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It's Carl Grover's call on how to proceed, but it's pretty clear they're not going to repay him according to the original terms of the note. Carl needs to decide if he rolls the dice and lets the company continue to operate, or brings things to an end in December.
If he thinks his equity is $0, then he's playing to preserve as much value as possible on his $5 million secured note. It's a hard call by Carl Grover since he has so much tied up in this company. I'm glad I'm not in his shoes.
Every time the company makes a dividend payment on the preferreds, that's cash that's not going to Grover. That's got to burn.
Other than management, no one knows for sure how much cash they have on hand since they haven't filed their financials since the end of the third quarter 2019! That's why Nasdaq delisted them.
Their last 8k filing from a few weeks ago showed an unexpected write-down of +$10 mm, so we know they won't be getting paid the $5 million that their the Nicaraguan partner owes them.
YGYI's last filing showed $7.2 million of cash on September 30, 2019.During the first nine months of the year, the company's cash flow statement showed it burned $7.7 mm of cash, or $2.5 mm per quarter. We're now 4 quarters removed from their last filing. If you give the company the benefit of the doubt and assume they burned an average of $1.5 mm per quarter, not $2.5 mm as they had been doing, that's about $6 million, leaving $1.2 million cash on the balance sheet at September 2020. $1.2 million isn't going to retire a $5 million obligation.
Why do you think they have the cash to make the $5 million payment?
Happy to play along, oltimer.
Please explain what happens on December 12, 2020 when the company must repay $5 million to its secured debtholder?
YGYI doesn't have enough cash to make this payment and cannot arrange a refinancing. The secured debtholder lacks any incentive to restructure his debt. The company can't offer new collateral, can't make a partial cash repayment on the note of any size, and the company is likely continuing to burn cash.
If the company's future looked positive, and there's no reason to think the company's future looks positive, the debtholder could agree to convert some debt into stock in a transaction that would severely dilute equity holders.
If the company converted a mere $2.5 million of debt into equity at $0.30, the company would need to issue 8.3 million shares ($2,500,000/$0.30). The company has about 30 million shares outstanding, so that transaction would increase the share count by almost 30%. This is a good transaction for current equity, only relative to a bankruptcy, but would drop the share price to $0.20.
Why someone with a secured claim would give up any of that for an equity claim on a company like YGYI is inconceivable. For that reason, the likely outcome to this is a bankruptcy. Not saying it's the only outcome, but a very likely one.
How, oltimer, does the debtholder and the Company resolve the repayment issue on December 12, 2020 and avoid bankruptcy? It's a question for you to answer if you claim the company will not file for bankruptcy protection.
Unless your investment is in Ted Inc. and not YGYI, oldtimer, you're better off using your energy to understand what's going to happen to your capital invested in YGYI. A good place to start might be to ask yourself what happens on December 12th when YGYI can't repay Mr. Grover?
Here's a summary of transactions to consider if you plan to hold YGYI shares:
(1) Carl Grover lends $5 million to YGYI & CLR Coffee Roasters on December 13, 2018; YGYI agrees to repay Mr. Grover on December 12, 2020. See footnote #1 below from YGYI SEC filings.
(2) CLR Roasters lends $5 million to H&H Export in December 2018; H&H Export agrees to repay CLR no later than November 30, 2020. See footnote #2 below from YGYI SEC filings.
(3) On October 13, 2020, YGYI discloses that it must write down the value of its loan to H&H Export to $0. In other words, H&H Export will not pay CLR Roasters (YGYI) anything on November 30, 2020 and YGYI must recognize $5.3 million of losses on its income statement. See footnote #3 below from YGYI SEC filings.
(4) On December 12, 2020, YGYI owes Mr. Grover $5 mm principal + $800k interest. See footnote #4 below with simple interest calculation.
(5) YGYI has no cash to repay Mr. Grover and fails to find someone as insane as Mr. Grover to refinance his maturing note which is backed by green coffee in Nicaragua that's already written down to $0. What do you think happens next? See footnote #5 below.
FOOTNOTES:
(1) On December 13, 2018, CLR, entered into a Credit Agreement with Carl Grover (the “Credit Agreement”) pursuant to which CLR borrowed $5,000,000 from Mr. Grover and in exchange issued to him a $5,000,000 credit note (“Credit Note”) secured by its green coffee inventory under a Security Agreement, dated
December 13, 2018 (the “Security Agreement”), with Mr. Grover and CLR’s wholly-owned subsidiary, Siles, as guarantor, and Siles executed a separate Guaranty Agreement (“Guaranty”). The Credit Note accrues interest at eight percent (8%) per annum. All principal and accrued interest under the Credit Note is due and payable on December 12, 2020.
