Enzolytics Inc (ENZC)

[foxi]

Closing the loop on the stuff I was looking at with ENZC's recent financials. This post is dense and lengthy, but the rabbit hole runs deep and I wanted to be comprehensive. TLDR; there's a summary at the end!



Here's the document listing again:

"Document A": Annual Report - FINANCIAL AND FOOTNOTES 12.31.2021 published 04/18/2022 for period end date 12/31/2021

"Document B": Annual Report - AMENDED FINANCIALS AND FOOTNOTES DECEMBER31, 2020 published 04/14/2022 for period end date 12/31/2020

"Document C": Quarterly Report - FINANCIALS AND FOOTNOTES published 11/22/2021 for period end date 09/30/2021

"Document D": Annual Report - Annual Disclosure Filing 12.31.2021 published 03/31/2022 for period end date 12/31/2021

"Document E": Supplemental Information - SHARE ISSUANCE HISTORY AND DILUTION published 03/16/2022 for period end date 12/31/2021




Audited documents:

It appears Documents A and B and D are audited. They don't include the (Unaudited) disclaimer at the top of Page 1. Correct me if you know otherwise!

Document C includes the (Unaudited) disclaimer.

Document E is unaudited since the information in it comes from earlier unaudited OTC reports.




Rolling old debt into subsidiaries:

From Document E:

All outstanding debt of the Company flowed to its subsidiary, now known as Robustomed, Inc. This means there are no outstanding convertible debt pieces of ENZC common equity, and that has been the case since November 30, 2020. This has been disclosed in all filings made on OTC (both annual and quarterly) since that date.

This seems to be the most relevant information about convertible debt for any evaluation of ENZC's current convertible instruments. They appear to be saying they have no lingering convertible debt and have taken on no new convertible debt since late 2020. This does not imply there are no convertible instruments or promissory notes than can still be converted to common shares, but it does mean specifically debt related notes that resulted in the dilution marked "Debt Conversion" to entities like Livingston should now be a thing of the past.





Derivative liabilities:

Document C is clear that derivative liabilities are convertible to common stock. Also something I was missing before are that these are not necessarily debt related liabilities, though some are described as promissary notes (see Page 18).

The company carried an $8,795,075 balance for derivative liabilities forward from December 2020, unchanged, in their quarterly and annual accounting until Document C for period ending Q3 in 2021.

This would appear to contradict the statement from Document E "there are no outstanding convertible debt pieces of ENZC common equity, and that has been the case since November 30, 2020" from the paragraphs above UNLESS the derivative liabilities they're talking about aren't "convertible debt pieces".

They mention "This has been disclosed in all filings made on OTC (both annual and quarterly) since that date." Since there are $8,795,075 in convertible notes (derivative liabilties) reported on every annual and quarterly filing from Q4 2020 through Q3 2021, these presumably then aren't convertible debt pieces. (Or, they've been accounting for them in the Unaudited filings when they shouldn't have been, and the auditors caught that error. Or, the accounting method recently changed so they are no longer their own line item after Q3 2021. More about the latter possibility in a second...)

The Q3 2021 quarterly is included in the list of filings which will be amended when the audit is finished so it will be curious to see how or if the reported numbers change.





Changes in accounting methods for convertible instruments:

Earlier, I mentioned a tangent from Page 9 of Document A about ENZC possibly re-bucketing derivative liabilties as additional paid-in capital. I'm currently leaning toward that section being intended as informational only, not announcing an accounting change as I first thought, but it does state "As of December 31, 2020 and 2019, there were no conversion features that met the definition of a derivative." which is important to note.

Whatever the other implications, "As of December 31, 2020 and 2019, there were no conversion features that met the definition of a derivative" didn't prevent ENZC from reporting $8,795,075 in derivative liabilities in all reporting periods through Document C.


I found this on Page 10 of Document A:

In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. The standard eliminates the liability and equity separation model for convertible instruments with a cash conversion feature. As a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. Additionally, the embedded conversion feature will no longer be amortized into income as interest expense over the instrument’s life. Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium.

I think this is where the derivative liabilities went, I'm going to assume because they must have a cash conversion feature. This implies the debt is still on the books (just not its own line item) and these instruments may still be convertible to ENZC shares.




Derivative liabilities (continued):

I mentioned another tangent from Document C page 17 that in 2019 ENZC issued 941,078 shares of Series C Preferred stock as payment for convertible notes. At the time I called them a debt conversion, but maybe that's the wrong label -- what we DO know is that this was a conversion of derivative liabilities from that time period. Series C Preferred isn't "common equity", but it IS convertible back into such.

