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Final comment on this.
If ECIG had to give Mansour additional shares based on their July 2014 SPA, then the wording of the April 2015 SPA would have explicitly and clearly stated so.
It didn't. It stated that the 19.7M shares were to induce Mansour to into into the Credit Agreement ($1M loan) and amend certain provisions of the July 2014 SPA.
You stated, "any offering made to more than 35 people is considered a public offering". That is not a factual comment and is 100% baseless.
"ECIG was required to pay Mansour liquidated damages of 2% of the $20 mil for EVERY MONTH they did not file (or get approval?) for the public offering. That's $400K per month."
Where did you get this from?
"But since the IPO didn't happen maybe it never got brought up until Mansour threatened to sue or even take over the company with their additional $40 mil option."
When did Mansour threaten to sue and what would the basis of the lawsuit be?
If Mansour wanted to exercise their rights to purchase $40M more worth of shares they would have had to pay $6.75/share prior to the R/S and $101.25 afterwards. Why would anyone in their right minds do such a move when the stock was trading in the pennies and the number of shares would not have given them ownership even close to control?
Stick to whatever theory you want. I will stick to facts, not theories...
Again, not a factual statement.
Public offerings are made to the public at large. Unless a company files a registration statement that is then approved by the SEC it cannot legally make a public offering.
ECIG has not had a public offering, end of story.
That clause was put into the agreement because ECIG planned to issue an IPO when they up-listed to the Nasdaq and Mansour wanted to protect their investment (protect their price).
The fact is the company gave Mansour 19.7M shares and there was no legal requirement from a prior arrangement for them to do so. Some have suggested it relates to a pending distribution deal, but I believe it relates to future financing. It very well could relate to a distribution deal though, I am just doubtful of its merits.
No investor got burned as bad as Mansour. I believe ECIG did what they did to heal the relationship. There will be a future benefit to the company having Mansour back on board, either a distribution deal or financing or both...
No, there has not been a public offering at all.
It isn't.
But you are the one who minutes prior to posting this question stated you were one of the investors who participated in the June 2013 offering.
Yet, in September of 2013 you posted that you were not a shareholder.
Just trying to weed through the bullshit.
What you have highlighted is the reset price clause. It isn't anti-dilution related at all, but the exact opposite. If ECIG had a public offering with a stock price under $7.94 they would have to provide Mansour with additional shares (which would be dilution).
The Reset Price clause protected Mansour, not the other way around.
ECIG has not had a public offering, so no shares would need to be given under this clause.
They have had other private offerings and loan agreements.
I am still not clear on whether you held shares at $0.25 in June of 2013?
I have read the whole July 2014 SPA. I have read all of the filings.
What "anti-dilution" clause are you talking about?
There are 2 things that were included in the July 2014 SPA (other than the purchase of 2,962,965 shares for $20M).
1. Protected Mansour if an IPO was issued under $7.94 per share. This clause would provide Mansour with additional shares. This is the "reset price" provision.
2. An option to buy an additional $40M worth of shares at the lower of $6.75 or the reset price. Seeing that there has not been an IPO, there is no reset price. So the option prior to being removed in the last amendment was for Mansour to buy $40 worth of shares at $6.75. That $6.75 post R/S is $101.25 today, LOL!
The option (2.) had a two year window to be exercised. They could purchase the full $40M worth of shares up to July 11, 2015 and after that date the option is reduced to $20M worth of shares up to July 11, 2016. After July 11, 2016 the option expires.
That option is totally meaningless when the pps is at the current state. Mansour wanted this removed so they were not limited to buying shares at $101.25 when the stock is trading at around $0.30...
Believe what you want, but there was no prior legal agreement that made ECIG give Mansour the 19.7M shares.
yerboss Sunday, 09/22/13 10:52:24 PM
Re: None
Post # of 72338
Volatility = Opportunity
I think this stock is in for a rollercoaster ride for the next few months. I am not a shareholder yet. I plan on buying below $10 so I can get at least 5,000 shares without chasing it. I am patient and know there is stock to come into the market on one hand and great promo by a very impressive CEO on the other. Any other opinions?
So, you participated in the June 2013 offering at $0.25 but on September 22, 2013 you were not a shareholder yet?
Can you clarify this for me?
So you were not a participant in the conference call?
That $0.25 price was pre R/S so it equates to $3.75 today.
So no profit for them at these prices...
So those investors who got in at $0.25 in June of 2013 agreed not to sell any shares when their June 30, 2014 restriction was lifted and agreed to wait until the IPO (at which time they sell 30% of their holdings within the IPO). The remaining 70% were restricted until Dec. 31, 2014 (an additional 6 month restriction).
When the IPO was withdrawn, they still held 100% of their shares and by the time they could sell the pps was below $0.25.
My understanding is those investors didn't sell for substantial profits like you stated.
