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Hopefully this helps with your confusion:
VIP is a wholly owned subsidiary of ECIG. This means ECIG owns 100% of the common stock in VIP. VIP is a separate company and ECIG is a shareholder.
VIP's Administration process is all about the creditor's interests (VIP creditors). Basically the common stock that ECIG owns of VIP is worthless. That is what the Administrator is saying. Once the creditors are dealt with there will be nothing for ECIG, as shareholders would be the last class of creditors to receive anything and they only receive something if all other creditors (secured, preferential, and unsecured) have been paid in full. Looking at VIP's assets and liabilities it is very easy to see that ECIG will get nothing through this process.
With regards to ECIG, Chapter 7 is the end of the business, ECIG shares are worthless (only shorts are/should buy). All of ECIG's assets are going to be liquidated and proceeds distributed among its creditors according to priority (Strong).
I honestly thought Chapter 11 would happen with Strong getting full control of ECIG, but Chapter 7 means this was a way worse situation. Chapter 7 means Strong does not come out rosy like some assume, but under both scenarios the shareholders end up with worthless paper.
If all the warrants and options are exercised it would bring in $58M, so I would assume the conv. debt ($20M) would just be paid off in order to minimise the dilution and need for an A/S in the area of 700M.
But whats another 100M, when the company hands them out like candy....
Keep in mind he would own the company after all the bankruptcy filings are done....
So for $80M he owns ECIG (with limited to no other shareholders and no debt)...
Hmmmm
And......almost 300,000,000 warrants issued!
Fully diluted they are already over their Authorized Shares.
They will not issue 1 share, never mind 220M...unless another R/S or A/S increase.
That is why it is debt, debt, and more debt.
If they can pull a rabbit out of their hat and restructure their current liabilities, that is only a stay of execution if revenues do not drastically increase.
If revenues remain stagnant we are facing bankruptcy once again and we will all be receiving a letter in the mail asking us to vote on a R/S and A/S increase.
There is a higher probability my investment turns to zero than turning a profit here...and my average is under $.50/... That is the cold hard truth.
There is no manipulation here. The shares are at this level based on the fact the company is on life support (once again).
No point in selling now. Should have right after the R/S. Would have made a little, but my greed got the best of me and I was too wrapped up in the potential to really see what was happening.
I do not need the loss right now and have already internally written off my investment. Plus, I am not very deep into this stock so can afford to play it out.
If a miracle happens I can make some money, if not I have a loss to offset other gains down the road.
Will just wait things out...
I am just trying to convey where I think the company is at right now. Not trying to bash, just trying to be real. Things are very dire. That is the reality. Not so different from when they had to do the R/S. If that didn't happen the company was done. Similar to the current situation, if they do not address the current debt, they are done (or more to the point, our investment is done).
Current portion of debt is $28.6M. Add the $4.7 M of A/P and the $7.4M of interest and other payables and we are now at over $40M that needs to be paid off this year (and that is without adding the new debt, interest and payables that will occur over the rest of the year).
So without even factoring the operating losses they incur, they somehow need over $40M in cash just to pay their current debt.
The fact is it isn't easy to just renegotiate debt, never mind at those levels. Revenues have peaked and have actually dropped. Yes they have made allot of improvements on the cost side and other things within the organization, but who in their right mind would loan them money under traditional terms right now? In order to renegotiate or obtain additional financing they are going to have to concede things that are not in current shareholders best interest. Plus, what collateral is left to obtain any new loan? $10M in current assets isn't going to get them anything when their current liabilities are 4 times that.
They gave millions of shares away to obtain a few million, what do you think they will give to get $40M?
I see a way for this company to have a future, but that means I would have lost everything....
I do not find the situation the company is in amusing at all. My paper is just as worthless as yours right now.
I find your rose colored glasses view of the company's situation amusing. I actually find all commentary on this board pumping this company laughable. Either you are purposely misleading or ignorant. I feel sorry for anyone regardless of which one...
Laugh away at my commentary, there is no analysis in it other than facts...
I am not viewing the Balance Sheet but rather the Income Statement.
I am also viewing the Cash Flow Statement and they needed to borrow $6.9M in the last Q to exist.
Looking at the Balance Sheet, this company has over $100M in debt (which is still growing) and Current Assets of $10M.
Their current ratio is atrocious and shows that they are in serious jeopardy of not being able to pay off their short-term liabilities.
Bottom line is this is not a company that is sitting on a pile of cash to cover their operating losses. As a result, they need to borrow more and borrow more and borrow more and eventually that well will run dry.
I suspect the debt holders will eventually own this company and we will be stuck with a bunch of worthless paper...
That is actually hilarious!
Good apples to apples comparison there...
You do know that Tesla wouldn't exist if not for government subsidies right?
