Greengro Technologies Inc (OTCMKTS:GRNH) Recovers More of Its Losses
After a prolonged downtrend the stock of Greengro Technologies Inc (OTCMKTS:GRNH) found itself sitting just above 4 cents per share at the end of Tuesday’s trading. On Wednesday, however, the company published a new press release which managed to reinvigorate investors and as a result GRNH spiked up the chart and added more than 19% to their value. Yesterday the positive momentum pushed the stock another 13% up to a close at $0.0548.
So what did the PR say in order to elicit such a drastic change in the sentiment displayed by investors? GRNH announced that they are expanding their position in the cannabis marketplace by adding an industrial product line consisting of three extraction and processing units – an Essential Oil Distiller, a CO2 Extraction, and Solvent Extraction Machine. The news is indeed encouraging especially when you also take into account the previous announcements made by the company.
In their April 12 PR GRNH stated that the record amount of $522 thousand in sales has been recorded in just the first quarter of the year. This is close to the amount of revenues generated by the company for the entire 2015. What the company didn’t mention was that $330 thousand of the sum was recorded as deferred revenue in the quarterly report for the period. Still, for the quarter GRNH generated over $197 thousand in revenues, which represents an increase of around 30% compared to the same period a year ago. This positive achievement becomes far less impressive when you realize that due to a significant increase in the cost of revenues the gross margin of the company was down by $20 thousand on a year-over-year basis.
The report also revealed that during the first quarter of the year GRNH had issued another 8 million shares as a conversion of just $40 thousand of principle convertible debt. This means that the average price of each share was just $0.005, which is over ten times lower than the current market price. Last year GRNH had issued over 54 million shares for consulting services and 7 million shares at $0.005 as a conversion of debt. Even more red flags can be found in the subsequent events section of the quarterly. Apparently between April 1 and May 25 a total of 12 million fresh shares were used for consulting services. Furthermore, on April 25 GRNH revised the conversion price of its outstanding convertible promissory note and from $0.10 it was reduced to $0.01 per share.
It is clear that investors are still excited about GRNH‘s potential and the possibility of the DEA rescheduling cannabis could create even more hype around the sector. Underestimating the red flags, however, could prove to be extremely dangerous. Plan your trades carefully and never put unaffordable sums of money on the line.
