28 Jul Green 4 Media Inc (GEEM) – stock research report – now Fresh Healthy Vending International, Inc (VEND)
Green 4 Media Inc (GEEM) recently completed a very big share acquisition agreement with FHV Holdings Corp that could make GEEM a very interesting stock to follow once it starts to publicly trade.
Before getting into the new business operations (which are significant) we'll take a quick look at the set-up and early history of the GEEM shell.
Set-up / Early history
Green 4 Media Inc started out as a Hawaii based company incorporated as a Nevada business entity on June 8, 2011 with the forward looking business plan to become a marketing and advertising company for clients wishing to emphasize they care about the environment with the use of natural and sustainable materials in their advertising.
The original CEO and sole officer/director for the shell was David Duval. David Duval has been involved in sales and marketing for more than 30 years. He moved to Hawaii in 2002. Mr. Duval was issued 1,000,000 shares for $10,000 ($.001/share).
Green 4 Media Inc also sold 210,000 shares to a group of 9 investors for $.10/share (Scott Abraham, Carla Gregg, James LaCour, Linda Miller, Jennifer Nobiling, Rose Scarborough, Allison Steiner, Barry Steiner, Dima Suslikov).
Scott Abraham and Linda Miller can also be found as seed shareholders together in New Media Insight Group Inc (NMED) which was another developmental stage Hawaii based marketing and advertising company that is on the verge of some kind of new acquisition agreement. See our NMED report here.
An S-1 was filed to take Green 4 Media Inc public on October 13, 2011.
The attorney providing the attorney letter was James Parsons of Parsons/Burnett/Bjordahl/Hume LLP. James Parsons has been involved with several pump&dump tickers including NSRS, RARS, GWBU, LEXG, TGRO, and WSML. James Parsons also helped take NMED public.
The accountant helping with the S-1 filing was Sadler, Gibb & Associates.
The S-1 filing was approved by the SEC on January 10, 2012.
In February of 2012, GEEM sold an additional 365,000 more shares to some anonymous seed shareholders for $.10/share. This made the outstanding share count for GEEM look as follows:
Authorized - 100,000,000 shares
Outstanding - 1,575,000 shares
David Duval - 1,000,000 shares
Seed shareholders - 575,000 shares
Through its website green4media.com, GEEM ended up seeing $25,419 in revenues for the fiscal year ending August 31, 2012 and $9,634 in revenues for the next 9 months after that, but the revenues were not enough to cover operating costs and by May of 2013, GEEM was out of cash.
On July 15, 2013, GEEM filed to do a 11.67165:1 forward split. David Duval would end up cancelling his 1,000,000 shares prior the the split being executed thanks to the share acquisition agreement with FHV Holdings Corp. The forward split would end up giving the GEEM seed shareholders 6,711,200 free trading shares of GEEM stock.
On June 25, 2013 with the help of attorney Aaron A Grunfeld, GEEM formed a wholly owned subsidiary in California called FHV Acquisition Corp to be used for the acquisition of FHV Holdings Corp, a California entity whose principal asset consists of Fresh Healthy Vending LLC.
On July 19, 2013, an agreement was then signed for the acquisition of FHV Holdings Corp. The main terms of the acquisition agreement included the following:
1) David Duval cancelled all of his stock (1,000,000 pre-split shares)
2) 15,648,278 new shares of GEEM stock (already split adjusted) were issued to Nicholas Yates for the acquisition of all of FHV Holdings Corp and its primary asset, Fresh Healthy Vending LLC.
3) 2,788,369 shares of stock were sold raising $1,210,000 ($.434/share), $190,000 of which was paid to David Duval in exchange for the cancellation of his stock.
4) David Duval resigned from all of his positions
5) The FHV Holdings Corp management team took over as the officers/directors of GEEM
Alex Kennedy - CEO
Jonathan Shultz - CFO and treasurer
Nicholas Yates - VP of Corporate Operations and director
New Share Count
With the completion of the forward split and share acquisition, the new share count will look as follows:
Authorized - 100,000,000 shares
Outstanding - 25,147,847 shares
Nicholas Yates - 15,648,278 shares
Private Placement shareholders - 2,788,369 shares (costing on average $.434/share)
Seed Shareholders - 6,711,200 free trading shares (costing $.008567/share)
More about FHV Holding Corp
FHV Holding Corp (formerly known as YoNaturals Inc) was formed as a California business entity as the holding company for Fresh Healthy Vending LLC.