Those 941,078 shares are still in Document A which is presumably audited, and also represents the latest numbers we have.

For additional traceability, you can see the issuance of 941,078 Series C Preferred shares in the line item "Series C Preferred stock issued in connection with the securities exchange agreements" on the table in Document A page 4.

You can see the breakdown of some of the convertible notes that were converted under "Notes payable to investors" on Document A pages 12-17 -- look for all the paragraphs that say "On November 16, 2020, in connection with the Company entering into a Securities Exchange Agreement, this note was converted into shares of its Series C Convertible Preferred stock."

These conclusions follow:

When the company says "there are no outstanding convertible debt pieces of ENZC common equity" that doesn't imply there are no general convertible instruments. There are 941,078 Series C Preferred still held by someone and convertible to common. These are not "debt pieces" so the company must be speaking very specifically in Document E.

Derivative liabilities that haven't been discharged in some way may clearly be converted to and represented by Preferred shares instead of Common shares. They may also be directly convertible to Common shares. How they work is clearly visible and well defined; how many (if any) are still on the books is what's unclear.



Crowdfunding convertible notes

$654,606 in "Crowdfunding convertible notes" are still on the books in Document A. We don't know the conversion details for these notes but they are debt related convertible notes.

On November 30, 2020, the Company assumed the responsibilities of the Crowdfunding convertible notes issued by BioClonetics to various investors as part of its business combination agreement. On November 30, 2020, the outstanding balance of the Crowdfunding convertible notes was $654,606 consisting various investor notes (“Investor Notes” or “Investor Note”). As a result, the Company recorded an expense of $654,606 to general and administrative expenses in its consolidated statements of operations for the year ended December 31, 2020 , and corresponding amount to Crowdfunding convertible notes on its consolidated balance sheet for the Company’s servicing responsibilities for these notes. The Crowdfunding convertible notes are stock-settled debt under ASC 480.

These debt related convertible notes are still on the books in the latest financial filing (Document A). I'm not sure how this gels with Document E's claim that "there are no outstanding convertible debt pieces of ENZC common equity" unless we assume they can only be converted into Preferred ENZC equity.

In fact, that is the case, per Document B page 20:

Since the underlying obligation to the investors is a BioClonetic obligation as it relates to a sale of the company and capital raises at the Company believes that neither of these scenario’s will never happen, the Company offered the following three options to the investors to settle the Crowdfunding convertible notes:

Option 1: The investor may elect to hold its note until a conversion event occurs such as a future Series A financing round or when the Company is acquired.

Option 2: The investor may elect to have the Company repay the notes along with the 2% interest.

Option 3: The investor may elect to exchange its notes for each $5.00 note investment into 1 shares of Series D Preferred Stock.

It's possible that crowdfunding convertible notes can be converted ONLY to cash or non-convertible instruments. Series A (explained shortly) have no listed conversion rights, are closely held (4 shareholders of record, see page 3 of Document D), and are used as a control block. ENZC would not exchange these for debt repayment.

We currently have no details on Series D shares. The company refers to them in Document B page 20 as "Series D Preferred Stock" while they'll refer to something like Series E as "Series E Convertible Preferred Stock" on page 29. Absence of the word "convertible" might suggest Series D are non-convertible, though this assertion is weakly supported by the information at hand. I'll circle back to Series D later in this post.


These conclusions follow:

When the company says "there are no outstanding convertible debt pieces of ENZC common equity", in relation to crowdfunding convertible notes, this is technically accurate either way; somewhat disingenuous if Series D can be converted to Common or other Preferred Series in a pathway to Common; or totally accurate if Series D are strictly non-convertible shares.






Series A Preferred shares:

There are 60,000,000 Series A issued and outstanding as of December 31 2020 per Document A page 1.

(Though the issued/outstanding is reported "at December 31, 2020", the numbers in the deficit column (6,000) are the same for the period ending December 31, 2021, meaning this many shares are still issued and outstanding at the end of 2021.)

These shares have "Super Majority Voting Rights" (see Document A page 22) and are not convertible into Common.





Series B Preferred shares:

There are 445,180,000 Series B issued and outstanding as of December 31 2020 per Document A page 1.

(Though the issued/outstanding is reported "at December 31, 2020", the numbers in the deficit column (44,518) are the same for the period ending December 31, 2021, meaning this many shares are still issued and outstanding at the end of 2021.)

