Sunday, April 17, 2022 11:34:14 PM
https://www.otcmarkets.com/otcapi/company/financial-report/275843/content
So far I'm picking up that the company had (and looks to still have?) a TON of toxic convertible debt. Would appreciate insight from some of the regulars on here since there's a lot of complicated data to parse. In particular, if you know of agreements occurring in 2021 or 2022 that canceled or repayed older debt, that would help me in my analysis.
Here's my best attempt to summarize what I'm seeing. On Page 28 there's a lengthy section on Derivative Liabilities that includes the following quotes:
Note how they needed "1,025,676,038 shares of common stock" to pay back merely $64,624 in principal and $52,121 of interest and fees from a total debt of $1,008,604 during 2020. So they carried a lot of debt forward from 2020?
We know from https://www.otcmarkets.com/otcapi/company/financial-report/276898/content what the O/S was on December 31, 2020:
It looks to me that on December 31, 2020, ENZC owed $8,795,075 in derivative liabilities with conversion prices ranging from .0001 to .0034, which at the average of the conversion prices to help us ballpark it (.00165), the outstanding debt from derivative liabilities comes out to something like 5,330,348,484 shares give or take a few Billion.
Note that presumably this number does not include:
- liabilities where there IS a floor "to the number of common stock shares the Company might be required to issue"
- the issuances of convertible preferred stock options and that occur throughout the filing to investors, insiders, etc.
- I'm not sure if it accounts for the "crowdfunding convertible notes" either.
Obviously if there were already 2.7 Billion out of 3 Billion shares outstanding when these numbers were recorded, there's been no room to facilitate conversions to repay the debt. Do yall know if this mountain of convertible debt has been discharged in 2021 or 2022 by some other means than conversion into Common shares? Or is it correct to assume future conversions are 'waiting in the wings' unless they can find another way to discharge those overdue liabilities?
We also have this paragraph from Page 11:
The Going Concern assumption is present to assert that ENZC plans to operate for the foreseeable future (at least 12 months from the date of [I think the April 2022] filing) and includes the lines of thinking for how it plans to discharge its liabilities.
From what I'm seeing, ENZC is disclosing unambiguously that they are running out of money and that they intend to dilute in the future.
"The Company also intends to conduct additional capital formation activities through the issuance of its common stock to establish sufficient working capital and to expand its operations." is saying that they intend to dilute.
"The Company has incurred an operating loss since inception and the cash resources of the Company are insufficient to meet its planned business objectives. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern." This is them saying they are in danger of running out of money, raising "substantial doubt" about continuing as a "going concern" (see here for more info https://en.wikipedia.org/wiki/Going_concern#Accounting ). This does not imply ENZC is imminently bankrupt, but it appears to suggest they need to raise big money pronto to address their liabilities and ongoing operating expenses.
This being an amended 2020 filing, filed in 2022 and many parts worded in the present tense, is a little confusing. Are they framing the situation Today or framing the situation as it appeared Back Then?
Let me know your thoughts!
I edit too much! Refresh any of my posts within the first few minutes to get silly little updates and clarifications. :)
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