The below post is consistent to what I have been told by 2 other Canadian Investors who got in at $0.25:
ECIGShareholder Monday, 01/05/15 05:56:55 PM
Re: None
Post #19831 of 72331
I've been reading things on here for a while and wanted to contribute my story in case it gave anyone perspective on things.
I was one of 72 Canadian investors who bought into the company back in June of 2013. Together, we purchased 2.5 million dollars worth of shares at .25 cents per. There was a lock-up agreement in place for one year.
In that year, we saw the share price climb to over $40 at one point and hold steady for long periods at well above $20. As it got closer to the end of our 1 year lock up period, the company had a conference call with us letting us know that they were about to go ahead with getting uplisted to the Nasdaq. They were concerned about what might happen to the share price if we all suddenly were able to sell our shares all at once (approximately 10 million shares). Instead, they proposed that we would be able to sell 30% of our shares at the uplisting price as part of the raising of $150,000,000 - and the other 70% would be locked up for an additional 6 months. We all agreed.
Obviously that didn't occur - and by the time our broker's lawyers were able to untangle everything and we had control over our shares, the price had dropped below what we paid for them. Now obviously that was disappointing - and if anyone has reason to be discouraged by what is happening, it would be me/us - except that I'm not - I still fully believe in this company and this management team. In fact, I have added to the number of shares I have. There is obviously a great deal more involved than what we as investors are aware of - but after watching how masterfully they were able to grow their business and revenues, and hearing them speak about how they plan to operate the company, I don't think there is a better investment opportunity in the market right now than ECIG. I'm sure you can make money flipping through this volatility, and who can blame anyone for wanting to make money, but I truly believe that this company and its team are capable of sorting out the debt issues, and growing into the global leader in ECIGs.
If you are long on this stock, have faith - I have done my DD the entire time and have seen nothing to indicate anything but positive long-term growth.
Hey Yerboss,
Are you sure they sold at substantial profits?
My understanding was they couldn't sell their shares until after the Nasdaq IPO (trade restriction period).
Interesting read.
I am totally giving him and the company time. I am not selling for a loss and firmly believe I will make money on this investment.
All I am saying is if Q2 is going to be good and the company has information that if made public would increase the pps and exposure of the company they should release that information now and squeeze the shorts.
I have my doubts that there is NSS here, but even if there is they still would need to cover at some point in order to deliver and if the pps goes up they would be squeezed (along with other short sellers that did borrow).
The short squeeze applies to all short sellers.
If the pps rises based on fundamentals, then there would be too high of a risk to short (regardless of whether you borrowed the shares or not). Nobody shorts a stock when the stock is rising. You only short a stock in order to profit from its decline.
So the only way to stop short selling (NSS or otherwise) is for the company to improve financially, which will then correlate to a rising pps.
If the company has information that, if made public, would cause the pps to rise then that is the very best way to combat shorts.
They have had long enough to load up low...
How about the company do something for us now. I am not asking for much, just get the pps back to my cost average :)
Wouldn't it be better if the company did all of that now? If Q2 results are going to be positive then they are already sitting on that information.
By delaying, they give the shorts time to cover.
I would rather see the shorts/manipulators given a serious kick in the nuts...
Hear, hear!
Couldn't agree more.
ECIG did.
You do not need to be a lawyer, as it is spelled out very clearly in the SC 13D.
Man Fin Co was given 19,666,667 shares for 2 reasons:
1. To induce them to enter into the credit agreement (the $1M loan).
2. To amend certain provisions of the July 2014 SPA. The amendment was removing Man Fin Co's right to acquire additional shares through the reset provision or the option.
Plus, as part of the $1M loan agreement, ECIG gave them 3,828,059 warrants at an exercise price of $0.45 that do not expire until April 27, 2022.
Not my opinion, but facts.
For sure, in time we will know more.
Don't get me wrong, I am not against entering new markets and expanding the company's reach. I do well when the company does well....
Well if costs get to the same level as cigarettes and sale prices for ECIG's products get to competitive levels as cigarettes in those areas of the world, then yes distribution would be economical.
But moving away from the dream world for a second, people who make less than $2,000 a year do not buy $20 e-cigs or $20 e-juice. They buy $2.00 pack of smokes...
I here you though, I have been working on getting my average down. Was trying to get it to $0.45 but I am at a point where I am not willing to invest more $s.
Warrants can be exercised up to April 27, 2022.
I am not a lawyer, but I assume the wording in the agreement makes it legal. I was not and still not happy about what transpired...
That is not true.
They only would have had to give Mansour additional shares if an IPO was issued with a public offer price under $7.94 per share.
There has not been a public offering of shares since Mansour invested their original $20M so no shares were required to be given under their private placement agreement.
We have gone through this already...
They sell a boat load of cigarettes to allot of people. But, cigarettes cost pennies to make and they sell them for under $2 a pack in some of the poorest areas of the world where companies pay government officials more than they pay in taxes.
