While Green Endeavors, Inc. (PINKSHEETS: GRNE) put together a string of impressive days in trading volume last week, the holding company with operations in health and beauty has seen Monday’s trading volume dwarf last week’s production, already threatening to surpass the combined volume of the previous five days of trading. Not only has the trading volume of GRNE spiked but the company’s share price has surged as well, pushing to a high of 0.0007 today after sinking to a low of 0.0003 last Thursday.
Before any investor gets too excited it should be remembered that GRNE’s 52-week high stands at 0.0100, set back on April 19, 2011 and shares were as high as 0.0012 in late February; so the company isn’t exactly on the verge of exploding.
That being said GRNE has certainly produced some results that their shareholders have found favorable, namely that their newly formed subsidiary Landis Experience Center, LLC has fully executed a lease with The Taubman Company for a term of seven years and that their unaudited revenues for March 2012 at both Landis Lifestyle Salon locations exceeded revenues generated at the same locations in March 2011.
Usually a lease execution may not elicit such excitement but because it represents another step toward LEC operating an Aveda Experience Center, a retail shop that sells Aveda’s full line of hair and skincare products, it is cause for celebration. While Aveda had previously owned and operated their Experience Centers directly they have since begun to allow a few select salon operators to open and operate Experience Centers. The fact that LEC is one of the few selected is nice, but making things even better for LEC is the location in which they will open that retail store.
This is where the importance of the lease comes into play; the location will be positioned in City Creek Center, a $2 billion development in the heart of downtown Salt Lake City that counts outlets like Nordstrom, Tiffany & Co., Michael Kors, Pandora and Tumi as retailers.
Richard Surber, CEO of GRNE, was certainly excited about the fully executed lease, stating “It is happening! We are well underway in the process of opening our newest Aveda™ business. Within in the week I expect that we will be placing orders for all of the furniture and fixtures for the new store through an equipment line of credit. I am also in receipt of Aveda’s™ licensing agreement which is fully executed. The opening of the Aveda™ Experience Center is a milestone in our business.”
Of course it should be noted that even with a fully executed lease in place it’s not as if LEC is ready to open up shop right now. It may be recalled by some shareholders that GRNE anticipated a fully executed lease in early March but that was obviously delayed. GRNE also anticipated that the City of Salt Lake would pass off on the architectural plans by the end of March and while those plans have been submitted the City of Salt Lake has yet to provide approval.
GRNE has projected an opening date for the Aveda Experience Center by June 1, 2012 “which will be just in time to prepare for back to school and the 2012 holiday season.” Now if they miss that opening date it could cost them a significant amount of “time to prepare” and hurt their revenues.
Even with the success of GRNE’s two salon locations currently operating the fact is they need to succeed with the Aveda Experience Center. The financial success of salons typically centers on the sale of products rather than the services they provide. This means GRNE is essentially dependent on Aveda and while they have a seemingly strong relationship with the company that doesn’t mean the carpet couldn’t be pulled out from under their feet, especially due to the fact, as mentioned in their most recent quarterly report, “Aveda Lifestyle Salons are required to carry all of Aveda’s products and must meet a higher threshold for product sales than other types of Aveda Salons.”
Any kind of failure to meet the requirements set by Aveda could result in GRNE breaching that agreement and possibly losing the rights to own and operate the Aveda Experience Center. Remember they just signed a seven year lease so it would be in their best interest to meet the threshold for product sales if they want to keep a business in the space they are leasing.
Now GRNE has seen strong revenue growth from their current locations, reporting combined unaudited revenues for both Landis Lifestyle Salon locations were $267,750 for the month of March 2012; which is an increase of $26,790 or 11% compared to March 2011. This comes after reporting last month that the combined unaudited revenues for both locations were $227,878 for the month of February 2012; which is an increase of $17,493 or 8.3% compared to February 2011.
Those numbers are positive but it should be noted by investors that GRNE is carrying a working capital deficit of $1,209,265 as of September 30, 2011 and had long-term liabilities of nearly $3 million with total Stockholders’ deficit at September 30, 2011 of $3,317,659. Something else investors will want to keep an eye on is the statement in GRNE’s last quarterly filing in which they said “We expect that our cash provided by operating activities will decrease over the next twelve months as we purchase inventory and increase operating expenses as a result of opening one additional salon during the next 12 months.”
GRNE has shown in the past that they can push their share price up to a strong level and if they are able to meet some of their deadlines for the City Creek Center retail outlet then they may be able to attract additional shareholders but they have little room for error given their current financial standing.