GREENESTONE HEALTH (OTC:GRST) Seek Attention
There has been some commotion around GREENESTONE HEALTH (OTC:GRST) recently. Some news are flying out of their headquarters, the CEO is appearing on TV, his interviews are over the websites and the paid promoters jumped on the bandwagon as well. We decided to check on GRST to see what all the fuss is about.
When the closing bell went off yesterday, their price was $0.29 which led us to believe that they might be a serious player in the penny stock field and it’s fair to say that they are certainly a lot better off than most of the companies featured on these pages.
They have a couple of clinics in Canada and their main focus is the treatment of mental illnesses and addictions. They are also a private healthcare company and, as we all know, private healthcare is quite a lucrative business since there are a lot of wealthy people who want the best possible services when it comes to their physical and mental well-being. They are willing to pay the price as well.
With that in mind we opened GRST‘s latest 10-Q covering the period that ended in September hoping to see some respectful revenues and a healthy-looking income. Unfortunately, that didn’t happen. Here are the figures:
- cash: $301 thousand
- current assets: $433 thousand
- current liabilities: $4.4 million
- revenue: $1.3 million
- net loss: $417 thousand
Of course, the press-releases that have been constantly flying out of GRST‘s headquarters and the pumpers tell you that they are on their way to profitability and, truth be told, the financials look somewhat better than the ones for the previous year. They still have a long way to go, though.
Because of the constant losses throughout the years, they were forced to borrow a substantial amount of money which, of course, they now need to return. The losses are again what stops them from doing so, which means that quite a lot of notes are being converted into common shares. During Q3 of 2012, for example, a total of 9.6 million common shares were issued and 4.5 million of them are totally unrestricted. This means that the number of outstanding common shares has risen by more than 10 million over the last twelve months.
It’s not like they’ve run out of notes to convert, either. After abusing the calculator for a while, we found that there are over $2 million worth of notes that are convertible into common stock at a discount. Because of this, GRST recently filed an 8-K report saying that they want to increase the number of authorized shares from 100 million to 500 million. This leads us to believe that the upcoming dilution for the shareholders will be huge, but it also means that the note holders will have massive amounts of common shares ready to be sold at a huge profit.
The pumpers have skipped the above facts, and they have also failed to mention what happened the last time they got all excited about GRST. We, however, remember. It happened in October 2012 and, when we checked the emails from back then, they read pretty much the same optimistic revenue and income projections. During the promotion, GRST‘s shares were traded around the $1.80 mark, however, soon after the hype stopped, the price took a tumble and less than a month later, they were below the $0.10 line.
Having in mind that they are now at $0.29 per share, there’s certainly room for another downhill turn. That’s why it is critical that you weigh the potential risks carefully before jumping in on the hype created by the pumpers.