This number should be 447,180,000 (2 million more) as of December 31, 2021 for the following reason. The holders of Series B include the main four company insiders, one other person, and a list of Bulgarians who fell off the most recent accounting. The number of Shareholders of record jumped from 5 to 10 after adding the Bulgarians and has remained so as of Document D even though the share issuances to the Bulgarians is removed from that filing. See here for more info.


I've mentioned before that we know the conversion rate for Series B is 10 Common for 1 Series B due to an older conversion into Common.

This is backed up by the fact that Series B holders have 10 for 1 voting rights per Page 22 of Document A.

Document A page 20 has the breakdown of why the currently outstanding Series B shares were issued. If you add the transactions listed, the sum is 445,180,000 shares.

It's important to note that company insiders control the vast majority of these shares. See Document D page 6 as a cross reference. If you sum all the Series B issuances to Harry, Charles, Guarav and Joseph in Document D, the total is 395,180,000 Series B shares. Harry's shares sum to 190,750,000 by themselves.

For additional traceability, you can see the issuance of 395,180,000 Series B Preferred shares in the line item "Stock-based compensation expense" on the table in Document A page 4. Note that these were from 2020, and the remaining 50,000,000 are from 2019 per Document A page 20, summing to a total of 445,180,000 shares.

From Document A page 22:

The holders of Series B Preferred Stock shall have conversion rights as follows: Each share of Series B Preferred Stock shall be convertible at the option of the holder thereof and without the payment of additional consideration by the holder thereof, at any time, into shares of Common Stock in accordance with the stock designations filed with the office of the Delaware Secretary of State.

These conclusions follow:

When the company says "there are no outstanding convertible debt pieces of ENZC common equity", in relation to Series B convertible preferred shares, the Series B shares are not convertible debt pieces. If unrestricted, they can be converted into Common at any time without any cost to the Preferred shareholders.

If the conversion ratio is truly 1:10, these 447,180,000 shares may represent a possible 4,471,800,000 Common shares.

The Cotropias, Chandra and Harry together control 395,180,000 Series B shares.



Series C Preferred shares:

There are 941,078 Series C issued and outstanding as of December 31 2020 per Document A page 1.

(Though the issued/outstanding is reported "at December 31, 2020", the numbers in the deficit column (94) are the same for the period ending December 31, 2021, meaning this many shares are still issued and outstanding at the end of 2021.)

Who is holding these shares? From Document A pages 23-24:

In December 2020, the Company entered into subscription agreements to issue Series C Convertible Preferred Stock to the same two investors who were investors in the Securities Exchange Agreements on November 16, 2020. Under the terms of the subscription agreements, the investors purchased 1,763,324 shares of Series C Convertible Preferred Stock and warrants to purchase 1,763,324 shares of the Series C Convertible Preferred Stock at a price of $0.50 per share resulting in a carrying value of $881,662.

Each share of the Series C Convertible Preferred Stock is convertible at price of $0.005 into shares of common stock anytime at the option of the investors. The warrants have an exercise price of $0.00750 per share and a term of three years and are exercisable anytime.

What is the exchange rate into Common? This part is speculation since the agreed rate is not disclosed, but if we extrapolate by voting rights on Document A page 23, it's 1:100. This also makes sense given the $.50 valuation of the preferred shares in 2020 (page 23) which wouldn't be a fair valuation at 1:1 or 1:10 conversion rate.

Interestingly, there are 941,078 Series C issued and outstanding as of December 31 2020 per Document A page 1. These are therefore the derivative liabilties conversions from 2019 I mentioned earlier.


These conclusions follow:

When the company says "there are no outstanding convertible debt pieces of ENZC common equity", in relation to Series C Subscription Agreements, these instruments are not convertible debt pieces, so the company is speaking very specifically in Document E. The Series C can be converted into Common shares directly, at the agreed exchange rate, "at the option of the investors."

If the conversion ratio is truly 1:100, these 941,078 shares may represent a possible 94,107,800 Common shares.



Series D Preferred shares:

There are no Series D preferred shares reported in Document A and there are no disclosed details for how they work. If we look to Document D there are 0 shares outstanding as of December 31, 2021.

Remember, Series D are one of the conversion options for Crowdfunding Convertible Notes I talked about in another section above.




Series E Preferred shares:

There are 25,000,000 Series E issued and outstanding as of December 31 2021 per Document A page 1. Something is wrong with this number because the same line says there are a total of 10,000,000 authorized.