FHV is a Franchise Development Company and operator of Company-owned vending machines that makes healthy eating more convenient through access to high quality healthy foods at high foot traffic vending destinations
As of June 30, 2013, Fresh Healthy Vending (FHV) and its franchisees operated 1,775 vending machines total throughout North America, the Bahamas, and Puerto Rico. The vending machines offer over 6,000 healthy food and beverage vending products.
The company is headquartered in San Diego and has 27 full-time employees as of June 30, 2013 as well as three contracted positions.
FHV has been growing quickly
The company had revenues totaling $10,137,088 for the year ended December 31, 2012, compared to total revenues of $6,744,968 for the year ended December 31, 2011. This represented an increase of $3,392,120 or 50.3%.
FHV had 145 franchisees as of December 31, 2012 up by 42 franchisees compared to December 31, 2011 when FHV had 103 franchisees.
FHV was cash positive in 2012 by $1,055,818 after all operating costs. Overall, however, FHV still had a total deficit of $1,856,911 at the end of 2012. At the current rate of growth that deficit could end up being eliminated some time during 2014.
On July 19, 2013, FHV issued convertible notes payable totaling $191,000 to 3 pre-existing note holders. The notes currently carry a conversion rate of $1.25/share of GEEM stock. FHV had previous issued a $84,000 note in April of 2013.
Future plans for FHV business operations include launching an international franchising program and investing in the development of new vending machine technology.
Visit the FHV website here.
Skeletons in the closet
Despite all of the positive surrounding the current business operations for Fresh Healthy Vending (FHV), the company is not without some pretty ugly skeletons in its closet.
For starters, the main person behind FHV, Nicholas Yates, was found guilty of participating in misleading and deceptive conduct in the operation of a vending machine business and mobile telephone business by the Australia Competition and Consumer Commission. The group was fined $3,725,000 on February 27, 2006 and $1,139,000 on June 5, 2008. Rather than pay his portion of the fine, Nicholas Yates filed a Debtor's Petition with the Insolvency and Trustee Service in Australia to declare himself as bankrupt in that country.
One of the original major shareholders of FHV, Mark Trotter, was found guilty by the State of Texas of deceptive trade practices. Mark Trotter and others linked to him sent out unsolicited and misleading emails to computer users in Texas and across the country to obtain personal information that the defendants then sold to others.
On March 18, 2013, the state of California found FHV guilty of making inaccurate/incomplete disclosures in the company's 2010 and 2011 Franchise Disclosure Documents regarding the business experience of directors and managers of FHV including not disclosing the litigation histories and bankruptcy histories of Nicholas Yates and Mark Trotter.
On March 24, 2012, the state of Washington found FHV guilty of making inaccurate/incomplete disclosures in the company's 2010 and 2011 Franchise Disclosure Documents regarding the business experience of directors and managers of FHV including not disclosing the litigation histories and bankruptcy histories of Nicholas Yates and Mark Trotter.
At one point, following the guilty verdict by the state of Washington, FHV tried to lie about the fact that Nicholas Yates was still involved with Fresh Healthy Vending as explained in this article. FHV now at least discloses the troubled past of its insiders.
In March 2013, FHV entered into a settlement agreement with the State of California regarding the inaccurate and incomplete disclosures in the 2010 and 2011 Franchise Disclosure Documents. As a result of the settlement agreement, 13 franchisees who collectively purchased 172 vending machines are eligible for the offer of rescission. The total possible refunds due to all franchisees should they all accept the offers of rescission would be approximately $718,000. So far FHV has received a demand for rescission of a franchise agreement and the payment of $120,000 from a franchisee in the state of Oregon.
Fresh Healthy Vending is run by a convicted fraudster that was guilty of ripping off millions of dollars from people in the past then found guilty again of hiding these facts from future clients. Others linked to FHV have been found guilty of spamming and other manipulative dishonest practices. Despite the ugly skeletons in the closet, the Fresh Healthy Vending business operations have been booming over the past couple of years and appears to be geared up to see more growth. Depending on what price GEEM opens up trading, it could turn into an interesting stock to watch and possibly own if the company continues to show strong growth in the future. Based on the free trading share count and balance sheet, GEEM looks like a stock that is destined to hit a price of over $1.00/share. The biggest risk with FHV is that the past will come back to haunt the company. Just changing the name of the company from YoNaturals to Fresh Healthy Vending may not be enough to completely sweep the dirty past under the rug. Because of the history of the GEEM insiders, even with the smaller sized float, we would not be surprised to see GEEM become a future newsletter/hard mailer type promotion.