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In less technical terms:
(and I'm tired as heck so bear with the sloppy verbiage!)
Potential Future Dilution:
There is potential dilution in the pipeline. If we ignore Series B for now, there are still the following potential Common shares that have not been sold yet. I say "potential" because some require conversion from ENZC's Preferred Series C and some are investors' option to purchase (which they don't have to exercise):
380,289,565 Restricted Common shares that are already issued & eligible to be flipped to Unrestricted.
94,107,800 Common shares from converting existing Series C.
176,332,400 Common shares from using warrants to buy Series C and then converting.
188,215,600 Common shares purchased directly using warrants.
Right here we're looking at 838,945,365 potential Common shares that might eventually be sold into the market. These numbers are from the latest filing plus an assumption I carefully documented about the Series C conversion rate.
The Series B, Series E, possible "derivative liability" conversions, company insiders' stock options, crowdfunded notes account for at least 4,471,800,000 additional Common shares IF they are each and all converted, warrants exercised, etc. They surely won't all be converted, but that additional total is also a lowball since we don't currently have all the accounting details available for major categories (derivative liabilties, stocks options, Series D, Series E) in the filings. If even 20% are converted and sold, we're talking almost a billion additional shares.
Potential Dilution Today:
Thankfully (from our point of view), ENZC can't currently issue many more Common shares due to nearly exhausting the 3 Billion Authorized. So the new selling we Retail investors are at risk for today is from the 380,289,565 Restricted Common shares that are already issued & eligible to be flipped to Unrestricted, and up to another 169,564,047 (the difference between Outstanding and Authorized) the company can create out of thin air at any time as dilution to raise operating capital.
That's up to 549,853,612 Common shares waiting to be sold -- though surely not all will be sold since ENZC said here that some people are choosing to hold. And ENZC probably won't dilute with ALL remaining potential shares. Point being this dumping could start Monday or start Never, no way to know how it'll play out.
Outstanding Debt:
ENZC owes a lot of people a lot of money. They quoted an accumulated deficit of $29,533,234. They need to account for these stakeholders if tides turn and the company starts making money. ENZC will be further incentivized to dilute if it can't discharge the old debt by other means.
Put another way, if there's "room" to dilute and convert, and big money to be made in doing so, a lot of parties besides Retail will want their piece of the pie.
Reverse Split:
ENZC has an obligation to all its shareholders, and this also includes the Preferred shareholders. The Preferred shareholders can't convert with the current O/S being so maxed out. ENZC may feel some pressure to do share restructuring to be fair with the conversion options it owes its Preferred shareholders. ENZC may be incentivized to do a reverse split to 'unlock' the full potential of these classes of shares.
Perspective:
This is only one side of the coin. Don't forget all the potential value in the pipeline as well. If ENZC makes it big, there might just be enough money to go around. And we're not privvy to any new funding or equity deals they may be striking with partners or investors behind the scenes.
Closing the loop on the stuff I was looking at with ENZC's recent financials. This post is dense and lengthy, but the rabbit hole runs deep and I wanted to be comprehensive. TLDR; there's a summary at the end!
Here's the document listing again:
"Document A": Annual Report - FINANCIAL AND FOOTNOTES 12.31.2021 published 04/18/2022 for period end date 12/31/2021
"Document B": Annual Report - AMENDED FINANCIALS AND FOOTNOTES DECEMBER31, 2020 published 04/14/2022 for period end date 12/31/2020
"Document C": Quarterly Report - FINANCIALS AND FOOTNOTES published 11/22/2021 for period end date 09/30/2021
"Document D": Annual Report - Annual Disclosure Filing 12.31.2021 published 03/31/2022 for period end date 12/31/2021
"Document E": Supplemental Information - SHARE ISSUANCE HISTORY AND DILUTION published 03/16/2022 for period end date 12/31/2021
Audited documents:
It appears Documents A and B and D are audited. They don't include the (Unaudited) disclaimer at the top of Page 1. Correct me if you know otherwise!
Document C includes the (Unaudited) disclaimer.
Document E is unaudited since the information in it comes from earlier unaudited OTC reports.
Rolling old debt into subsidiaries:
From Document E:
All outstanding debt of the Company flowed to its subsidiary, now known as Robustomed, Inc. This means there are no outstanding convertible debt pieces of ENZC common equity, and that has been the case since November 30, 2020. This has been disclosed in all filings made on OTC (both annual and quarterly) since that date.
In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. The standard eliminates the liability and equity separation model for convertible instruments with a cash conversion feature. As a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. Additionally, the embedded conversion feature will no longer be amortized into income as interest expense over the instrument’s life. Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium.
