Penny stock tied to Local Fitness Outfit
By Kim Nilsen
Triangle Business Journal
December 10, 2004
A sudden, steep and unexplained rise in the trading of shares in gym operator Absolute Health and Fitness, a company with Triangle roots, has sounded alarms with over-the-counter market watchers.
The small cap stock began to gallop in mid-November. In December, it took off. The company's share price, which had hovered as low as 12 cents, climbed to a yearly high of $5.08 in early December as daily trading volume approached 10 million shares.
The Web service Hotstockfinder.com promoted the stock on its main page on Dec. 8, putting the company's six-month share price target at $10. Visitors to Pennystockpro.com found promises of "600% Profit Potential In 6 months if you BUY AHFI Now!"
"The bubble is going to burst eventually," says Jay Lee, president of The Bellwether Report, which tracks the market for investors. "There's nothing of substance there that I can see."
Pink Sheets, a New York company that monitors the daily movements of over-the-counter stocks such as Absolute Health, posted a warning on its Web site about Absolute Health after receiving complaints about faxes and e-mails promoting the stock that might violate federal law.
Bellwether included Absolute Health in a Nov. 15 trading alert, which noted that the company's shares were trading up 25 percent on "no corporate developments at all."
Absolute Health's Web site on Dec. 8 wasn't working. Thomas Flynn, the company's vice president of sales and marketing, did not return a phone call.
Yet, eager investors are pouring dollars into a company that hasn't released any news, hasn't filed reports with the U.S. Securities and Exchange Commission and hasn't delivered financial reports with Pink Sheets, Lee says.
The name of Absolute Health and Fitness in May was changed from Ornate Holdings, according to Pink Sheets records.
Pink Sheets can't reach Absolute Health management. The company's last address, provided in June, is one on North Harrison Avenue in Cary.
Its president, according to the profile on Hotstockfinder.com, is Roland Rohm.
The company's last known address, according to Pink Sheets, leads to a row of old-fashioned postal box windows at a mail and packaging store in a strip mall anchored by a Food Lion.
The last phone number listed by Pink Sheets for the public company rings the corporate office of Beyond Fitness, a chain of gyms in the Triangle. Phone messages were not returned. Flynn is a partner in Beyond Fitness, according to employees.
"This stock is one that in my view should be suspended" from trading, says Cromwell Coulson, chief executive of Pink Sheets.
The Securities Division of the North Carolina Secretary of State's Office has received no complaints about Absolute Health, says division spokeswoman Liz Proctor.
Despite the clouded history, Davidson, N.C., businessman Jerry Hancock invested money in Absolute Health. Hancock dabbles in day trading, and he made $150 with a small investment in Absolute Health on one day.
Hancock says he became suspicious when he couldn't find any information on the company. "Like a fool, I went back for more," he says.
By Dec. 7, the fitness company's trading volume and share price were sagging.
The sudden cooling left Hancock with a loss of about $380 on his investments as of that day.
Hancock and others are trying to draw a line between Absolute Health and the Triangle's Beyond Fitness.
According to a backgrounder posted at Hotstockfinder and TheLion.com, Absolute Health operates a handful of unnamed gyms in the Southeast but is pushing to consolidate the fitness industry by snapping up independent gyms.
The source of the information, which forecast $23 million in revenue this year for Absolute Health following an alignment with an unnamed major fitness center operator, isn't listed.
The company's last known address, box 116 at the Cary postal store, has been listed as a business address for Randall Rohm's fitness business Double R Enterprise, according to records on file in the North Carolina Secretary of State's Office.
According to Better Business Bureau of Eastern North Carolina files, Double R does business as Beyond Fitness, a gym network that includes several former Gold's Gym locations in the Triangle.
The BBB has prodded Beyond Fitness to clarify its ownership and respond to complaints. "It's a very difficult trail to follow," says BBB President Beverly Baskin.
In May 2003, Ted Sampson told Triangle Business Journal that his network of fitness centers had shelved the Gold's Gym name because the franchise operation was too restrictive when it came to the number of locations in a market.
That January, Sampson took on Jeremy Jaynes as a partner in the gyms. By December, Jaynes became the first person in the United States to be arrested on felony Internet spam charges. Jaynes was convicted last month.
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