THE METEOR KNOWN AS GNIN
Green Innovations, Ltd. (GNIN.OB) was posting impressive gains in recent weeks as the latest meteor in the penny stock world, but like any meteor, its fate is to come crashing into earth's market in explosions of price collapses. That is what we got today and it is far from over.
About Green Innovations, Ltd.
Like many penny stocks that see a promotional campaign it's as both a company and stock, it is a mutant.
According to its October 28, 2012, SEC Form 10-Q Quarterly filing it is the end result of a recent "reverse merger" between a company formally known as "Winecom, Inc. (WNCM.OB)" and Green Hygienics. Green survived and its name was later changed to the latest reincarnation: Green Innovations, Ltd.
As you may know, a "reverse merger or reverse takeover" is the acquisition of a public company by a private company. This usually happens so that the private company can bypass the lengthy and complex process of going public.
Winecom, Inc. was an Israeli based company originally formed to develop an Internet social website for wine lovers. With a start like that it can be argued things could only get better. "In August 2012, with the acquisition of Green Hygienics, the Company changed its operations to the business of importing and distributing bamboo-based hygienic products. The prior operations of the Company have been abandoned effective with the acquisition of Green Hygienics." (October 28, 20102, Form 10-QSEC Quarterly filing.)
"Green Hygienics is in the importation, sale, and distribution of hygienic and household products made of bamboo-based paper. On August 1, 2012, Green Hygienics entered into a Licensing Agreement with American Hygienics Corporation ("AHC"), a corporation domiciled in the People's Republic of China, pursuant to we acquired the exclusive right for a period of 5 years to import and distribute AHC's proprietary bamboo pulp-based hygiene products. AHC is the world's largest manufacturer of bamboo-based wet wipes…". (October 28, 20102, Form 10-QSEC Quarterly filing.)
The present captain of GNIN is Bruce Harmon. Mr. Harmon has an accounting degree from Missouri State University, also owns Lakeport Business Services, Inc. and serves as a corporate consultant to various companies. He has been a player in business enterprises and situations like this (primarily alternative energy) many times before. Mr. Harmon was instrumental in the public registration of SinoFresh HealthCare, Inc. (SFSH.OB) in 2003 - now apparently inactive; Alternative Construction Technologies, Inc. (ACCY.OB) in 2006 - REVOKED by the SEC on January 11, 2011; Accelerated Building Concepts Corporation (ABCC.OB) - unhappily featured in SEC litigation activities; and in 2007, eLayaway, Inc. (ELAY.OB) - fallen in price from $1.00/ share to $0.01/share. One of his latest ventures of note (November, 2011) is as CFO of Omni Ventures, Inc (OMVE.PK) - which has been PUMPED & DUMPED at least TWICE since he joined the company. Harmon owns 5,000,000 series a preferred shares.
GNIN capital structure (After 20:1 split) is basically the following:
- Outstanding common Shares 25,000,000
- Free Trading Shares 20,000,000 (owned by 35 different seed investors @ $0.002/share)
- Preferred shares 5,000,000
GNIN basically has no real assets, no income and press releases for prospects. In fact, its only asset seems to be a Licensing Agreement that is really a sales distribution contract. Yet, its market value is now at $1.40 roughly still $35,000,000 even after this big price drop.
Is there any logic to this? Yes, someone involved with GNIN wants your money. So this sales distributor of bamboo based paper substitute products has now become a high flyer. WHY? They need a story to sell to retail investors (hype).
Along with any stock promotion there has to be a story. It's the same story over and over again - the story's name today is GNIN. GNIN is a temporary STOCK PROMOTION. It is NOT an INVESTMENT. Given all this, it is no surprise to our team that Green Innovations Ltd. ended up being promoted. It was on my radar for stock promotion for months prior to being promoted.
What exactly is stock promotion? It's when newsletters are compensated to tout a certain stock to their email lists. Why do people pay certain newsletters to tout stocks? The main reason is that seed shareholders who own free trading shares in these companies cannot turn their shares into cash unless there are buyers - better known in this offshoot of the carnival trade as the "naïve investor" (retail stock buyers like you). This is why they pay newsletters to hype up certain companies so they can turn their shares into cash.
Green Innovations Ltd. has all of the characteristics of a corporate shell set up for the sole purpose of enriching insiders:
1) Business taken public with no revenues
2) Seed shareholders given shares for next to nothing
3) Change in control
4) Name and symbol change
5) Forward split while all the shares were insider owned
It's an old story that is a daily constant in the penny stock markets. The story almost always has the same narrative and ending - a stock promotion sky rocketing a stock's price upwards only for it to crash and burn shortly thereafter. That is the reality of a stock promotion. The folks behind GNIN promotion are some of the best - the Brighton Markets Group.
Brighton Markets Group History
Who exactly is the Brighton Markets group? It's a group that uses boiler room tactics to promote stocks. They call people and send emails to tout certain stocks. Their websites are listed below.
How is their track record you ask? Here is an example. See for yourself.
Independence Energy Corp. (IDNG.OB) - This was the promotion that put them on the map. Naïve retail stock buyers got crushed as the insiders banked big.
Punchline Resources Ltd. (PUNL.OB) - Punchline Resources Ltd. is another story of naïve retail stock buyers being left to hold the bag. One thing you can pick up from these two promotions is when they start to dump, they dump BIG and they dump FAST. Take a close look at the following chart and be happy you weren't on board for this crash.
GNIN - Green Innovations Ltd. Stock Promotion
Green Innovations Ltd. started out being promoted by Brighton Markets newest sites in the beginning. Here are Brighton's updated websites (notice that there are 7 new sites).
Brighton's primary, established websites didn't start sending out emails on GNIN until 2/18/13. Read their email and disclaimer below.
It's also no coincidence that the PR activity from this company started to pick up during this promotion.
GNIN's PR Activity DURING the Promotion (1 month span):
GNIN's PR Activity BEFORE the promotion (2 month span):
Why I believe Green Innovations Ltd. will continue to move lower:
The insiders have already begun to cash in on Green Innovations Ltd. Naïve investors who hold on much longer and don't cut their losses will only add to their losses. That is why we recommended people to rethink their investment and take this opportunity to sell before it is too late. Take a second look at how the other two promotions turned out for the people that bought the stock ... Crushed!
You have been warned.
Disclosure: I am short GNIN.OB. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.