Youngevity International Inc (fka YGYI)

[Ted_77]

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