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(2) In December 2018, CLR advanced $5,000,000 to H&H Export to provide services in support of a 5-year contract for the sale and processing of 41 million pounds of green coffee beans on an annual basis. The services include providing hedging and financing opportunities to producers and delivering harvested coffee to the Company’s mills. On March 31, 2019, this advance was converted to a $5,000,000 loan agreement as a note receivable and bears interest at 9% per annum and is due and payable by H&H Export at the end of each year’s harvest season, but no later than October 31 for any harvest year. On October 31, 2019, CLR and H&H Export amended the March 31, 2019 agreement in terms of the maturity date, to all outstanding principal and interest shall be due and payable at the end of the 2020 harvest (or when the 2020 season’s harvest is exported and collected), but never to be later than November 30, 2020. The loan is secured by H&H Export’s hedging account with INTL FC Stone, trade receivables, green coffee inventory in the possession of H&H Export and all green coffee contracts. As of September 30, 2019, the $5,146,000 note receivable remains outstanding which includes accrued interest.
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(3) The Company also has recently determined that the value of the collateral underlying a promissory note, due November 2020, in the principal and interest amount of $5.3 million, from H&H has been impaired, resulting in an impairment allowance for $5.3 million. As a result, management believes it is more than likely that the Company will not collect the outstanding balance and interest due on the note receivable, and allowances for doubtful accounts should be recognized at December 31, 2019.
The Company has therefore recognized allowances for collectability against the remaining net trade account receivable, notes receivable and other receivables due from H&H for approximately $5.0 million, $5.3 million and $397,000, respectively. These amounts have been recorded as allowances for doubtful accounts at the end of December 31, 2019.
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(4) $5,000,000 * 8% = $400,000 * 2 = $800,000.
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(5) YGYI has no options other than to file bankruptcy.
More Bad News for YGYI
Pareteum Provides Business Update in Open Letter to Shareholders
LINK: https://finance.yahoo.com/news/pareteum-provides-business-open-letter-213000847.html
For those of you who think Nasdaq will not kick companies on account of COVID, this is very bad news. Pareteum's failures look almost exact the same as Youngevity's - failure to fail 10K and 10Qs. Pareteum, stock symbol TEUM, is down 40% today.
More
Delisting Update
Any one hear if the company received notification from Nasdaq on the outcome of the hearing and timing of a potential delisting? With all the pump and dump games going on with this stock, down listing to the OTC will be a disaster, making the stock even more susceptible to manipulation. No one will invest in it again.
At least they have that going for them!
Hand Sanitizer
Any word on how much hand sanitizer the company is selling?
Anyone have $5 mm to Lend Youngevity in December?
From 2018 10K (2019 10K not filed)
On December 13, 2018, CLR, entered into a Credit Agreement with one lender (the “Credit Agreement”) pursuant to which CLR borrowed $5,000,000 secured by its green coffee inventory under a Security Agreement, dated December 13, 2018 (the “Security Agreement”), with Mr. Grover and CLR’s subsidiary, Siles Family Plantation Group S.A. (“Siles”), as guarantor, and Siles executed a separate Guaranty Agreement (“Guaranty”). In addition, Stephan Wallach and Michelle Wallach, pledged 1,500,000 shares of our common stock held by them to secure the Credit Note under a Security Agreement, dated December 13, 2018 with Mr. Grover. The Credit Agreement requires us to make quarterly installments of interest. The $5,000,000 is payable in December 2020.
These unsuspecting folks caught in the pump and dump are going to own shares of YGYI worth $0 at the end of the year and they'll have nobody to blame but themselves. You've all been warned repeated by Ted's postings.
Youngevity's Delisting Status
Youngevity is in severe trouble, and notwithstanding the pump and dump of the past few days which will surely attract SEC attention, Youngevity is not going to make it to the end of the year without inflicting even greater losses on investors. Nasdaq has already delisted Youngevity. SEC filing in October state that a 15 day stay of the delisting is in effect until a hearing on November 5th. A stay doesn't change Nasdaq's decision to delist Youngevity. Youngevity needs to win the hearing in order to change their delisting status. After failing to file its 2019 10k, first quarter 2020 Q, second quarter 2020 Q, having their accountant resign, acknowledging the need to restate its 1Q, 2Q, and 3Q 2019 filings, and failing the $1 minimum share price requirement, Youngevity has ZERO hope of avoiding being thrown off the Nasdaq. When it does, the price is going to fall to 25 cents on November 6th and it's going to hurt investors badly. Failure to understand the severity of YGYI's situation and comments defending the company is going to cause people to lose even more of their investment. These comments are intended to warn people to abandon this sinking ship as I've done since the price of YGYI was $3. Youngevity is not coming back. Investors should sell now ahead of the November 5th hearing to preserve what little of their capital remains.
Good time to take winnings in YGYI. Nasdaq appears set to delist the company on November 5th. See link: https://www.sec.gov/Archives/edgar/data/1569329/000165495420011282/ygyi8k.htm
Youngevity Delisting
Investors in YGYI are taking a great risk by continuing to hope for the best as the clock ticks down to Nasdaq booting it off the exchange. Whether the company files its 2019 10k by the end of the day today and avoids a Nasdaq delisting is irrelevant to the long term value of the company’s stock price.