On November 30, 2020, the Company assumed the responsibilities of the Crowdfunding convertible notes issued by BioClonetics to various investors as part of its business combination agreement. On November 30, 2020, the outstanding balance of the Crowdfunding convertible notes was $654,606 consisting various investor notes (“Investor Notes” or “Investor Note”). As a result, the Company recorded an expense of $654,606 to general and administrative expenses in its consolidated statements of operations for the year ended December 31, 2020 , and corresponding amount to Crowdfunding convertible notes on its consolidated balance sheet for the Company’s servicing responsibilities for these notes. The Crowdfunding convertible notes are stock-settled debt under ASC 480.
Since the underlying obligation to the investors is a BioClonetic obligation as it relates to a sale of the company and capital raises at the Company believes that neither of these scenario’s will never happen, the Company offered the following three options to the investors to settle the Crowdfunding convertible notes:
Option 1: The investor may elect to hold its note until a conversion event occurs such as a future Series A financing round or when the Company is acquired.
Option 2: The investor may elect to have the Company repay the notes along with the 2% interest.
Option 3: The investor may elect to exchange its notes for each $5.00 note investment into 1 shares of Series D Preferred Stock.
The holders of Series B Preferred Stock shall have conversion rights as follows: Each share of Series B Preferred Stock shall be convertible at the option of the holder thereof and without the payment of additional consideration by the holder thereof, at any time, into shares of Common Stock in accordance with the stock designations filed with the office of the Delaware Secretary of State.
In December 2020, the Company entered into subscription agreements to issue Series C Convertible Preferred Stock to the same two investors who were investors in the Securities Exchange Agreements on November 16, 2020. Under the terms of the subscription agreements, the investors purchased 1,763,324 shares of Series C Convertible Preferred Stock and warrants to purchase 1,763,324 shares of the Series C Convertible Preferred Stock at a price of $0.50 per share resulting in a carrying value of $881,662.
Each share of the Series C Convertible Preferred Stock is convertible at price of $0.005 into shares of common stock anytime at the option of the investors. The warrants have an exercise price of $0.00750 per share and a term of three years and are exercisable anytime.
On June 1, 2021 the Company issued 1,250,000 shares of Series E preferred stock pursuant to a $500,000 subscription agreement.
On June 16, 2021 the Company issued 1,250,000 shares of Series E preferred stock pursuant to a $500,000 subscription agreement.
On October 20, 2020, the Company entered into a three-year employment agreements with four of its executive officers. Each executive officer is entitled to a base salary of $120,000 per year and 5,000,000 stock options. The stock options have a term of three years and vest ratably over a two-year period commencing on October 20, 2020.
On November 16, 2020, the Company entered into Securities Exchange Agreements with two investors. Under the terms of the Securities Exchange Agreements, the Company issued 941,078 shares of its Series Convertible Preferred Stock and 188,215,600 warrants to purchase 188,215,600 shares of its common stock in exchange for payment of various notes and accrued interest totaling $470,539 to these investors. Each share of the Series C Convertible Preferred Stock is convertible at price of $0.005 anytime at the option of the investors. The warrants have an exercise price of $0.00750 per share and expire on November 16, 2023. The Company valued the Series Convertible Preferred Stock at a price $0.50 per share which was based on subsequent subscription agreements entered in December 2020 (discussed below).
In December 2020, the Company entered into subscription agreements to issue Series C Convertible Preferred Stock to the same two investors who were investors in the Securities Exchange Agreements on November 16, 2020. Under the terms of the subscription agreements, the investors purchased 1,763,324 shares of Series C Convertible Preferred Stock and warrants to purchase 1,763,324 shares of the Series C Convertible Preferred Stock at a price of $0.50 per share resulting in a carrying value of $881,662.
With each increase in Float the total Restricted shares decreased in the same amount. As of December 31, 2021 there were 451,289,565 restricted shares remaining of the 2,797,935,953 originally issued prior to October 15, 2020. Approximately 71 million of these restricted shares are part of a lawsuit filed by the Company. The remaining 380,289,565 have met the SEC requirement for removal of the restrictive legends but have either not elected to or been unable to obtain an opinion letter acceptable to the transfer agent or are held by Officers and directors of the Company.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred an operating losses since inception and as of December 31, 2020, the Company has incurred accumulated deficit of $29,533,234. The Company has funded its operations through the issuances of notes payable to investors and sales of Series C Convertible Preferred Stock. The Company evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year beyond the filing of this Annual Report. In 2021, the Company has raised $2,000,000 in sales of Series E Convertible Preferred Stock and additional $950,000 in sales of subscribed Series C Convertible Preferred Stock. On May 12, 2021, the Company entered into a distribution agreement with a company to distribute the Company's anti-HIV-1 therapeutic ITV-1 in the countries of India, Pakistan, UAE, Indonesia, Philippines, Nigeria, Benin and Togo, Kenya, Tanzania, Rwanda, Libya, Uganda, North Sudan, Egypt, Morocco, and Tunisia. The Company received $1,000,000 in cash from the distribution agreement. As a result, the Company believes there are sufficient funds to continue operations and research and development programs for at least 12 months from the date of this report.
