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"People groan about boxing," Chung says. "But there is a lot of money in boxing, and we can take advantage of that."
Many longtime stockholders who bought into the idea of Kanga Roddy are disillusioned with the company's foray into boxing at all. Others are baffled by what appears to be an unfocused business plan filled with seemingly haphazard and even contradictory projects. When they first went public, Chung and Chan eagerly checked American Champion's stock chat page on Yahoo! every day. They thought it was neat to see what stockholders were saying about the company. Now, almost 8,000 postings later, the Yahoo! bulletin board is only a bitter reminder of how unforgiving the market -- and investor -- is.
It has become popular among bulletin board users -- upset with what seem to be the bumbling, dazed, and confused business practices of the company's founders -- to refer to the pair as "Cheech and Chung," despite the epithet's racist undertone. "What a scam, what a circus, what a bunch of clowns. Their hype is nothing short of comical and embarrassing. This thing is going nowhere fast," one person writes.
"I hope you people can sleep at night!!! Go to hell!!!" rants another message directed at Chung and Chan.
And then, of course, there are the death threats.
"I never told my wife about that; she'd never let me come to the office. There are a lot of loonies out there," says Chan, who now ignores what investors say on the postings. "When you get crap like that, you don't want to lower yourself to that dialogue. It's just barroom talk."
Chung isn't fazed by the criticisms either. "Joe Montana doesn't care what people say about him in the sports pages," he reasons.
Death threats aside, public pressure from the bulletin board doesn't help, and American Champion's mishaps highlight a new phenomenon in the stock market. "It is clear that people are greedy and very ill-informed," says Brett Trueman, a professor at UC Berkeley's Haas School of Business. "When they lose money, they want heads to roll. What they fail to realize is that it all happened because they took a big chance in an uneducated way. It is sad."
The message boards, he says, represent a new breed of investors who once lacked access to the stock market because of limited means or know-how. Now they can trade freely via the Internet, and with so many IPOs and start-ups, there are plenty of affordable stocks available. Today, the percentage of individual stock ownership is the highest ever, with the number of shares traded by individuals outnumbering those traded by institutions. "It is a pervasive phenomenon," he says. "Now everyone can play the market. Anyone from garage mechanics to waiters, who have a little spare cash and a desire to gamble."
And, when things don't go right, the chat rooms foster the equivalent of an electronic lynch mob.
"Can people say we made a preschool show and lost money? Sure," Chung says. "But we are not a dot-com, promising overnight success. We are a real company with a real product. We're not like a biotech company hoping for a cure. We're not just patiently waiting for the Kanga Roddy ship to come in. We are doing as much as we can to diversify the company and keep it going forward."
However, investors have legitimate reasons to complain about the company's record. Stockpatrol.com, a watchdog group that alerts investors to questionable companies, red-flagged American Champion in its recent Stock or Schlock? column, noting that the company's frequent use of convertible debentures was troubling. Offshore entities with addresses in Switzerland and Israel were the most willing sources to repeatedly lend money to American Champion, and then sell the discounted stock for a profit.
"I'm not so inclined to think fishy stuff is going on. It's just a very risky way to raise capital," says David Kathman, a stock analyst with Morningstar, who reviewed American Champion's filings with the U.S. Securities and Exchange Commission. "They're issuing debt in order to get cash to stay in business. Apparently, they've got these offshores willing to buy convertibles. But cozy deals like that can't last forever. This company is skating on thin ice."
In American Champion's most recent SEC filing, auditors from Moss Adams noted there is "substantial doubt" about the company's ability to continue as a going concern. "A 'going concern' letter is one of the worst things you can get," Kathman says. "So when you see one, you know it's a bad sign."
Chung offers no apologies.
"I'm trying to make this company profitable. I haven't done that yet, but I will. If it seems on the surface this could be a con, let me tell you this is real. If I just talked about Kanga Roddy, that's one thing. But you can see that it's happened," he says. "People say, 'You're just a salesman.' Of course I am. That's how things get done. If Columbus didn't convince a bunch of sailors to get on a boat, there wouldn't be a New World."