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I replied to you because of your reply to Ecmoney.
You belittled someone who was right when you were wrong (and continue to be wrong), making you the fool.
Take your conspiracy theory elsewhere. I am done with you.
Please ignore me!
That would be insanity...LOL
I hear what you are saying, I just need my trust to be earned (nothing since the 10-K has done anything to persuade me to add to my position).
I am choosing to give Dan a chance to do just that though (earn my trust). My only other option is to sell at a loss and move on.
At one time I was only focused on the positives (I was drinking the kool-Aid), maybe I have been focusing on the negatives lately but that was my reaction to what was going on within the company and the invalidated pumping/hype here.
I am not deep into this play so I am willing to gamble and see if it pays off.
Using your analogy, I do not think the forest is all doom and gloom. The trees in front of me are not looking all that great, but hopefully it doesn't spread throughout the forest...
I promise you, we do want the same thing.
Good advice, I am focusing on the tree and not the forest.
Thanks for the post. I am having a horrible week and need to cool off...
That is not what you said and you belittled someone who actually posted a fact.
Regardless, I have never made false speculation, scare/fear mongered, or made deceptive statements.
Warrants by their nature are dilutive. Is that deceptive, is that speculation, is that fear mongering or is it a fact?
If a company files Chapter 11, what happens? Have anything I stated on that topic deceptive, speculative, fear mongering or factual?
Based on the 10-K, is this company in a solid financial situation? Have i evaluated their financials wrong and made deceptive, false speculative and deceptive comments on the financials?
Read every post I have made and tell me exactly what I have stated that was false, deceptive and scare/fear mongering.
You add no value here so I am not even sure why I am responding....
If that was the reason to give shares to Mansour it would/should have been stated in the filing.
Stated in the filing was "Man FinCo acquired an aggregate of 19,666,667 shares of Common Stock from the Issuer (A) to induce Man FinCo to enter into that certain Credit Agreement dated as of April 27, 2015..."
That credit agreement is a $1M loan that comes with 3.8M warrants.
So go ahead and call me misguided. I would say I am pragmatic.
If, moving forward we tap into their distribution chain, I agree that would be beneficial. Additional distribution and adding product to other markets is never a bad thing. But, distribution in most countries is not a significant barrier/challenge and this was a HUGE price to pay for distribution.
Dude, I am in the same boat as you (had 4 opportunities to double my $s and re-entry with profits). That was on me. Now, I need to sit and wait things out.
If there is manipulation going on, strong Quarterly reports is what we need as a counter.
As for Mansour/Man FinCo, understand that this was ECIG doing them a solid, not the other way around.
Man FinCo was in the red big time. For their $20M investment last July their shares were worth $75K today. I am down a few K and I am frustrated, imagine if you were down almost $20M (pretty much your whole investment)... Then, to further weaken their position, the $41M loan agreement done last month removed Man FinCo's rights to acquire additional shares of Common Stock through the Reset Provision or the Option.
So ECIG gives them 19.7M shares to induce them to loan ECIG $1M and attached to that $1M loan is 3.8M warrants (at $0.45 exercise price).
So Man FinCo's average cost per share went from post R/S of $1,518.75 to $0.92.
I am so very tired of people spinning a positive out of a negative situation.
OMG is this a joke?
Only shareholders of record can vote, which is the O/S.
So the answer is yes, insiders and preferential shareholders control the vote and us retail investors have no say moving forward.
"Go back to school, my dear"....that is sooo funny given what you just posted!
I never said they would sell immediately, only that they would sell when the pps is above $0.45 and that warrants are dilutive.
You and me both.
They wouldn't exercise them below $0.45 because there is the risk it drops even further.
The safer play is to wait for the pps to be $0.50+ (or at whatever level above $0.45), exercise them, and sell (guaranteed profit).
I am with you regarding Q1 needing to be respectable...
Ummmm, because you want to make money.
If the pps is $1.00 and you hold 157M warrants with an exercise price of $0.45 you do not want to make $86.35M?
Do I assume the lenders would want to make more money than just the 12% interest? Absolutely! Why do you think the warrants were part of the loan agreement?
So when you assume that the warrants will not get exercised because that meets your objective (how you want things to play out) it is ok?
My assumption is based on reality.
In the real world, someone who was issued warrants exercises them when the pps is above the exercise price. That is not an assumption, that is a fact.
The fact the loan included warrants makes the loan dilutive.
Only way the loan is not dilutive is if the pps never goes above $0.45 for 7 years because under that scenario the lender would not exercise the warrants.
That is the point SeanBoy is trying to make.
So if you think the pps will go above $0.45, then you believe the warrants will be exercised, which is dilutive.
It sure would be.
What do you think warrants do? When exercised, they increase the O/S (which is dilution).
LOL
The warrants will not be exercised under $0.45 so there will not be any cash related to the warrants until such time.
If the pps does go up (would only do so based on positive financials) and the warrants get exercised, I doubt the funds go towards growth...right now they need the funds for operating expenses.
The company had no choice, as they needed the money to survive.
So either they agree to those terms and get the money, giving them a chance, or they file for Bankruptcy.
Oh ya, look at the 8-K.
"The Credit Agreements are secured by a first priority security interest in all of the present and future assets of the Company. In addition, the Company pledged all of its equity interests in its subsidiaries as security for its obligations under the Credit Agreements"
Exactly.
You would just buy the shares at a lower price through the market.
They loaned the $s because it was a win win situation for them.
If the company is successful they get a 12% return AND 157M shares (which could be more).