Management of the Company believes that the Company will be successful in its capital formation and operating activities, there can be no assurance that it will be able to raise additional equity capital or be able to generate sufficient revenues to sustain its operations. The Company also intends to conduct additional capital formation activities through the issuance of its common stock to establish sufficient working capital and to expand its operations. The accompanying financial statements have been prepared in conformity with U.S. generally accepted accounting principles (GAAP), which contemplate continuation of the Company as a going concern. The Company has incurred an operating loss since inception and the cash resources of the Company are insufficient to meet its planned business objectives. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
The history shouldn't be changing, but the current value for A/D will change by the day. It's somewhat volume weighted, and low volume causes different movement than high volume.
There's a formula partway down this page that shows how A/D is computed. The number it spits out isn't shares, it can grow faster or slower than actual shares traded.
https://www.investopedia.com/terms/a/accumulationdistribution.asp
I know I used to think of it being measured in shares. I think I've also made a mistake before looking at it in periods other than one day. Pretty sure I read somewhere it loses some reliability when measuring trading session that aren't 1 day each (but don't quote me on this)
I think you were onto something with the float increasing in tandem to the price declining as people and maybe ENZC were probably dumping Unrestricted shares into the market.
But now these are the numbers:
Authorized Shares
3,000,000,000
04/11/2022
Outstanding Shares
2,830,435,953
04/11/2022
Restricted
483,789,585
04/11/2022
Unrestricted
2,346,646,368
04/11/2022
Float
2,313,596,368
03/31/2022
(source)
They absolutely need to get their tweets in line with reality. That's something that could get them in real trouble, not to mention the disappointment and reputational damage being generally bad for stock price.
Stuff like "days to weeks", #Marchtoremeber, March isn’t over yet, HUGE announcements coming.... #SpecialSituations, #Equity, #audited could ire the SEC and that possibility increases investor risk, which also pushes retail away. I can say as an investor, I do feel misled.
This has a bottom if they drop big news or start communicating accurately. Right now it seems to be a falling knife. I feel your frustration and GLTY <3
Great post, thanks.
I have not been happy with the company's poor communication over the last year, as I feel we investors have often paid the price being hyped up by ENZC for good things that don't happen, and left completely in the dark when bad things do happen. But the number of issues ENZC was sorting out behind the scenes is impressive when summarized together as you did. Each appointment and subsidiary and debt negotiation and share class restructuring slowly brought us to where we are today, which is a decidedly better place than where ENZC was a couple years ago.
It's easy to see how all this baggage would have gotten in the company's way had they tried to sweep it all under the rug and spent 100% of their energy on bringing products to market. Obviously that's incredibly important too -- but not if the skeletons could rise up and sink them before they even really got started.
They've also been working with CDMOs and universities and biolabs and marketing firms, sometimes in multiple countries, amidst drama like pulled PRs and broken centrifuges. Patent offices, audit teams and now OTC lawyers. Four different lawsuits. Youtube interviews and the retail convention. Possible investors and future partners we haven't met yet. All that stuff takes time and energy too.
Now hoping enough ducks are in a row they can shift focus to growth goals, and we start seeing some bigger news drop soonishly. :)
Indeed a possibility, but it's their job to communicate about that so we stay in the loop. Instead, they left us trying to guess what happened after all the hype-y tweets and hashtags. The loud buildup followed by silence when they fail to perform is a chronic pattern, discourages investors and reinforces the current downwards market movement. They may not have control of whatever force is delaying their goals, but they do have control of what they tweet.
It exceeds my risk tolerance for adding any more, even at this price. But dry powder on hand!
I like this take on it! Thanks
It's way oversold and double bottoming with the prices in December. I bet it closes green!
If they're trying to dump tens of millions but not for less than $x (until they get impatient), that could be why a ceiling keeps appearing. The tweets seem to promise ever more as the price continues to trend down. You can sorta feel an electricity building in retail right before each big sell -- which would cushion the impact of surprise dumping.
It looks so much like pumping and the company unloading shares, except the financials and OTC numbers suggest they aren't! Very confusing.
This is a volume profile chart so each set of yellow bars is a day. During the dumps you can see sellers going way outside the 'neutral zone' on VolumeZoneOscillator at the bottom. Maybe it's the company selling or maybe it's MM's tossing around big blocks of shares at better and better prices, whoknows.
