First – let me point out even though I am highlighting what could be a negative in some eyes, I don’t really fault the public company here. You will note that we even issued a MOMENTUM ALERT for IGPK on Friday morning after that news was issued late Thursday night.
Let’s get into the issue at hand as revealed late Thursday. Who are the parties involved?
- First, the public company is Integrated Cannabis Solutions, Inc. (OTC PINK: IGPK). This company is a non-reporting Pink Sheet stock. It does report some financial information to OTCMarkets.com. I will refer to it as IGPK from here on out.
- IGPK announced it is buying Greenway Holdings, Inc. (GHI), a private company with three subsidiaries.
The three subsidiaries for Greenway Holdings Inc. are:
- CBD Medical Labs LLC
- Green Diamond Consulting LLC
- Greenway Garden Products LLC.
In the release it is stated that the second subsidiary listed above has a “Letter of Intent” and a “Professional Services Agreement” with Vivint Solar.
SOMETHING HAPPENED SOMEWHERE BETWEEN MONDAY AND THURSDAY OF LAST WEEK:
LET’S QUOTE THE RELEASE TO BE 100% ACCURATE. THIS IS FROM THE JULY 21ST 8:15 AM ET RELEASE:
“Green Diamond Consulting LLC, has recently secured a Letter of Intent and Professional Services Agreement with Vivint Solar, a solar electricity provider that designs, installs and maintains residential photovoltaic systems. They currently operate in six states including New Jersey, Massachusetts, Hawaii, Maryland, New York and California, and the District of Columbia. Green Diamond Consulting will have the opportunity to assist the Vivint Solar sales team in the areas of public relations, promotional designs, sales, and strategic planning.”
July 24th at 8:10 PM ET IGPK issues a release that changes things. Here is the headline and first two paragraphs of that release:
“Integrated Cannabis Solutions, Inc. Announces Update
“Jul 24, 2014 BALTIMORE, MD / ACCESSWIRE / July 24, 2014 / Integrated Cannabis Solutions, Inc. (OTC PINK: IGPK) has been informed by Vivint Solar that the Professional Services Agreement and Letter of Intent referenced in its press release dated July 21, 2014 are not valid agreements; the Vivint Solar employee who signed the documents did not have legal authority to do so. In light of this, Green Diamond has acknowledged that no contractual relationships exist between Green Diamond and Vivint Solar. Vivint Solar has also informed IGPK that it has no intention of using Green Diamond’s services.
“IGPK is excited to move forward and continue working with Greenway Holdings and Green Diamond as it pursues additional projects and opportunities across the green sector.”
Let’s put the changed realities into bullet points:
- The “Letter of Intent” is not valid.
- The “Professional Services Agreement” is not valid.
- “Green Diamond has acknowledged that no contractual relationships exist between Green Diamond and Vivint Solar.”
- IGPK claims a representative at Vivint Solar did, in fact, sign the agreement. They claim they were informed directly by Vivint Solar that they have no intention of using Green Diamond’s services.
- IGPK is still – QUOTE – “… excited to move forward and continue working with Greenway Holdings and Green Diamond as it pursues additional projects and opportunities across the green sector.”
Let’s analyze:
There are two worlds of business as far as I am concerned. Or should I say, there are two worlds of business I have been a part of.
1. The first world is working for private companies, working with private company clients and never having to think about public company issues when it comes to signing agreements (often on a handshake). Even owning my own businesses as I have for most of the last twenty years, business is about the relationship and less about the signed document. Often the check and payment is your real agreement. People sign things to get prices out of you at times. They often play fast and loose, and you – in the private company world – learn to navigate it and not get burned.
2. The second world is the world of rules, regulations, laws and disclosures associated with public companies. I started my consulting with public companies in 2003. Before that I covered public companies, and worked for a few public companies as an employee like most of have in the past. But consulting smallcap companies requires you to have the utmost integrity and the absolute focus on every detail. Nothing is real that anyone tells you unless it is signed and proven to you.
A Likely Collision of Two Worlds
What I see here is that the worlds of the non-public businesses collided with the realities of being directly associated with a public company. According to the Thursday release, somebody at the solar company did sign two documents. They should not have signed them, and that is where dealing with a public company collides with the way deals are often done with private companies. The worlds are different. It is not uncommon to create agreements, offer every thing in your arsenal you have and put it all on the table, etc., when you are at a private company seeking an agreement. I remember when a partner of mine and I flew from Dallas to Orlando for the day to meet a significant capital firm regarding the sale of our private company. It turns out we were dealing with an underling who was playing big shot. When we showed up at their offices they went into panic mode. Finally we had a small meeting with them, and they made it clear that the underling was out of line. They then sat with us for a while and we all brainstormed about all of the potential things our competing companies could work on together. That poor guy that had us come was told at then end of this to get us lunch and to take us back to the airport. He attempted the lunch, but his card did not work when the check arrived. We chalked it up to experience. We never spoke to anyone at that company again. And it meant nothing. That’s the price of being in business. Not selling that company that day made us a whole lot more money as it took off massively after that.
Walking into that Orlando meeting, we had a Memorandum of Understanding already signed. That is why they all panicked. Like a Letter of Intent, it is just a step in the process. If the process moves forward, that letter is important. It it comes to an abrupt end, it’s over. I still consult a lot of public companies. One thing I tell now is never put out a release on a Memorandum of Understanding or a Letter of Intent. If real dollars have not changed hands, then it is all talk. Nothing is real until someone is writing a check or someone is wiring funds. Legally what I am saying is not always true. Some attorneys can write rock solid Letters of Intent, but it is the public disclosure of that letter that likely should have been held back until the deal was over and funded.
Were investors hurt?
DID ANYONE REALLY GET HURT HERE? NOT IF THEY WATCH NEWS.
The real truth is if they watched the news and bought because of it Monday then they were likely watching the news and saw the Thursday release as well. It not only traded above Monday’s close. It traded up as high as $0.09. Monday’s high was $0.093. There were very few shares that traded at the high, so just about anyone could have ran to the exit door if they needed a way out. I am sure that over the next few days the stock may even top the $0.093 price from last Monday – although I can never be sure.
Good luck to all involved. Let’s hope this is a one time thing.