And the facts are that Tesla on a number of occasions actually was going out of business.
Is ECIG going to get billions in subsidies like Tesla did?
Yup, you got it.
Except $3.2M in interest that you missed.
So $6.6M in gross profit with operating and interest at $14.4M...so my twice as much was a little generous...
When we factor in foreign currency translation losses and losses on extinguishing debt the pictures gets so much better...
Q: Help me understand your reasons for thinking they are doing so bad?
A: Are you actually serious? How long do you think they can continue with those numbers? No warrants being exercised at these levels, so they will need to either borrow more or issue more shares? They cannot even make their interest payments now...They are not even remotely close to "being in the black".
LOL!
Have you looked at their financials?
A company that makes 12-15 a quarter but spends twice that a quarter is still closer to bankruptcy than profitability...
There is a reason this stock is almost worthless ($.01/share pre R/S) and it has nothing to do with manipulation.
Not pessimism, but realism.
As toxic as it gets for us current shareholders...
People talk of these friendly lenders...makes me laugh knowing they can own the company if default occurs (and guess who gets nothing under that scenario).
When interest payments are eating almost half of gross profits the debt is toxic, just in a different way...
We need $25+M in Q revenue and we are not even close to those levels.
This company is in serious trouble. I was hoping to sell most of my position by the end of 2017...now I am just hoping they still exist by the end of 2017...
Haven't posted very much because this stock hurts to look at it...
I've discounted my calculation based on the debt.
I am not using fully diluted either, but I factor in the warrant liability etc.
In the end we both are probably valuing the company pretty close to the same, just using a different calculation.
I am not selling anything until 2017 though (probably after Q2 is released), so I am hoping for something in the $3 range (assuming continued growth). that would be sweet!
If we see $18.5m in Q4 revs I do not see how we can be under $1 by EOY.
If 2016 Q1 shows further revenue growth and the financials continue to improve I do not think $2 by EOY is unrealistic.
With that said, I have been soooo wrong on this stock it isn't funny...I think we easily should be above $0.50 right now....
Your an idiot, so please ignore me.
I think you both are missing my point.
Some, who shorted the stock at say $6, got squeezed as it got manipulated up to $21.
But that says nothing about those who shorted at at $21 and made massive $s when the stock fell to $0.20...
Cynk is one of the most recent highly publicized penny stock scams out there.
Some shorts got squeezed because they new the company was worthless, but just timed it wrong or were trapped by those manipulating the stock.
Again, I would not use Cynk as an example of anything other than OTC pump and dump schemes.
Cynk was a total scam. No assets, no revenue, address for company didn't even exists...
That is not an example you would want to use here IMO.
To add, Q2 2015 was the best (by far) financials the company have released since I started watching them (and definitely since I have been a shareholder).
The latest results are better than last Fall when up-listing was being pursued.
What has changed? I would say quite allot.
1. Revenues did increase. 8% Q2 over Q1 and 6% Q2 2015 over Q2 2014.
2. COGS has decreased significantly over the past four Qs. Gross Margin was a horrendous 86% in Q3 2014, then worse at 88% in Q4 2014, but down to 53% in Q1 2015 and was all the way down to 48% in Q2 2015.
3. D, M & A expense as a % of sales decreased. 19% in Q2 compared to 31% in Q1 and compared to 44% in Q2 2014.
4. S, G & A expense as a % of sales decreased. 72% in Q2 compared to 176% in Q1 and compared to 160% in Q2 2014.
5. Interest expense down. $26M in Q4 2014, $32M in Q1 2015 and down to $14M in Q2 2015.
So if you listened to the conference call or read the summary that was posted here, you can also anticipate increased revenues (three strategic drivers that are focused on distribution and how they will go to market).
Factor in addition cost saving initiatives and their bottom line will continue to improve.
As for the warrants, nobody exercises warrants (pays the company $0.45 per share) unless the pps is above that. Are they going to get out at $0.46 and make $0.01 per share (a 2% return) or would they wait for a higher price? Based on who the warrant holders are and the fact they know more than retail investors (us), I would be very surprised if any warrants were exercised when the pps is under $1.00. With that said, cash is king, so some warrants could be exercised under that price but not many imo.
You bet, they are getting there. Q3 should be even better based on the work that has been done and direction they are going in.
They still need to get their Professional Fees & Admin Expenses down but they sure made some headway on that. Glad they are breaking down their SG&A expenses in more detail on the reports now.
Now they need to increase gross profits (increase sales) to justify their remuneration (salaries, benefits, and stock based compensation).
Things are looking much better today than they were three months ago and we are in a different universe from where they were six months ago...
PPS increase will be muted based on all the warrants out there that will be exercised above $0.45, but even factoring in the stock dilution we are extremely undervalued right now.