Huh! Good question. :)
Consolidating it somewhere might somehow make it easier to pay off. Also maybe they could treat it as debt of a subsidiary as a clever structure that limits would-be conversions to help escape toxic debt, if it can legally be re-accounted that way.
If they could discharge old liabilities by any means, I feel like they'd broadcast that with a pretty significant PR. That's another reason I think the debt reported as derivative liabilities thru Q3 2021 is still present in some form. I'm hoping it didn't just get reclassified in an accounting bucket that makes it harder for retail to see conversions coming ahead of time.
I've been digging to try and learn what kinds of convertible instruments might wait in the wings because I think it makes good business sense for ENZC do a reverse split in some scenarios, for example to help increase share price to uplist. After a reverse split there'd be room to increase A/S again without making it as ludicrously high as 3 billion. Having convertible debt that can't currently be converted due to lack of O/S headroom isn't a big deal before then -- but I don't want to end up in a situation where a R/S happens and a bunch of parties find a path to convert.
This stuff is such a tangle. I don't envy the auditors, haha. XD
I found this in Supplemental Information - SHARE ISSUANCE HISTORY AND DILUTION from 03/16/22:
This information lists each original common stock issuance of Enzolytics, Inc. (“ENZC” or the “Company”), and its predecessors, from April 6, 2012 through October 15, 2020. There have been no original issuance of ENZC shares since October 15, 2020. ENZC is a Delaware Corporation that filed a reorganization merger under 251g of the Delaware Corporate Statute on November 16, 2020. All outstanding debt of the Company flowed to its subsidiary, now known as Robustomed, Inc. This means there are no outstanding convertible debt pieces of ENZC common equity, and that has been the case since November 30, 2020. This has been disclosed in all filings made on OTC (both annual and quarterly) since that date.
That would be fantastic if we can pin it down, and it could be another explanation for why some of the old debt is absent in the latest filings. It would have to be a reorganization that happened after the Q3 2021 reporting period since $8,795,075 in derivative liabilities was reported in Q3 (filed November 2021) so if it's there, it'll be in one of the four newest disclosures on otcmarkets.
There's something on page 10 of Annual Report - FINANCIAL AND FOOTNOTES 12.31.2021 about treating old convertible notes as debt of ENZC's subsidiary, but it doesn't look to be talking about the $8,795,075 in derivative liabilities.
The transaction with Landmark was not completed by the Company. Subsequently, on February 14, 2012, the Company issued 50,000 shares of registered common stock to the holder (post reverse stock split) in satisfaction of $50,000 in principal on the notes. The balance remaining is $140,000.00 and was subject to the 251G reorganization and is not convertible into ENZC shares but is now debt recognized as convertible debt of the private entity ENZC Sub, Inc. (“Predecessor”).
Here's a continuation of my earlier posts digging through the new filings. Specifically, here I'm trying to track what happened to the derivative liabilities (convertible notes) that ENZC continued to disclose as liabilities as late as the Q3 2021 accounting period.
I'm currently focusing on these documents:
"Document A": Annual Report - FINANCIAL AND FOOTNOTES 12.31.2021 published 04/18/2022 for period end date 12/31/2021
"Document B": Annual Report - AMENDED FINANCIALS AND FOOTNOTES DECEMBER31, 2020 published 04/14/2022 for period end date 12/31/2020
"Document C": Quarterly Report - FINANCIALS AND FOOTNOTES published 11/22/2021 for period end date 09/30/2021
"Document D": Annual Report - Annual Disclosure Filing 12.31.2021 published 03/31/2022 for period end date 12/31/2021
From Document D, we know that due to accounting for Bioclonetics as a business combination and not a reverse merger, "The Changes in Accounting Method will result in amendments to the quarters ending March 31. 2021, June 30, 2021 and September 30, 2021 immediately upon completion of the audits." So we know that in the documents above, Document C (the Q3 2021 Quarterly Report) will have future amendments.
Derivative liabilities:
These represent liabilities where "there is no floor to the number of common stock shares the Company might be required to issue", I think since the unpaid debt grows with interest. In Document C, ENZC accounted for $8,795,075 in "derivative liabilities" through December 31, 2020 and this number remained unchanged through September 30, 2021.
As of December 31, 2020 these have conversion prices ranging from .0001 to .0034 meaning the holders of these convertible notes can acquire common stock at those prices regardless of current market price, if they convert. Looking at outstanding shares since 2020, NONE of these notes have been converted before Q3 2021 since there has been no change in derivative liabilities balance and no change in O/S thru that period.
See here and here for more info.
Interestingly, the entire derivative liabilities category drops off the books in Document A. What happened?
From Page 9 of Document A:
All other convertible instruments, the Company evaluates embedded conversion features within convertible debt under ASC Topic 815, Derivatives and Hedging (“ASC 815”) to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20, Debt with Conversion and Other Options (“ASC 470-20”). As of December 31, 2020 and 2019, there were no conversion features that met the definition of a derivative.
