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Discovery Gold Corp. Is A $150M+ Empty Shell, False Company Statements - 98% Downside

Aug. 12, 2019 8:40 AM ETGRN Holding Corporation (GRNF)CBGL54 Comments
White Diamond Research profile picture
White Diamond Research


  • Discovery Gold Corp (DCGD) is a $150M+ empty shell – an unheard of valuation for a shell with no cash, no assets, and no business.
  • Investors appear to believe the company’s new CEO, Justin Costello, is an exceptional businessman in the cannabis sector, but our research reveals that is not the case.
  • Our research suggests that Costello didn’t graduate from Harvard Business School, despite it saying that in DCGD’s SEC filing and promotional websites.
  • Our research shows that Costello’s company, GRN Funds, is not a registered hedge fund despite the company saying that it is.
  • We have tipped off the SEC to these falsehoods and submitted this report to the agency.

At the moment, Discovery Gold Corp (OTCPK:DCGD), is an empty shell stock with a $150M+ market cap. This is an unheard of valuation for a shell. Right now, investors literally own nothing except the stock symbol listed on the OTC exchange. It has no cash, no assets, and no business. Shells generally have an intrinsic value of about $500K, which is on average what they sell for on this website.

We believe once all the hype settles down and DCGD finishes its reverse merger, investors will experience a 95-98% decline in share price to about $0.02 or less. Which is still about 10x what the shares were purchased for by the new CEO, Justin Costello. We believe this not only because the company is currently an empty shell, but also because we don't trust the competence or the honesty of management.

Costello acquired 56% of the company with the intention of reverse-merging his investment banking services company, GRN Holdings, into it. On 7/1/19, DCGD filed an 8-K that states on 6/20/19, Costello acquired 139M shares of DCGD, 55.65% of the outstanding shares, for only $300K. That comes out to a price of $0.00216 per share. Today, at $0.70 a share, Costello has achieved a return in two months of over 20,000%! That has to be some kind of record.

Costello is a 38 year-old businessman who in only two months saw his investment in DCGD grow from $300K to over $90M (on paper)!

Investors should know that any assets or companies that the company acquires will have to be paid for in either equity or cash, likely equity because right now the company has no cash.

We’ve found some questionable promotional tactics are being used by DCGD. We found that the claims that GRN Funds (the company that will merge into DCGD) is

This article was written by

White Diamond Research profile picture
We provide deep research and valuable information on small cap stocks to hedge funds and high net worth individuals. We specialize in the technology and healthcare sectors. We have an over 80% success rate, see our reports at whitediamondresearch.com. See the 3rd party verified return on each of our bearish reports over the last 24 months at: https://breakoutpoint.com/as-summary/white-diamond-gvmtg/To inquire about becoming a premium subscriber, send a PM here or email us at research@whitediamondresearch.com.Follow us on twitter @whiteresearch.

Analyst’s Disclosure: I am/we are short DCGD. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (54)

Justin Costello has now been charged by the SEC and DOJ with fraud etc.
Darp Research profile picture
Good call, down a lot
JoeDNJ profile picture
Clarification that this article is based on false statements.... https://grnfunds.com/#about
04 Oct. 2019
Joednj I thought your provided link could have been more helpful. It appears the site is not functioning. I checked this site two weeks ago and it was the same message.
peacewarrior profile picture
Maybe Not Empty for long...I have heard (still verifying) they hired a large public audit firm and they have been doing audits on all there companies including some banking division that serves the cannabis industry, for the last 3 months. I think it’s all in for these guys. JC found a way to go public. A local processor in Seattle may have confirmed this today too...If true then maybe this is the real deal...? Also looks like your attempt to discredit the Harvard gig may be just semantics, Justin just released a shareholder letter...
White Diamond Research profile picture
Just semantics? It says in the SEC filing that Justin graduated from Harvard business school. Did Justin not notice that on his own filing? The shareholder letter says he "attended" Harvard but did he graduate? Did he even attend Harvard or is that another lie? Did he not say he is running a hedge fund?