YGYI has already disclosed that losses in 2019 will exceed $24 million, and will likely reach a figure closer to $27 million, if not higher. Bringing its 10k filing up-to-date will only confirm the massive size of losses in 2019, instead of leaving the exact number to speculation. Losses greater than $25 million for two consecutive years are going to trigger an immediate sell-off, making the company's current share price today of $0.61 look generous as investors seek to preserve what little is left of their capital in YGYI.
YGYI is out of time. The company no longer has capacity to continue to fund its operating deficits. Over the past 12 months, YGYI issued $1 million in secured debt with a 1-year maturity at 18% on March 20, 2020, $6.4 million of 9.75% preferred stock on December 17, 2019, and $8.3 million of 9.75% preferred stock in September 2019. That totals $15.7 million of capital issuances, all capital that's higher in priority than the company's common stock. To make matters worse if you're a common shareholder, not only is YGYI unable to issue more fixed obligation securities, but the company has taken on $1.6 million in promises of preferred dividend/interest payments as a result of last year's issuances. When the company is incurring massive operating losses, how does it come up with cash to pay these promises? Aside from these very pressing liquidity concerns, YGYI has a debt maturity of $5 million coming due in December 2020.
A company incurring $25 million in losses will be unable to make additional $1.6 million in payments for very long to service fixed obligations related to previous capital issuances. The only lever available to YGYI is to continue to issue more common shares, diluting you, the common shareholder. If you're wondering if this is really true, whether management would be so brazen to treat its common shareholders with utter disregard by issuing tens or hundreds of thousands of more shares of equity to fund never ending losses, then take a look at the company's press release on April 21, 2020. To fund its ill-conceived hemp business in Nicaragua, YGYI will issue “1.5 million shares of YGYI common stock to the Nica Hemp Cooperative in exchange for a 50% stake in the land …” Whether common shareholders realize it or not, management of YGYI is already massively diluting them and YGYI will continue to dilute shareholders right up until the day the company files for bankruptcy, regardless of whether Nasdaq boots it off the exchange on September 29th.
Common shareholders should realize that Youngevity is out of time. While painful, sell and take $0.61 for your shares while it’s available, otherwise you risk selling at levels much lower later in the week. If you question the credibility of this view, take a look at a warning to investors at the end of June when the company’s stock was $1.40:
https://www.dropbox.com/s/fepwicgsgv83qs9/YGYI%20-%20Investment%20Write-Up.pdf?dl=0
YGYI: Going from Bad to Worse
Investment write-up LINK:
https://www.dropbox.com/s/fepwicgsgv83qs9/YGYI%20-%20Investment%20Write-Up.pdf?dl=0
Hi Sir Terence
I don't know reads the YGYI board. I assume that most investors in Youngevity are not sophisticated. No institutional investors will hold this name as it continues its fall to $0. My guess is YGYI's investor base a retail group with strong participation by people who sell their products.
Bad news for Youngevity.
On June 29th, the Russell 3000 Index deleted Youngevity from its membership list. Several large index funds are holders of Youngevity. Since Youngevity is out of the index, institutional index funds will not continue to hold their shares. Expect BlackRock, BYN Mellon, and a bunch of others to start dumping shares today. Chickens finally coming home to roost.
LINK to Russell 3000 deletions:
https://content.ftserussell.com/sites/default/files/ru3000_deletions_20200626.pdf
SEC Action & YGYI
The SEC finally appears to be getting its enforcement act together, gearing up to pursue companies whose shares traded up wildly on coronavirus news. The article below quotes Thomas Gorman, a former SEC official as saying the agency should "absolutely" be investigating the situation at Moderna. For the unfamiliar, Moderna made an announcement about a corona vaccine under development during the height of the crisis and saw its stock double almost immediately. Any smart Moderna shareholder is well advised to sell. Once the SEC announces an investigation, the stock will fall 40% in 3 seconds.
To all YGYI shareholders, stand up and take notice:
For I am involved in mankind.
Therefore, send not to know
For whom the bell tolls,
It tolls for thee.
- John Donne
Any views on when the SEC will come knocking on YGYI's door?
Moderna's coronavirus vaccine announcement set off a frenzy on Wall Street. Now some are calling for an investigation
LINK:
https://www.cnn.com/2020/06/01/business/moderna-vaccine-stock-sales-invs/index.html
SEC Action & YGYI
The SEC finally appears to be getting its enforcement act together, gearing up to pursue companies whose shares traded up wildly on coronavirus news. The article below quotes Thomas Gorman, a former SEC official as saying the agency should "absolutely" be investigating the situation at Moderna. For the unfamiliar, Moderna made an announcement about a corona vaccine under development during the height of the crisis and saw its stock double almost immediately. Any smart Moderna shareholder is well advised to sell. Once the SEC announces an investigation, the stock will fall 40% in 3 seconds.
To all YGYI shareholders, stand up and take notice:
For I am involved in mankind.
Therefore, send not to know
For whom the bell tolls,
It tolls for thee.
- John Donne
Any views on when the SEC will come knocking on YGYI's door?
Moderna's coronavirus vaccine announcement set off a frenzy on Wall Street. Now some are calling for an investigation
LINK:
https://www.cnn.com/2020/06/01/business/moderna-vaccine-stock-sales-invs/index.html