Under the ASC 470-20, an entity must separately account for the liability and equity components of the convertible debt instruments that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer's economic interest cost. The effect of ASC 470-20 on the accounting for convertible debt instruments is that the equity component is required to be included in the additional paid-in capital in the consolidated balance sheets and the value of the equity component is treated as a debt discount which is then amortized over the term of the related debt to its earliest date of redemption.
Do you see the derivative liabilities totaling $8,795,075 in the most recent 2021 reporting period through September 30, 2021, as being a potential problem?
https://www.otcmarkets.com/otcapi/company/financial-report/312797/content
That $8,795,075 is the same number as the total derivative liabilities disclosed for the period through December 31, 2020. It looks like maybe they haven't discharged any of the old outstanding debt in 2021, which would include some with a conversion to Common shares at a rate as low as .0001 unless there's a way to change the rate?
Something I just noticed, in the latest filing (the 2020 amended filing) the very last page says:
In June 2021, the Company issued 5,000,000 shares of Series E Convertible Preferred Stock and received cash proceeds of $2,000,000.
In 2021, the Company raised an additional $950,000 in cash from subscribed Series C Convertible Preferred Stock.
https://www.otcmarkets.com/otcapi/company/financial-report/327646/content
Still looking over the new filing (Amended Financials and Footnotes December 31 2020) and I'm a little late to the party due to urgent family issues last week.
https://www.otcmarkets.com/otcapi/company/financial-report/275843/content
So far I'm picking up that the company had (and looks to still have?) a TON of toxic convertible debt. Would appreciate insight from some of the regulars on here since there's a lot of complicated data to parse. In particular, if you know of agreements occurring in 2021 or 2022 that canceled or repayed older debt, that would help me in my analysis.
Here's my best attempt to summarize what I'm seeing. On Page 28 there's a lengthy section on Derivative Liabilities that includes the following quotes:
Certain of the Company’s convertible notes are convertible into a variable number of shares of common stock for which there is not a floor to the number of common stock shares the Company might be required to issue. Based on the requirements of ASC 815 Derivatives and Hedging, the conversion feature represented an embedded derivative that is required to be bifurcated and accounted for as a separate derivative liability.
As of December 31, 2019, the Company had existing derivative liabilities of $1,008,604 related to various convertible notes. During the year ended December 31, 2020, $64,624 in principal of these convertible notes along with accrued interest and fees of $52,121 were converted into 1,025,676,038 shares of common stock. Also, $185,378 in principal of these convertible notes along with accrued interest and fees of $58,871 were converted into 941,078 shares of Series C Preferred stock.
On December 31, 2020, the derivative liabilities on the remaining convertible notes were revalued at $8,795,075 resulting in a loss of $10,094,691 for the year ended December 31, 2020 related to the change in fair value of the derivative liabilities. The derivative liabilities were revalued using the Black-Scholes option pricing model with the following assumptions: conversion prices ranging from $0.0001 to $0.0034, the closing stock price of the Company's common stock on the date of valuation of $0.0054, an expected dividend yield of 0%, expected volatility of 383%, risk-free interest rate of 0.12%, and an expected term ranging from 0.25 to 1 year.
As of December 31, 2020, the number of shares outstanding of our Common Stock was: 2,797,935,953
Page 11
(2) Going Concern
Management of the Company believes that the Company will be successful in its capital formation and operating activities, there can be no assurance that it will be able to raise additional equity capital, or be able to generate sufficient revenues to sustain its operations. The Company also intends to conduct additional capital formation activities through the issuance of its common stock to establish sufficient working capital and to expand its operations.
The accompanying financial statements have been prepared in conformity with U.S. generally accepted accounting principles (GAAP), which contemplate continuation of the Company as a going concern.
The Company has incurred an operating loss since inception and the cash resources of the Company are insufficient to meet its planned business objectives. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
The going concern principle allows the company to defer some of its prepaid expenses until future accounting periods. The going concern assumption is a fundamental assumption in the preparation of financial statements. Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading or seeking protection from creditors pursuant to laws or regulations. Accordingly, unless the going concern assumption is inappropriate in the circumstances of the entity, assets and liabilities are recorded on the basis that the entity will be able to realize its assets, discharge its liabilities, and obtain refinancing (if necessary) in the normal course of business.
https://en.wikipedia.org/wiki/Going_concern
NPI needs to get on the ball! That would be their purview, yes? Or whatever firm is building the buy-direct website.
In addition to announcing these plans to begin the production of Enzolytics IPF Immune™, the Company has engaged a national marketing and branding agency as its distributor to advance the product through multiple distribution channels throughout the U.S. (source)
You are correct, I see that in the filing! Updated my post.
