – or even marginally
successful. When we first wrote about the Company in October 2003, it
was trumpeting a plan to enter the market for flat-panel display screens
– relying on a licensing agreement with an English firm called
CeraVision Limited. There was just one problem. According to a
representative of CeraVision, AuGRID had not paid the required licensing
fees and the agreement had been terminated. See
Augrid Corporation - Another Rubin-Esque Venture?;
Augrid Corporation - S-8s Are Us;
Augrid Corporation - Is New Major Shareholder A Major Headache?; Augrid Corporation - Does Activity Equal Action?
Although AuGRID continued to lay claim to that license, it ultimately
acknowledged the possibility of a dispute, retaining counsel to explore
the status of the CeraVison license.
But AuGRID was not deterred by the fog surrounding its relationship
with CeraVision. In August 2003, the Company acquired Alysium
Corporation – another ill-fated venture. AuGrid originally claimed that
Alysium was “a diversified industrial manufacturer with an exclusive
technology in both ThermoCouple manufacturing and Nano Technology.”
Later, the Company said that Alysium was developing “body armor.” Still
later, AuGRID said that Alysium was “distributing specialty sensors,
drives and motors.”
Exactly what was Alysium doing? Not enough, as it turned out. On
March 30, 2005, AuGRID announced that it as a “cost cutting measure” it
had “temporarily” ceased research, development and distribution
operations at Alysium. Is this temporary interregnum likely to prove
permanent? AuGRID seems to be making a clean break with the
underperforming subsidiary. The Company said it was firing the Alysium
staff in Houston and Austin, Texas, relocating its corporate
headquarters to Cleveland, Ohio, exploring ways to unwind the Alysium
merger, and considering lawsuits against “three consultants and four of
the Alysium partners.” None of these measures sound temporary.
Meanwhile, Alysium was not the only flickering flame in the AuGRID
fire. In September 2003, the Company undertook yet another venture,
announcing that it would sell electronic products, including television
monitors, through a newly formed subsidiary called Optipure LLC.
Although the Company subsequently claimed to have signed up
“approximately” 15 dealers and distributors for the Optipure products in
the U.S. and abroad, it is not clear whether the subsidiary has
generated any revenues.
Any income that flowed from Alysium or Optipure seems to have been
short-lived. Indeed, the nature of AuGRID’s revenues – such as they are
– is something of a mystery since the Company has stopped filing
financial reports with the SEC. AuGRID’s most recent Form 10-Q, for the
quarter ended September 30, 2004, indicated that the Company had no
revenues at all between June 1 and September 30, 2004. During the first
six months of 2004, AuGRID generated revenues of approximately $254,000
from one or both of its ventures – far less than the nearly $900,000 in
general and administrative expenses incurred during that period.
Now the Company says that Optipure is about to gain traction in the
Middle East. Although AuGRID has shuttered its offices in Texas as a
“cost-cutting” measure, it recently announced the opening of a new
office in Dubai – claiming that a search is under way to select
distributors and installers for Optipure’s video and “soon to be
released” audio products.
Those potential distributors and installers are likely to be a tad
confused if they look for Optipure’s audio and video products on the
website identified in AuGRID’s May 26, 2005 press release -
http://www.optipure.com.
That website belongs to the Optipure Brand of Chemco Industries, “a
leading supplier of quality raw materials for the nutritional supplement
industry.” There is no mention of electronic equipment, video and
audio products, or AuGRID.
The dispute with CeraVision, demise of Alysium, and doubts
surrounding Optipure are not the only questions facing AuGRID. On
December 13, 2004, the Company issued a press release stating that its
trading symbol had been changed from AGRI to AGRIE and going on to say
that, as the result of a random audit, the Company was being asked to
comply with the provision of the Sarbanes Oxley Act that requires public
companies to use accountants who have registered with the Public
Company Accounting Oversight Group.
The Company said that its auditor, Henry Creel was working to “amend
this issue” and the Company’s “internal comptroller,” Stan Chapman, said
that AuGRID would “move swiftly to comply with the decision of the
auditor.”
What did Creel discover and Chapman implement? On January 26, 2005,
Henry L. Creel Co. Inc. was replaced as AuGRID’s independent auditor.
On May 25, 2005, Stan Chapman was removed as an Officer and Director of
the Company. AuGRID said that it would seek to hire an individual with
suitable knowledge of public company financial requirements. The
Company said that both men were terminated at the recommendation of the
Audit Committee, which, according to a Form 14A Information Statement
filed on September 30, 2004, consists of “non-management member of the
Board. That same Information Statement indicated that the Board was
comprised of Chapman, M.J. Shaheed (the Company’s CEO and President),
Mary Sloat-Horoszko (Secretary and manager of the Company’s day-to-day
operations) and Essa Mashni – and that only Mashni was not also a
corporate officer.
That would suggest that Mashni was the sole member of the Audit
Committee. His biography does not indicate any meaningful financial
background. Mashni is a pharmacist and a member of the American
Pharmaceutical Association, the Michigan Pharmacy Association, the
American Ramallah Federation and St. Mary's Antiochian Orthodox Church.
The December 13th press release implied that the symbol change for
the Company’s stock was somehow related to the NASD’s “random audit.”
That is not necessarily the case. NASD routinely adds the additional
“E” to a stock symbol when a Company is not in compliance with its
reporting obligations. Companies may be removed from the OTC Bulletin
Board if they have not demonstrated their compliance within 30 business
days. On February 3, 2005, AuGRID was removed from the OTC Bulletin
Board for failure to comply with NASD’s reporting requirements. The
Company now trades on the Pink Sheets.
And now it is making plans for a new venture and dropping a major
name along the way. On June 9, 2005, the Company disclosed that it had
completed production of a prototype “Home Entertainment PC Gaming
System” to be combined with its “Internet Audio System.” AuGRID stated
that it has “reached out to Microsoft” for a possible collaboration on
its Internet audio device.
AuGRID did not explain how it hoped to carve a place in the highly
competitive home entertainment market – where other players are
well-entrenched and far better capitalized. Nor did the Company
indicate how it is financing this latest venture, when the prototypes
were created and by whom and whether it has any patents or trademarks
for the product.
Is there any possibility that Microsoft will respond favorably to the
Company’s overtures? It seems like quite a reach. Alas, it would
appear that, once again, AuGRID’s reach may exceed its grasp.
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