I suppose it does come back to our disagreement about how negative cash flow is.
It makes sense to me that what happened Friday could be some of that added debt they have had to incur while still operating with negative cash flow. There have been a handful of 8-K filings for $250k-$3 million. I think most of those were issued to make required payments on the larger notes though. I don't know what the sell off Friday was all about and I'm open to interpretations but regardless, nothing will change my views here but that 10-K.
The terms of the latest financing aren't great but these investors have no shield against being diluted by the company or future investors. That's why their terms are so good for the warrants. The convertible debt at five cents makes sense as that is evidently how low the market and other lenders are willing to drive this stock. It's the terms many other Current CD note holders have so why would new money all of a sudden pay double for the same amount of equity? And with other convertbile debt diluting, why would they pay lets say $.1/share (pre-split) and have all that downside? We've got to climb that latter gradually. A cash flow negative company would certainly have trouble getting favorable terms and they very likely are cash flow negative still. How cash flow negative is where you and I disagree.
There are a number of speculative things I could say about the lenders in the latest 8-K and how the company plans on managing the situation. However, I am in this long. I don't care to cast my speculation about it out there anymore as my opinion is immaterial. We'll find out next week maybe.
I am frustrated at the missed opportunity to buy lower - I didn't anticipate such a big sell off as fundamentally I can't imagine what would push the market cap much lower AND I don't know/didn't expect significant dilutive debt conversions like Friday. I'm caught off guard by it...but it's perfectly within the bounds of my projections of downside so far. I knew this could get this low. At this price though why would lenders concert debt and sell it below their conversion price? Only one or two reasons I can think of - one being to give the company back shares and ownership for cheap and 2 because ecig is crashing and burning and they want out whatever they can get. Doesn't make a lot of sense though.
What I do know is there is an OS limit here and I've got it pegged for about 88 million. From there, if fundamentals are improving, it's n hard seeing market cap justifying a much larger pps over the next few years. Most agree with me on that point (granted it's loaded with assumptions of company growth). I understand trying to get the best price possible but below $.75 is greedy and it makes no sense to me how it will get significantly below $.75 other than panic selling from retail.
If Q4 doesn't show significant improvement I'll be out. I'm adding more Monday in anticipation of quarterly growth, news from management, and the pps staying at these very affordable levels.
AI