I have been operating off "the audit has been proceeding without any issues" from everywhere but the filing. Mybad for the disconnect.
Thanks for your complement. I'm just a fox on the internet, but I do my best.
Personal story, I lost approximately half my investing money last year on a ticker that was stealthily diluting and habitually lying in fluffy PRs. Eventually they got caught in a lie and the SEC suspended them, and though they were unsuspended in a few weeks, the game was over. Leading up to the suspension, people (including myself) saw stuff that "looks bad", didn't discuss it, and just hoped it went away, as you put it. Never again, lol
ENZC is way more established and connected (Samsung, Intel, etc) and I see them taking a much more positive track. I try to be fair and leave no stone unturned, as much to stimulate responses on here as anything. We're all stronger by helping each other refine our DD.
Given this, can you imagine what their accounting looks like? Can you imagine auditing their books? Would then a 15 months long and counting audit surprise anyone then?
On January 11, 2021, the Company engaged Malone Bailey to perform the Audit for the years ended December 31, 2019 and 2020. The Company completed the client approval process in early February. The audit of both years is still in process. No unanswered issues have arisen. It was determined in June of 2021 that the Bioclonetics transaction, which closed in November of 2020, should be accounted for as a reverse merger rather than a business combination and will be reported as such in the audited financials for ENZC. The requested change in accounting method required the books and records of Bioclonetics to be audited for the years ended December 31, 2019 and 2020 in accordance with GAAP standards by a PCAOB auditor. After the hiring of independent Accounting Consultants, it was determined that the Companies did do a business combination not a reverse merger, and as of the time of this filing, the Company has provided all the records and agreements, accounting memos and backup documentation requested by the consultant and the auditor. The Changes in Accounting Method will result in amendments to the quarters ending March 31. 2021, June 30, 2021 and September 30, 2021 immediately upon completion of the audits. There are no disagreements with the auditing firm and the Company is working closely with all parties to finalize the audit.
The shareholders of record for the Series B that the missing bulgarians own still shows a count of 10 (it jumped from 5 to 10 on the disclosure where the Bulgarians first appeared), so I assume they still own the shares. If the shares were canceled or removed in any way, ENZC would need to show us in the latest disclosure, afaik. Maybe it was a clerical error (opening the wrong PDF to copy and paste the tables?) You raise a good question though, if the shareholders of record wasn't 10 I'd say you're onto something.
As an investor I need to see the Bulgarians' shares in the disclosures because I need to know which shares are being converted or flipped from Restricted to Unrestricted. If the shares are refunded there needs to be traceability since the issuances were reported publicly. Hopefully they issue an amended disclosure to correct the omission.
I see it! But that's a good illustration of how saturated some of these retailer shelves can get. Those guys with the green and yellow box, or solid red/solid orange box, have the right idea.
If it's on shelves at all, and people learn it exists and believe it helps their health, people will buy it. All those other supplements have the same marketing challenges in such a crowded space.
The market will probably go there when it gets near there, for discovery of any missing support levels. But the decline from near $1 wasn't because of that gap.
June 15 '21 for around .27. I was up triple digit green and got too greedy. Watched that second candle on the 14th fail to break higher, knew it was pulling back next, and thought I'd ride out the retracement. This has traded below the 200 day moving average ever since. (A bearish signal I generally use to avoid going long.)
Better not to live in the past. One could argue they've missed good trades too, and the weight of suboptimal decisions starts to feel overwhelming. Those who are bagholding here can sell now to trade risk for losses, ride it out for a few years and see how it plays, or average down during the breakdowns to slowly get out for profit on the dead cat bounces.
ENZC has a lot going for it despite what's happening right now, it might be a very different picture if we finally get a slew of news from Africa, the audit, and IPF Immune reaching noteworthy retailers. Once those ventures show actual substance, they would hopefully be perceived as ongoing opportunities rather than forward-thinking sales pitches and should create new value in investors' minds, driving price back up.
The long term potential in the pipeline is undeniable, if the company's products actually work and its business team can finally find its wings.
Everyone with liquid shares except retail?
I think they'll get them in before the yield sign, and that they'll be pretty bland with no new information. Not expecting the market to hype for them this time around. Maybe next time if they succeed in getting product on shelves here in Q2!
Yay, those are the kinda web traffic stats I was trying to find before bed. Thanks.
Looks like OneLavi is virtually unknown and won't likely be bringing them noteworthy revenue. I'm still glad to see ENZC name drop a real storefront because that's less vague than the announcements before. Hopefully they raise the bar with the next one.
Another sort-of safeguard is that they only have 169,564,047 shares left to play with out of the 3,000,000,000 authorized. That's still a sizeable amount, but that's a low enough ceiling they probably want to avoid burning them up while prices are this low.
