History Repeats Itself for GROVEWARE TECH LTD (PINK:GROV)
If we had to give a single piece of advice to GROVEWARE TECH LTD (PINK:GROV) we would probably send them a video of Elvis Presley’s “A Little Less Conversation”. And we would emphasize on the “a little more action” part.
GROV are in the business of development various software programs that are supposed to make workers’ lives easier. The applications can be used in various ways and GROV go public every now and then saying that they have signed the next big contract with governmental agencies, big private companies and the like. It really is a shame that all these deals have not made any impact on their financial statements.
Indeed the press-releases would have you believe that GROV are a mightily successful company with expanding business relations and tonnes of revenue that, is getting bigger by the minute. When you look through their reports, however, the picture is somewhat different. We have included a recap of their most important financials as stated in the latest 10-Q covering the period before September 30, 2012:
- cash: $12 thousand
- current assets: $72 thousand
- current liabilities: $850 thousand
- revenue: $87 thousand
- net loss: $83 thousand
We all know that the margins for profit in the software business (provided the product is good) are extremely high and yet, GROV can’t seem to fit in them. In their report they say that they expect a dramatic decrease in the operating expenses over the next couple of years, but it’s still all in the realm projections and forward-looking statements.
The same can be said for the headlines coming out of GROV‘s HQ every now and then. The news, more often than not, states that GROV have signed their next big contract and it includes all sort of flattering words about their products and how useful they can be. This is usually accompanied by a promotional campaign initiated by pumpers of all shapes and sizes. The pumps, of course, affect the performance of GROV‘s shares and often the results are devastating.
Here’s an example: back in August 2012, GROV stated that they are launching a new piece of software. This triggered a frenzy among pumpers and people standing behind a number of newsletters received an incredible amount of money to explain to investors how bright GROV‘s future is. The emails flew around for the best part of two weeks but once the hype had subsided, GROV was left with a third of its price gone. The investors were probably less than happy.
This goes to show that when the excitement around a penny stock company is created by nothing more than PR and promotional campaigns, things are usually bound to end up pear-shaped. GROV are not the only ones who have gone through such a treatment. There was a similar pump for Great Wall Builders Ltd (PINK:GWBU) back in June 2012. It was preceded by optimistic press-releases and projections of huge revenues in the near future. As evident from the chart on the right, it all came crashing down just a few days later, leaving a lot of grumpy and badly burnt investors.
There is one more thing that connects GROV and GWBU – Mr. Hrair Achkarian, GROV‘s current CEO and Mr. Scott Boyes, GROV‘s now ex-CFO once held the same positions at GWBU.
