GreenGro Technologies, Inc. (OTCMKTS:GRNH) Soars On Legalization News
Last Tuesday’s session finally broke GreenGro Technologies, Inc. (OTCMKTS:GRNH)’s journey to the bottom of the charts, beginning an ascent that brought the company a 17.35% rise to its market value yesterday. The jump was made possible by the news on the latest marijuana legalization developments.
It was pretty much clear from the day the legalization started, that it was just a matter of time before the DEA got banned from persecuting legitimate businesses. Despite this, the news that this has happened facilitated yet another sector-wide surge that began on Friday. Most of the “Prominent” marijuana companies, such as Cannabis Science Inc. (OTCMKTS:CBIS) and Terra Tech Corp. (OTCMKTS:TRTC), have managed to make massive gains to their market values, all on hype and hope. This time, GRNH was running with the leaders of the pack, but how long will the company’s new-found momentum last?
GRNH may be hot now, while the news of the latest legitimization developments are still fresh, but pot-stocks have a tendency to shrivel once the dust settles. The marijuana market’s sudden bursts of hype driven volatility only last for as long as it takes for people to start having doubts and do some due diligence on a company. And in the case of GRNH, there is plenty of room for doubt once some proper research is done. A look at the company’s latest financial report is enough to subdue the enthusiasm of any reasonable investor:
- cash – $228 thousand
- total current assets – $443 thousand
- total current liabilities – $60 thousand
- NO REVENUES
- net loss – $3.9 million
It is hard to call this the balance sheet of a healthy company, and it’s even harder to believe that said company is currently valued at $55 million by the market. GRNH enthusiasts may argue that this state of developments is old news, that all has changed and that the company has $140 thousand in revenues in April alone, that it is just picking up the pace. However, the fact of the matter is that the encouraging figure quoted above came from a GRNH press release. As is the norm with press releases without a filing, investors have no real way of knowing if such information is trustworthy or not. Seeing as how marijuana stock PR are often exaggerated, or even downright false, there is certainly reason for doubt.
Still, although it is a serious shortcoming, lack of commercial success is by far not the only red flag surrounding GRNH. In the three months ended March 31, 2014, the Company issued 22,250,000 shares of common stock, some of which were issued at prices as low as $0.01.
With this in mind, investors may want to consider the “Toxic debt” section in page 21 of GRNH‘s financial report very carefully before deciding if the gamble on this particular stock is worth the risk.