The whole amount would be worth $11.7 M at current prices, but selling them too fast would crash the ticker and diluting very many could become a PR nightmare. So hopefully they're just dipping into them strategically for operating cash.
This is great to see, thanks for keeping us up to speed.
It isn't Walmart or Amazon but it's a step. OneLavi seems to be a virtual unknown, but at least it's a name drop and a real storefront, which is less nebulous than the PR about 27 companies saying Enzolytics IPF Immune "was a clear fit for their product line". Now we just need to wait for more "soon" - which hopefully won't be many weeks this time.
Here is their facebook:
https://www.facebook.com/OneLaviLLC/
Health, Beauty, and Wellness
15 people like this
19 people follow this
www.onelavi.com/
Yeah, I was wondering that as well. Depending on how well they budgeted and any unexpected opportunities coming from the resale convention, they might need some quick operating cash to help pay new short term expenses. Or maybe an extra expense related to developing the website.
It's not automatically bad for a company to dilute. It'd be better to dilute and maintain forward progress than to run out of money and get stuck. Saying they haven't diluted and then immediately diluting could be unfortunate timing without necessarily attempting to mislead. Being that this is an unaudited pink company, I can also see where the new dilution and poor communication could look like shady business instead.
Hopefully it's for the better! If it's ENZC creating shares to sell for quick cash, we might be in for a red week.
So now we have:
- A supplemental filing from mid-March asserting there is no dilution. Specifically: "No Dilution has occurred since October 15, 2020, when the total issued reached 2,797,935,953."
- Share issuances (convertible Series B), which appear to be held by foreign entities, disappearing from the latest filings.
- The O/S growing by 32.5 Million shares to 2,830,435,953, most likely just after the Q1 filing cutoff end of March. This activity could stay off the disclosures until the Q2 filing which might appear as late as September 2022 due to the three month reporting lag.
I'm sure there's an explanation, and I'm not interested in bashing the company. But realistically, couldn't this kinda stuff start to attract unwanted attention from market regulators?
Good catch yall, thanks for the info.
Maybe they're positioning to raise some operating cash following an upcoming news drop? 32 Million shares at .07 is only worth $2,240,000. I guess we'll see if the selling pressure keeps up and float keeps growing.
The dilution shouldn't be in the year-end report. If the OS showed the increase between 2022-03-30 and 2022-04-11, the activity won't show up in the OTC disclosures until Q2 or Q3 (ie it will be reported in the quarterly disclosure ending March or June 2022)
But yes, apparently they DID dilute right after they issued the supplemental information claiming "no dilution" on 03/16/2022. Oof.
That'd odd. How do share issuances vanish from disclosures?
Disclosure for the period ending June 30, 2021 shows 5 shareholders of record for Series B and the Bulgarians aren't listed in the tables.
https://www.otcmarkets.com/otcapi/company/financial-report/300160/content
Disclosure for the period ending September 30, 2021 shows 10 shareholders of record for Series B and the Bulgarians are all listed in the tables.
https://www.otcmarkets.com/otcapi/company/financial-report/311215/content
Disclosure for the period ending December 31, 2021 shows 10 shareholders of record for Series B but the Bulgarians are NOT listed in the tables.
https://www.otcmarkets.com/otcapi/company/financial-report/325767/content
Series B converts 1:10 into Common shares according to the Seacor Capital conversion from October 2020 where 20,000,000 Series B converted to 200,000,000 Common. The Bulgarians collectively own 2,000,000 Series B, which could then potentially convert to 20,000,000 Common.
Why did their share issuances (and restricted/unrestricted status) fall out of the disclosures? Was it an accounting error? A way to mask conversions until ENZC fixes the omission on a later disclosure? Either way it'd be good to have clarification. (And audited disclosures in general.)
You raise some good questions, thanks for taking the time!
The recent supplemental filing breaking down the last few years of share issuances, conversions, and major stakeholders seems like a PR move to try and quiet the internet rumors of the company stealthily diluting since the last run up to nearly $1. The supplemental filing is not required and there's no requirement how far back it must go.
It does seem kinda weird that they don't account for a great many older shares, or the 50,000 for 1 dilution of the founding shareholders in two earlier reverse splits that you've mentioned, but that was also a long time ago -- and all they're trying to address in the supplemental filing is activity surrounding the last run up to $1 (especially any claims of dilution in 2021 and the growth in float; see pugsieboy's notes)
The audit on the other hand, absolutely needs traceability for all shares to close those swim lanes.
I've wondered before if the audit firms were having trouble signing off on the audit since millions of shares are still in legal dispute (Savov case), but I wonder if those shares could simply be disclaimered to allow the audit results to be delivered anyway since lawsuits often take years.