A possible correct total outstanding could be 2,500,000 since this is the number that appears in the footer of the table for column Preferred Stock Series E Amount in Document A on page 4. But it gets more confusing than that:

From Document A page 7: In 2021, the Company has raised $2,000,000 in sales of Series E Convertible Preferred Stock and additional $950,000 in sales of subscribed Series C Convertible Preferred Stock.

From Document B page 29: In June 2021, the Company issued 5,000,000 shares of Series E Convertible Preferred Stock and received cash proceeds of $2,000,000.

Since these quotes reference 5 million shares, the total outstanding cannot be 2,500,000 so the data in the table seems wrong too.

Now we turn to Document C (remember, that one's unaudited). Page 1 lists 10,000,000,000 shares authorized, 25,000,000 issued and outstanding at June 30, 2021. There's also traceablity on the table in Document C on page 3. You can see the issuance of 2,500,000 Series E Preferred shares in the line item "Stock issued".

There are also these quotes from Document C page 21:

On June 1, 2021 the Company issued 1,250,000 shares of Series E preferred stock pursuant to a $500,000 subscription agreement.

On June 16, 2021 the Company issued 1,250,000 shares of Series E preferred stock pursuant to a $500,000 subscription agreement.

So we know of three transactions that sum to 7,500,000 shares, which don't match the totals on any of Documents A, B and C.


These conclusions follow:

There's currently a discrepancy how many are authorized and issued. We don't really know the totals.

We don't know the conversion details, but this class is convertible. I assume convertible to common.





Series F Preferred shares:

There are no Series F preferred shares reported in Document A and there are no disclosed details for how they work. If we look to Document D these shares are not listed in the balances outstanding as of December 31, 2021. But they should be present if Document C is correct in its statement on Page 21 that "On June 11, 2021, the Company created a new class of Preferred Stock, 10,000,000 shares of Series F authorized."




Stock options for company insiders:

Interestingly, Document A page 20 includes the following quote:

On October 20, 2020, the Company entered into a three-year employment agreements with four of its executive officers. Each executive officer is entitled to a base salary of $120,000 per year and 5,000,000 stock options. The stock options have a term of three years and vest ratably over a two-year period commencing on October 20, 2020.

So some of the warrants issued to insiders are fully vested by October 20, 2022 and must be exercised before October 20, 2023 before they expire. I don't see other details for how these warrants could be used to acquire ENZC common or preferred shares, or at what rate.




Other warrants:

From Document A page 23:

On November 16, 2020, the Company entered into Securities Exchange Agreements with two investors. Under the terms of the Securities Exchange Agreements, the Company issued 941,078 shares of its Series Convertible Preferred Stock and 188,215,600 warrants to purchase 188,215,600 shares of its common stock in exchange for payment of various notes and accrued interest totaling $470,539 to these investors. Each share of the Series C Convertible Preferred Stock is convertible at price of $0.005 anytime at the option of the investors. The warrants have an exercise price of $0.00750 per share and expire on November 16, 2023. The Company valued the Series Convertible Preferred Stock at a price $0.50 per share which was based on subsequent subscription agreements entered in December 2020 (discussed below).

And also:

In December 2020, the Company entered into subscription agreements to issue Series C Convertible Preferred Stock to the same two investors who were investors in the Securities Exchange Agreements on November 16, 2020. Under the terms of the subscription agreements, the investors purchased 1,763,324 shares of Series C Convertible Preferred Stock and warrants to purchase 1,763,324 shares of the Series C Convertible Preferred Stock at a price of $0.50 per share resulting in a carrying value of $881,662.

So the company has issued warrants allowing investors to purchase shares of common stock and convertible Series C preferred stock. Warrants are not dilution -- they simply require the company to perform the exchange at the stated exercise price, if the holder of the warrant opts to buy whatever class of shares.

It's important to note that the company has issued warrants for Common and Series C shares. If the current outstanding total of either class is already held by other parties and the holders of warrants wish to exercise before the expiration dates, ENZC will be required to issue new shares or buy back existing shares to fulfill the company's obligation.

These conclusions follow:

Warrants exist which may result in future dilution.

The listed amounts from Document A include 1,763,324 Series C stock and 188,215,600 shares of Common stock.