If the company is not successful, they OWN it.
Yes, because they would OWN this company when the company defaults and not just this company but a company with a much improved B/S.
Example:
Current B/S
$10M in Assets
$8M in debt (of which $6M is to senior lender)
$2M in Equity
New B/S (after Chapter 11 Restructuring)
$6M in Assets (bankruptcy valuation)
$6M in Equity (100% to the senior lender)
After Chapter 11, no debt, old shareholders are wiped out (we get zero), and unsecured (lower debt holders) get nothing.
Who makes out like bandits? The Senior Lender!
If Q1 is not good, then pps is under $0.20 and no warrants would be exercised, meaning no $s from those warrants.
So guess what happens then?
Seriously?
$10-15M in Q1 Rev would drop this into the $.30s and we might see pre R/S price.
Good point.
I would think they exercise the warrants if that happens (reap the rewards of the buyout deal).
I totally agree in that we need to give Dan some time to do his thing. Judging someone on such a limited time period is not fair.
With that said, I am not so sure obtaining a loan with those terms was anything close to an impossible task.
Also, not so sure how removed we are from the cusp of the abyss. If the operations/financials do not improve we are still in trouble and we are going to go from 65M O/S up to the A/S so how high can this really go in the next 1-3 years...
1. Doesn't matter if the loan is paid in full, they have 7 years to exercise the warrants. They do not go away until that 7 year date.
2. Lenders can only hold 4.99% of the O/S (Upon lender notice this can be lower, but can go up to 9.99%).
3. Not sure where you get the $110M, but $44M will probably go towards paying the debt come maturity (hopefully the lenders exercise enough warrants up to that date).
4. Only way the warrants do not get exercised is if the pps stays under $0.45 or the company files Chapter 11.
I assume that the majority of the $41 probably went to old debt.
We will see in the 10-Q next week, but I would assume we are still within the 300M A/S (previous warrants and convertible notes would now be down below 34M).
Well, they had debt that was due and didn't have the cash to pay it.
So a new Loan was required to keep the company going.
"If we do not obtain additional financing, we will not be able to conduct our business operations, refinance or repay portions of our indebtedness and achieve our business objectives."
People stated (their opinion) that the loan was a good deal and some said the pps would increase as a result. It wasn't anything close to being a good deal (other than for the lenders), but with the company's financial situation this is what was available.
The new loan was required to keep the company afloat so I guess in a way it was a good deal...
You are correct, there is no required today for a R/S.
However, in the future if the O/S reaches over 143M (excl. Warrants related to this loan), the Warrants if exercised would go beyond the 300M A/S. They would then have to do a R/S or increase the A/S or pay out cash (Insufficient Authorized Shares provision). If there is no cash to pay out under this scenario, they either borrow more or the only option is to R/S or increase A/S.
Within the next 7 year timetable, if for any reason the O/S increases beyond 631M, the Warrants would increase as well due to the structure of the agreement (no less than 25% of the total outstanding).
Example with O/S at 650M:
650M O/S * .25 = 162.5M Warrants (Lenders receive 4.7M more Warrants)
Example with O/S at 750M:
750M O/S * .25 = 187.5M Warrants (Lenders receive 29.7M more Warrants)
That's right, "The proceeds of the Term Loans will be used primarily to repay certain indebtedness of the Company..."
Here are some other points:
1. The Lenders will receive $13.3M in payments ($700K from Oct. 2016 - Apr. 2018). This represents 32% of the original loan.
2. On April 28, 2018 (maturity date), the Lenders will be owed just over $44M (principle, plus interest accrued, less payments made). This is a huge liability hanging over ECIG's heads and is greater than the original loan value.
3. Only 3 things can happen based on the Warrants that have been granted as part of the deal.
Either;
a) Shareholders approve another R/S, or
b) Shareholders approve an increase to the A/S, or
c) A potentially destructive cash payout (based on the Insufficient Authorized Shares provision)
4. If the company defaults; Chapter 11 restructuring, the Lenders would receive 100% of the new shares, junior debt holders would get nothing (or close to it), and existing shareholders would get nothing.
So at best case scenario (best case for the existing shareholders), the Lenders receive over $57M in cash for their $41M loan and would hold an influential position in the company moving forward (assuming they hold 9.99%). Worst case scenario (worst case for the existing shareholders), the Lenders do not receive all funds owed, ECIG goes through Chapter 11 restructuring, and the Lenders end up with ownership of the company (a company with an improved B/S) for their $41M (less any principle payments received).
Seems to me the Lenders make out golden in either scenario (wish I had $41M I could have loaned) and we either make out golden or lose everything.
Gotcha is the sense I understand, not that I "got you"...LOL
I am in total agreement with you.
Gotcha, so the provision limits the rights the lender would have from an ownership perspective (basically forces them to sell a large portion of their shares).
SeanBoy,
Have you looked at how the Beneficial Ownership Limitation (I'd go with 9.99%) effects the calculation?
Okay, I will keep an open mind...
I will ask you to stop calling for a PR without any substance.
They are a week away from releasing the Q1 report, at this time what could they possibly release of any substance other than that?
Your hilarious.
Lets make a friendly wager. Other than the 10-Q, I bet they will not release anything within the next week.
If I win, you post that I am the king. If you win, I post you are the king.
What exactly would this PR say?
There is nothing to release so these statements that they will release a PR in order to move the stock up is ridiculous.
Seriously?
You expected 12% interest and 157M warrants?
Do the math...
Wow!
I am not sure what I was expecting, but again my expectations were way too high...
ECIG has just been sold!