GlyEco Inc (PINK:GLYE) Support Themselves Through Paid Promotions

The paid pumps usually work like this: a third party pays the newsletters a considerable amount of money so that they can send out optimistic emails about the reviewed company’s future and the potential profits. People buy into the promises and, more often than not, the aforementioned third parties are the ones who actually profit from all the increased demand. Though similar, the case with Red Chip Companies’ promotion on GlyEco Inc (PINK:GLYE) is a bit different.

When you look at the fine print under Red Chip’s email, you will see that the awareness campaign that they initiated is actually paid for by GLYE themselves. According to the disclaimer it will last for a full year and the compensation method is rather different from the one that we’re used to. Instead of a cash compensation only, Red Chip will receive 28 thousand shares initially and 18 thousand options every quarter in addition to an undisclosed monthly fee.

Since, at the moment, the price of GLYE‘s shares is a little over a dollar, we reckon that the compensation will probably make the people behind Red Chip smile. But do GLYE actually deserve the attention that the promoters promise them?

GLYE is just one of the thousands of companies that have set themselves the task of cleaning the planet and making polar bears happy. As always the words “patent-bending” and “ground-braking” get abused a lot both in the emails and in the company descriptions all over the Internet. The core of GLYE‘s operations is the recycling of harmful oil-derived chemicals called glycols. They say that nobody has thus far thought about recycling them and that the potential of the process is huge. They also say that it saves money. But does it really?

Well, once thing is for sure – it didn’t save GLYE any money at all. While the operations have been going on for a while now, they have yet to turn a profit. We have summarized the most important figures as found in their latest 10-Q that covers the period before September 30, 2012:

• cash: $950 thousand
• current assets: $1.1 million
• current liabilities: $2.2 million
• revenue: $303 thousand
• net loss: $400 thousand
• accumulated deficit: $8.7 million

Red Chip tell us that GLYE have some seriously aggressive market strategy and that they often acquire smaller companies in an attempt to increase the value of their shareholders. We have read through the financial report and the press-releases that have been going out every now and then and we can confirm that. They did acquire quite a lot of companies and they continue to sign letters of intent, agreements and other documents that they will most likely execute in the future. But what’s the cost of all this? Shares, truckloads of them. In the Subsequent Events section of their latest 10-Q, for example, we see that a total of 3.7 million new shares saw the light of day in just a couple of weeks. After that they filed a number of 8-K forms, from which we learn that GLYE‘s printing press continues to work overtime.

We can only admire GLYE for their efforts on saving the planet and getting rid of one of its pollutants, but we have to point out that if they really want to be taken seriously, they better concentrate on turning a profit and stopping the hideous dilution rather than issuing stock for awareness campaigns.