Restricted common shares:

From Document E:

With each increase in Float the total Restricted shares decreased in the same amount. As of December 31, 2021 there were 451,289,565 restricted shares remaining of the 2,797,935,953 originally issued prior to October 15, 2020. Approximately 71 million of these restricted shares are part of a lawsuit filed by the Company. The remaining 380,289,565 have met the SEC requirement for removal of the restrictive legends but have either not elected to or been unable to obtain an opinion letter acceptable to the transfer agent or are held by Officers and directors of the Company.

These conclusions follow:

ENZC could flip as many as 380,289,565 existing outstanding common shares from restricted to unrestricted at any time.





Liquidity and Going Concern:

Thank you so much, whoever it was last week that noted this statement on the Going Concern. I can't find your post now but it was very helpful to see.


From Document B page 7:

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred an operating losses since inception and as of December 31, 2020, the Company has incurred accumulated deficit of $29,533,234. The Company has funded its operations through the issuances of notes payable to investors and sales of Series C Convertible Preferred Stock. The Company evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year beyond the filing of this Annual Report. In 2021, the Company has raised $2,000,000 in sales of Series E Convertible Preferred Stock and additional $950,000 in sales of subscribed Series C Convertible Preferred Stock. On May 12, 2021, the Company entered into a distribution agreement with a company to distribute the Company's anti-HIV-1 therapeutic ITV-1 in the countries of India, Pakistan, UAE, Indonesia, Philippines, Nigeria, Benin and Togo, Kenya, Tanzania, Rwanda, Libya, Uganda, North Sudan, Egypt, Morocco, and Tunisia. The Company received $1,000,000 in cash from the distribution agreement. As a result, the Company believes there are sufficient funds to continue operations and research and development programs for at least 12 months from the date of this report.

This is Document B which was published 04/14/2022, so the company is stating that it expects to continue operating until at least 04/14/2023. Note that while Document B is for period end date 12/31/2020, the going concern statement is based on 2021 information and refers to the "the date of this report" which was April 14, 2022.

There is an accumulated deficit of $29,533,234. This would include convertible and non convertible instruments accounted as debt, such as derivative liabilities, but "no outstanding convertible debt pieces of ENZC common equity" per Document E.


From Document C pages 13-14:

Management of the Company believes that the Company will be successful in its capital formation and operating activities, there can be no assurance that it will be able to raise additional equity capital or be able to generate sufficient revenues to sustain its operations. 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. The accompanying financial statements have been prepared in conformity with U.S. generally accepted accounting principles (GAAP), which contemplate continuation of the Company as a going concern. 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. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

This is Document C which was published 11/22/2021 for period end date 09/30/2021. Pay close attention to the dates. Remember all the Series E fundraising occurred in June 2021 and the quoted paragraph from Document B received cash from a licensing agreement on May 12, 2021, so all the fundraising activity ENZC is citing for Going Concern was already known when they quoted the above paragraph in Document C.

These conclusions follow:

ENZC said in April 2022 that it has sufficient resources to continue operations and R&D programs as a going concern through April 2023.

ENZC also said that it has "substantial doubt" that it can continue as a going concern given the same set of numbers in Q3 2021. It also said in 2021 it it "intends to conduct additional capital formation activities through the issuance of its common stock" ie dilution.

Thus, some ambiguity exists. Document B was published later and may also be audited, so in my opinion that newest statement has highest weight.





Summary and TLDR:

"There are no outstanding convertible debt pieces of ENZC common equity" is a very specific statement that has certain implications. We shouldn't see any more Livingston-style dilution for the reason of "Debt Conversion" on ENZC's books. There are many other convertible instruments to which this statement does not apply.

Derivative liabilities have a high potential impact since they can be converted into common shares, and are presently very hard to trace. $8,795,075 in derivative liabilities were either improperly accounted for in all quarterly and yearly filings from the December 2020 through September 2021 reporting periods but removed from the latest books following a bookkeeping ephiphany; or they've been reaccounted post-Q3-2021 in a way that now obfuscates them into a more general category like "additional paid-in capital". If the latter, then they aren't "convertible debt pieces" so the statement about "no outstanding convertible debt pieces" does not apply, hence we would conclude they aren't incorporated into an ENZC subsidiary as "old debt" and thus would still be convertible into ENZC common shares.

Crowdfunding convertible notes are convertible to Series D which may or may not be convertible to Common at an unknown rate. There are $654,606 in such convertible notes.

Series A Preferred have have "Super Majority Voting Rights" and do not have any listed conversion rights.

