Pumpers Trying to Help Greenestone Health (OTC:GRST) Recover
If you follow the trends in the penny stock promotion business, you will probably remember Greenestone Health (OTC:GRST). This is the company that with a couple of clinics in Canada that got pumped back in March. As we predicted in our previous articles, investors who got in on the hype and didn’t get out in time were left disappointed when the stock took a tumble and lost $0.13 or 30% of its value in a single trading session. Since then the ticker hasn’t really been able to recover and it has remained fluctuating in the $0.15 – $0.25 range.
Now, just three weeks later, PennyStockLocks, Stock Lock and Load, StockBomb as well as a few other promoters have set themselves the task of lifting GRST off the ground once again. What’s really interesting is the fact that this time, they are using words like “long-term” and “potential” and we’re not used to seeing those in promotional emails. That got us thinking: “Is it really possible?”.
Well, actually, there have been some developments around GRST recently. On April 1 they published the long-awaited annual report for the fiscal 2012 and the promoters are only too happy to tell us that in it we will find revenues 230% higher than the ones for 2011. We were quite eager to open the report and see if the pumpers’ optimism is well-founded.
Indeed, they are right that the revenues have jumped immensely during the last year. In fact, nearly all the figures in the report look more promising than the ones from years gone by. Here are the 2012 figures that got pumpers so excited:
- cash: $380 thousand
- current assets: $617 thousand
- current liabilities: $4.5 million
- yearly revenue: $5.5 million
- yearly net loss: $1.4 million
The twelve months of 2011, on the other hand yielded $1.6 million in revenues and a $2.4 million net loss. All in all, we can say that GRST have been keeping themselves busy but unfortunately, we still see the $4 million working capital deficit, the rather big net loss and the fact that they continue to issue shares like there’s no tomorrow.
In our previous articles we wrote about the massive dilution that GRST‘s shareholders have been put through and the new filing confirms that this hasn’t stopped. During the last quarter of 2012 alone GRST issued more than 4 million shares of common stock and they recently registered a further 11.5 million with the SEC.
In another recent filing we can see a familiar name – Asher Enterprises, Inc. We have seen them provide financing to many promoted penny stocks and we can see that every single note that is being issued to them has quite high interest rates and conversion terms that are favorable for Asher. The case with GRST is no exception – the interest is valued at 8% per year and the note is convertible at nearly 40% discount.
Having that in mind, it’s important to note that quite a lot of people seem to be desperately pumping GRST‘s stock and promoters like Small Cap Voice (SCV) have even invited the company CEO, Mr. Shawn Leon to speak about the future growth, the expertise of the staff and a host of other things that could get a lot of investors excited. Then again, SCV also invited the President of Labor Smart Inc (OTC:LTNC) back on April 2 and we can all see what happened to the share price shortly afterwards.
This goes to show that no matter how optimistic the whole campaign sounds, paid pumps often leave quite a lot of burned investors behind. That’s why it is crucial that you weigh the risks carefully and perform the necessary due diligence before jumping in on the excitement.