So at this time last year we had similar financial results (actually this Qs results are an improvement due to the cost reductions) and the stock was trading at $7/share...
$7 being pre R/S price so that equates to $105/share post R/S ($7 * 15).
Yet we trade at $0.41/share or $0.027 pre R/S.
1/2 Billion Market Cap last year compared to $30M now...
This is so undervalued right now it isn't even funny.
No way we should be trading below $2 based on this Qs results and the improvement Dan has been able to show in his short time leading the company.
COGS % is already fairly reasonable (53% of Rev, so 47% Gross Margin) and was coming down Q over Q (from 86% in 2014 Q3 to 66% in 2014 Q4 to 53% in 2015 Q1. That shouldn't be the focus.
What everyone should be paying close attention to is Selling, General & Admin expenses which have been greater than revenues every Q. That is insane!
Also interest expense, which was also more than total revenues in 2014 Q4 and 2015 Q1. I anticipate with the $41 loan (with interest payments paused) that this item will be way down for Q2.
Also keep in mind the Distribution, Marketing, & Advertising expenses which really rose in Q1 this year. If that translates into sales increases I would be okay with it, but that really needs to be the case to justify the spend in Q1.
It is an idiom.
The meaning is an optimistic perception of something, often thinking of it as better than it actually is.
Basically, if one is looking at something through rose-colored glasses they are only seeing the positives. They do not see the whole picture which can include things that are not good.
If you actually wore rose-colored glasses, you would see the world in red though...
You called it Dude...
A distribution deal isn't worthy of NR????
Why wait for Q2? Stock price is getting hammered and volume is low (no interest), yet the company is silent...
So unless you wear the rose colored glasses you should go away?
So if you are not going to post only positive "rah rah rah" posts you are wasting peoples time?
We sure don't want people posting facts here...that would result in some semblance of a balanced discussion (based on the cheerleaders posting their hopes and unsubstantiated claims).
The fundamentals are fantastic! The pps is dropping because of manipulation! Our revenues are going to be mountainous! Cash-flow positive this Q! Dan will save the day! We are all going to be rich! Just wait until Q2 (then it will be just wait until Q3, then it will be just wait until next year)!
Talk about wasting time...
LOL - way to put a positive spin when we are trading in the 20's...
With the pps at these levels the company is not getting any cash from warrants being exercised...
So to fund this pos, is another loan coming and if so at what cost (loan shark interest rates and massive warrants)?
if this company was even close to being cash-flow positive we would not be seeing this pps.
Dan must be exhausted after over a month with not even a relaxed moment...
Someone with nothing better to do…
Seriously, the reason I checked into you further is you stated some information that was inconsistent with what I was told by individuals who I know personally were part of the private offering back in 2013.
I don't know you and this is a message board. Just wanted to know whether I should pay attention to anything you post…because from time to time you post as if you have information that is not public.
The Registration Rights Agreement protected Mansour in any public offering, so they would be a registered holder prior to any offering which would enable them to sell their shares within that offering.
Whether the offering goes through or not is not the basis for the 2% liquidated damages though. The liquidated damages would be applied if ECIG didn't file the appropriate registration statement.
I can see where your confusion was though.
I apologize for my tone as I did not realize you were referencing the Registration Rights Agreement that was incorporated in the SPA. I could have saved us allot of time...
OMG! Do you even know what that section of the SPA relates to?
So you are not going to tell me where in the SPA or where in any company filing there is wording related to ECIG being required to pay Mansour liquidated damages of 2% of the $20M?
Oh right, your done because there isn't any....
Hey Stok,
At least our posts are activity on the board...this board is as stagnant as the stock this week (not allot going on)...
Sorry for boring/bothering you.
When someone says something that is wrong/false, I find it hard to bite my tongue.
Simple solution is to ignore me...
I will ask a 2nd time then, direct me exactly where in the SPA or any company filing where there is a liquidated damages clause that you are referencing?
If I have missed something, tell me where it is...
In what way?
LOL!
The amendment was very clear. The April 2015 SPA amended the July 2014 SPA by removing Mansour's rights to acquire additional shares through the reset price provision or the option provision (option to purchase $40M worth of additional shares).
The Investopedia quote states "generally" and relates to an explanation of what a public offering is, not a legal definition.
Look at what a legal definition is and you will not find any reference to 35 people. LOL.
Public Offerings are made to the public at large.
Public Offerings are governed by federal and state regulations.
Before a public offering can be made, a company must file with the SEC a registration statement. The registration statement must contain the price at which shares will be offered to the public and other pertinent information.
Unless the registration statement is approved by the SEC, it cannot legally make the public offering.
ECIG has not made a public offering.
I am tired of this conversation, believe what you want.
"If at first you don't succeed, give up. No use being a damn fool."