Series B Preferred are convertible to common at what appears to be a 1:10 conversion rate. There are 447,180,000 Series B issued and outstanding which may represent a possible 4,471,800,000 Common shares.

Series C Preferred are convertible to common at what appears to be a 1:100 conversion rate. There are 941,078 Series C issued and outstanding which may represent a possible 94,107,800 Common shares.

Series D Preferred are an unknown. There are 0 Series D issued. These are a conversion option for the crowdfunding convertible notes.

Series E Preferred have accounting discrepancies. They are convertible but we don't know to which other classes. There are between 2,500,000 and 25,000,000 currently issued and outstanding, and there are issuances described in an unaudited filing totaling 7,500,000 that don't add up to other totals.

Series F Preferred are an unknown. There are an unknown number of Series F issued. Conversion options are unknown. This class of shares in only mentioned once, in an unaudited filing.

Company insiders hold stock options (warrants) that become fully vested by October 20, 2022 and must be exercised before October 20, 2023 when they would expire. I haven't found details for how these warrants could be used to acquire ENZC common or preferred shares, or at what rate.

Other warrants exist that facilitate the exchange of 1,763,324 Series C stock and 188,215,600 shares of Common stock. These appear to expire in late 2023. Warrants do not automatically result in future dilution but the company may be forced to dilute to honor the holders exercising their warrants if shares are unavailable. Note that if Series C stock has a conversion rate of 1:100, warrants allowing someone to buy 1,763,324 Series C stock could result in a conversion pathway to as many as 176,332,400 common stock.

380,289,565 Common stock are currently Restricted but "have met the SEC requirement for removal of the restrictive legends", so they can be flipped to Unrestricted at any time.

For going concern, the company believes it can continue to operate until at least April 2023. Due to the contradictory Q3 2021 going concern statement based on the same fundraising numbers, is unclear whether there are still plans to fund the company through issuance of its common stock. (ie dilution)



If all conversions to common stock were enacted, existing common stock restrictions removed, and warrants exercised this very moment, I am totaling:

380,289,565 restricted Common flipped to Unrestricted.
4,471,800,000 from Series B conversions.
94,107,800 from Series C conversions.
176,332,400 from warrants > Series C > Common.
188,215,600 from purchased warrants.
unknown amount from company insiders stock options.
unknown amount from Series E conversions if these have any conversion pathway to common.
unknown amount from derivative liability conversions.
unknown amount from crowdfunded notes > Series D > Common if such a pathway exists.

Which comes to 5,310,745,365 Common shares PLUS all of the unknowns.

Obviously, it is not realistic for this to happen all at once, but note that the potential for future dilution is there.






Opinions:


Scroll up to the previous section for TLDR;


I think the company will do a reverse split sometime between now and early 2023 to create a bigger gap between O/S and A/S to facilitate dilution through issuance of common stock per the Q3 2021 Going Concern statement; and for Preferred Series conversions, whether or not the holders elect to convert. ENZC is beholden to its Preferred shareholders as well as its Common.

The biggest convertible series is Series B representing a potential 4,471,800,000 Common shares. The Cotropias, Chandra and Harry together control 395,180,000 Series B shares representing a potential 3,951,800,000 Common shares. Harry's share alone is 190,750,000 Series B which represents a potential 1,907,500,000 Common shares. These shares represent a control block of sorts, so insiders might feed off them occasionally but only liquidate if they are interested in exiting the company (or running a share-selling scam). I don't foresee liquidation, but I do think we'll see a strong dilutionary effect from Series B going forward.

The company may be able to offset any impending dilution with added value through expanding its business, restructure to eliminate the Preferreds, or come up with a way to renegotiate with Preferred shareholders. The accumulated deficit of $29,533,234 could partially be discharged through fresh earnings or equity deals with new investors.

If the company does a reverse split without supporting itself with new profitable business expansion, and substantial new dilution occurs, we will likely see a repeat of the 2021 chart patterns as hundreds of millions of new Common shares enter the float following conversions.

I expect the biggest news drops to occur in proximity to a reverse split. My reasoning is that ENZC would want to propel the stock price higher around the same time ENZC facilitates new dilution since this brings the biggest fundraising potential to dilution from new common stock issuance; and for the biggest profit for its preferred shareholders; while also giving the open market a reason to stay engaged. Insiders hold many convertible shares, so they have both the freedom and incentive to call these shots. This also seems likely to occur in proximity to their warrants and stock options vesting, (they vest sometime in late 2022 and expire in late 2023), so that holders of those instruments can get in on the action.