If ENZC's legacy bookkeeping is actually missing key information, it seems that could derail any successful audit attempt for the forseeable future. But I don't know how we could know that vs just speculating on it, and that would directly contradict the company's repeated claims that the audit is proceeding "without any issues".
As much as people rightfully point out that ENZC is under new leadership, at least in name, the Bulgaria ties and Harry's continuing influence as CFO and CSO do merit some scrutiny.
We have Harry's track record with IMMB to consider, including:
- An SEC suspension for unsupportable claims that IPF-based compounds could be used as an Ebola treatment, at a time when IMMB was unlicensed for using IPF on Ebola and unable to fund the development of IPF for Ebola.
- The Viral Genetics lawsuit from 2008 claiming Harry tried to divert intellectual property to another company, and per the linked article, "had been involved in an effort to bankrupt Viral Genetics" by approving a convertible debenture that increased the company's debt and devalued its stock through dilution.
- The Viral Genetics lawsuit strangely parallels the more recent Savov/Immunotech claims last year that Harry, bookkeeping for IMMB, engaged in fraud and tried to improperly divert ITV-1 IP from IMMB to ENZC. Important to note that Savov's claims are hearsay so far, since they haven't been addressed through proper legal channels, and that ENZC is actively suing him for making these claims.
- That Livingston Asset Management engaged in toxic lending to ENZC, with dilution and conversions which had ENZC in the low trips leading up to the big run that started late 2020.
These bullet points are all their own cans of worms, with a lot of important context I didn't include here, but it's important to observe that Harry is a common factor. As CSO he currently has influence in how ENZC structures its shares. I find the claim from the supplemental filing "No Dilution has occurred since October 15, 2020, when the total issued reached 2,797,935,953" disingenious because we can clearly see new convertable Series B issued well after that date. In this filing for ECPO on page 5, it's suggested that an old Series B converts 2:1 to Common shares, but a Series B conversion for ENZC documented here suggests the Series B issued to current ENZC insiders (including Harry) in December 2020 convert 10:1 to Common shares. Whatever the rate, it's opaque -- and it IS dilution because new shares were created out of thin air to the detriment of current shareholders. The complexity of these structures and the fact that they have occurred before while Harry was in charge of issuing shares, along with the supplemental filing that appears to be deliberately skirting the facts of new issuances, bring to mind this quote that "beyond a certain point, complexity is fraud."
For my own investment strategy, the delivered audit is a must before I'll put more significant money behind this company for anything other than swings, despite all their exciting promises. I've been burned in the pinks too many times to take a company solely at its word.
And quite frankly, my trust has been shaken in the past few months with the empty promises, overdue deliverables, unexpected silence, and aversion to engaging with those who ask legitimate questions. (Lots of people on here are blocked by the company on Twitter for daring to ask real questions. It's a chronic pattern.)
I'm still long with a small core, and still hoping to see this company take a better track!
The other possibility I see is if they were authorized in case the company gets acquired. That way the insiders would get paid for the value of those shares even though the current share structure doesn't have any Authorized left for conversions.
Otherwise it might seem they're there to facilitate conversions/dilution after a future reverse split, either by insiders themselves or as a general bargaining chip for partnerships and lenders since prior bargaining chips are already used up. If ENZC is not acquired, the existence of the shares virtually guarantees a dilutionary change to O/S or A/S sometime in the future.
Harry is still acting CFO and CSO.
He still owns 190,750,000 Series B shares (worth 1,907,500,000 Common shares at the 10:1 conversion ratio) and maybe/maybe not 50,000,000 Common shares according to the latest filing (depending if you look at page 18 or page 5)
https://www.otcmarkets.com/otcapi/company/financial-report/325767/content
Charles C and team brought a better direction for ENZC but Harry still has a lot of influence on the company's business and accounting structures.
Btw, dilution is still dilution if a company waits a few years to actually disburse/sell the issued shares. There isn't new dilution (in Common shares) disclosed currently, but the shares from old dilution came back to bite us last year as evidenced by the growth in float. There was dilution on December 7, 2020 when a bunch of Series B were issued which are someday convertible to common.
Good post and interesting points, thanks.
Excellent post.
I don't think you even read my post. XD
What I said validated parts of what you just said.
This one from 2/22/21 was for HIV and Covid patent applications:
https://www.otcmarkets.com/stock/enzc/news/Enzolytics-Announces-the-Discovery-and-Patenting-of-Eleven-Newly-Identified-Conserved-Target-Sites-on-the-SARS-CoV-2-Vir?id=290842
Afaik that's all they claimed in today's PR. Kind of an annual recap to let us know it's still in the works.
The veterinary market is indeed huge and often overlooked here, hopefully they get those applications in the works ASAP.