Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG) Bombs After The Holiday
Friday’s session may have had limited trading hours but that didn’t stop traders from shifting the unprecedented amount of 637 thousand of Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG)’s shares. The record traded volume didn’t mean that the stock had slowed down its fall though. On the contrary, the negative momentum got even stronger and ECIG crashed by more than 32% ending the session at $0.62 per share. A new 52-week low of $0.605 also got posted. Just for the month of November the ticker has depreciated by nearly 83% and the picture gets even grimmer if you go further back the chart.
On November 20 ECIG submitted their financial report for the third quarter of the year and although it showed a 41% increase in revenues compared to the previous quarter investors were far from impressed:
• $4.3 million cash
• $28.8 million total current assets
• $68 million total current liabilities
• $15.9 million total revenues
• $41.1 million net income
The balance sheet might have been a lot more encouraging if the massive net income wasn’t achieved through a $38.6 million gain on advisory agreement warrants. Not to mention that the negative working capital deficit actually got even bigger and from approximately $21 million for the second quarter of the year now stands at $40 million.
ECIG were trying to uplist to the NASDAQ national exchange but back in October they decided to postpone the IPO. In addition to the disgruntled shareholders this decision could also have a significant toll on their financials. At the end of May the company wanted to acquire Ten Motives but as part of the terms ECIG had to successfully complete the uplisting process. Now if they still want to close the deal they will have to pay $1 million for moving the closing date from July 31 to September 30. Furthermore ECIG will have to pay the sum of $16 129 a day for the months of October and November for not uplisting.
The three acquisitions from earlier this year have resulted in an increased revenue generation but ECIG still needs to show a lot of improvement in its balance sheet. The fact that at the moment their share price is nowhere near the minimum requirements for a move to a bigger exchange could also cause serious problems. Some investors might find the current market price an appealing entry point but the risks around the stock shouldn’t be underestimated.