Pretty different market and price point when talking the products ECIG carries...
And who is saving face here? Mansour was given shares for free. Why not just give them a shit load of warrants at $0.45 to get their avg. down? Then at least the company gets some cash and us retail guys could swallow that allot easier.
How can any investor be glad this company gave away millions of dollars in shares when I know for a fact that there are retail investors who held more than Mansour (not from a $ value but # of shares) prior to them being given 19.7M shares and those investors were not given anything.
Distribution in the Middle East and Africa is not economical and they know it. This was about securing future financing. They may spin it as a distribution deal but buried in that will be another financing deal that will work out golden for Mansour.
So ya, Mansour has deep pockets and ECIG will need to dip their hands into them before year end.
Are you asking or pointing something out?
I have and there is no reference to distribution or anything close to it.
Have you read it? If you did, you will see it was a private placement plain and simple.
It was done when the company was still pursuing a Nasdaq uplist so within the agreement was a reset price clause. Basically, it was Mansour getting in prior to the IPO associated with the Nasdaq uplist getting implemented.
Your question as to why is answered by anyone who invested in the company during those times or would buy shares under their Nasdaq IPO ($4.50). They saw a future value and thought the pps would go above their purchase price ($6.75 or reset price based on the IPO price for Mansour). If you also looked at the historical price of these shares there were times when they traded around $20, so buying in at $6.75 with the anticipation of $20+ would be enough for them.
The other added benefit of their investment was a seat on the Board, so they could influence the company moving forward. However, they never took advantage of this ability and that tells me it was strictly a financial investment and not about forming a long term relationship with the company.
I would be pissed too if my $20M investment was now worth less than $60K.
Moving forward with distribution would mean they were contracted to do so and that was not the case. They were investors plain and simple.
I have posted before that the Mansour relationship is being over-blown here. Their geographical area of influence is not areas that ECIG should be concerned with and I do not believe this has to do anything with distribution but more so with access to future $s. There are many distribution companies operating in financial viable areas of the world that relationships could have been formed at much less cost.
I think ECIG knows they are going to need further financing and they did a solid to Mansour in order to gain access to their money again (knowing they are not getting anything from big banks or institutional lenders). If you recall, the original agreement granted Mansour the ability to purchase $40M more of the company and I think ECIG wants access to that $40M.
All my opinion, but I am skeptical of the Mansour dealings...
Like the deal he made with Mansour?
Here is 19.7M shares and 3.8M warrants at $0.45 to get your average down from $1,518.75 to $0.92.
We will just say for reporting purposes that it was to induce you to loan us $1M.
That is the costliest loan I have ever witnessed...
A way to get their average down to be more in line with the company's current state...
If they were in at $0.25 pre R/S that equates to $3.75 today.
Lets say someone had invested $25K pre R/S at $0.25/share:
They would have held 100,000 shares.
Then the R/S results in owning 6,667 shares at a price of $3.75.
ECIG is then driven down to $0.30 and you double your investment (invest another $25K).
That is 83,333 at $0.30.
So now you own 90,000 shares at an average of $0.56 instead of 6,667 shares at $3.75....
But lets add another scenario:
Instead of doubling your investment, you triple it after the pps is driven down to $0.30.
So for an additional $50K, you acquire 166,667 shares at $0.30.
So now you own 173,334 shares at an average of $0.43 instead of 6,667 shares at $3.75....which puts you at an average under the warrant exercise price...
So maybe it isn't about getting back at management, but more about getting their average price to a level that makes this a solid investment for them once again.
In the example I used above, if this hypothetical investor still believed in the fundamentals of this company and thought it would go to $3.75 per share, by sitting on their hands the upside is breaking even. By adding to their investment once the share price has been depressed they can make 5-10 times their $s...
I would suspect if things were going as well as some have posted we would be seeing significantly higher demand (volume) than what we have seen lately.
The CTO is in Canada, so is Canada the only place that has interest in this company?
LOL!
So you as an investor are only concerned with cash-flow from operations? You do not care what the company is doing from an investment perspective or financing perspective?
Good to know...
I will be amazed and extremely happy if that is the case...
Agreed, this payment reprieve does gives them some added time to activate Dan's plan.
LOL!
You need to stop...your killing me!
So you are telling me that ECIG is positive or close to being cash-flow positive when you exclude proceeds from financing activities?
For me, cash-flow from debt is still debt and means they need loans to fund operations (tells me their revenues are not high enough or their expenses are too high for said revenues).
Cash-flow from equities mean my ownership is diluted. I would be okay with that if the proceeds improved their B/S (paid off all their loans) and also provided cash that could be used to increase Revenues...
Proceeds from Financing Activities is an item on the Cash Flow Statement you joker!
You are hilarious and I now know for a fact that you have no idea about accounting related topics...
You have also obviously never completed a Statement of Cash Flow or taken any accounting courses...