Oh yea, it's just semantics. I can see where your bias lies, good luck to you.
I remember dating a Harvard gal......
peacewarrior profile picture
No bias on my end, just sayin Your fact check may have some holes in the end here. I would say you're the one that needs some good luck here, Justin Costello posted a public PR Friday to address your concerns, if you are so sure?? Why have you not commented on this letter yet?? If you truly believe , then post some updated DD that can confirm that this will not become a holding company for several different cannabis plays and move on to become the first U.S. play of its kind?
honestly, you state the company has no cash but you also state the company paid over a quarter of a million dollars to acquire 56% . you also claim there is no buisness but seem to think the management is incompetent, You seem confused, or is it you are really concerned about your short position?
peacewarrior profile picture
You have definitely rattled the cage, this will be interesting as it looks like your research is proposing a binary event (meaning straight up if you're assumptions are incorrect or straight down if you can prove these allegations to be factual)
White Diamond Research profile picture
What assumptions are you referring to? We contacted the Harvard registrar, they said he's not an alum. We checked with the SEC, there is no hedge fund called GRN Funds. Is that not sufficient proof?
GRN funds is a Cigar shop

(link: www.instantstreetview.com/... instantstreetview.com/@47.612673,-12…

Justin Costello supposedly owns 100's of companies. Look how many have the exact same address down to the same suite

(link: www.bizapedia.com/... bizapedia.com/people/washing…
White Diamond Research profile picture
Thanks Tex. It's exciting to find new info on a P&D. Can you cut and paste those links again? They aren't going through.
peacewarrior profile picture
Do you guys have "any idea" what the exact assets will be that transfer into this empty shell? That would certainly add some color and clarity...imo
GRN’s address is a mailbox at The UPS Store. What a joke.
Read the State of Washington Laws related to LLC and going public. Also ask anyone who is not already claiming to be short that second question.
ASB Capital profile picture
Looks like some good sleuthing!
The most interesting paragraph in the report for me was where you implied the new company DCGD, would have to purchase assets. Does this include the assets of GRN? Or it that already a fait accompli, that all that GRN IS will be turned over to, or simply BECOME DCGD? Is there a loophole where the promoter could put some, but not ALL of GRN into the new company? Another question was raised by the apparent changing of the company's name and how that might complicate the shorts' covering in the end. Is that a genuine consideration? Thanks for a great article. It will be fascinating to see where this ends up.
White Diamond Research profile picture
We just got your answer, tommoylan. In the 10-K just filed it states:

"No potential merger candidate has been identified at this time."

So as of now, there is absolutely nothing, zilch, nada.
peacewarrior profile picture
C'mon to be fair that was for the year end 10k standard filing. Any assets that are merged into this will have a separate filing and or PR etc...Question. Have you actually tried to break down what the composition of GRN funds is and what may merge into this (very clean) shell prior to taking on Costello like this? If you're in any way not completely "accurate" with information you are touting, while trying to add fuel to your short position, you may see the bottom of a shoe sooner than later...Just an opinion.
I believe most people have no understand. That 10k was the period ending 4/30. The 8k and Form 3 happened after 06/20/19. Form 8k www.otcmarkets.com/... + Form 3: www.otcmarkets.com/...
What happens to the shorts on the Name Change? Must they all cover? This is funny right? The DISCLAIMER? "I am/we are short DCGD. I wrote this article myself...." ~ Short.

Is that an SEC document? www.otcmarkets.com/...
Who is the author of this article?
Kurtis Hemmerling profile picture
I second it that the author should make his name known.
Kurtis Hemmerling profile picture
Is it this guy? He seems to be the head analyst.
Kurtis Hemmerling profile picture
Just a question...why is GRN funds listed on the SEC website when you claim they are unregistered?
White Diamond Research profile picture
GRN funds is registered as simply a company that owns a significant position of DCGD. The claim by the company that it's a hedge fund is false. Hedge funds need to be registered on adviserinfo.sec.gov
Kurtis Hemmerling profile picture
Are you sure? Because there are various exemptions that might apply. I am not categorically saying you are wrong but I would have liked to see a little more research and discussion on the matter.

White Diamond Research profile picture
Well, show me a hedge fund that's not listed there. That's one way to prove us wrong.
I don't have a clue who you guys are, but you helped me with Capstone and something else......Thank you for your opinion.
Kurtis Hemmerling profile picture
You've made a whole lot of conjecture here. For your sake, you better hope you are right when you make such a personal attack like this. I understand that you are short DCGD and trying to make your case but there are some very serious accusations in this article. People don't take kindly to having their names destroyed if you are just fishing.
White Diamond Research profile picture
Hi Kurtis,

Please be specific. What conjecture? All of the facts are backed by evidence for proof.
Kurtis Hemmerling profile picture
You make a couple of phone calls and do a quick internet search. Then you pretty much claim the guy to be a fraud with an unlicensed hedge fund or possibly no fund at all.

You might be right. I don't have conclusive proof otherwise. But for the claims you make, I sure hope you have more ammo to back it up as my feeling is that you are about to be sued for libel.
My experience tells me that when C-suite tools lie about stuff like running billion dollar hedge funds, they usually lie about the important stuff later........

Time always tells the truth about these things.
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