Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG) Drilled A Hole In The $1 Floor
It hasn’t been a great year for Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG) on the front of share price. Right after ECIG filed their long awaited 3rd quarter 10-Q, well they did not really spice up the market to say the least. After an 8-month downtrend ECIG started this week with a dive straight through the $1 mark.
On Oct 24 ECIG announced the postponement of their NASDAQ offering. While it wasn’t really clear why, it definitely cost them a lot. It proved to be a step which sent them into a seemingly unstoppable fall and they closed Monday’s red session at $0.98, a 22% drop. Right now they are nearly 95% below their 52-week high of $18.80 that was registered back in March.
Yet another reason for a headache for ECIG regarding the postponement is the share purchase agreement they entered into with Ten Motives on May 30. If ECIG closes the deal it will have to pay $1 million just for having extended the closing date from July to September, and, of course, it would be even worse now that September has come and gone. ECIG would also have to pay $16,129 for each day of October (approximately $500,000) and $16,667 for each day of November that the listing hasn’t occurred. Again, that would be the case if ECIG got listed and closed the deal with Ten Motives. If those things don’t happen, and the deal falls through, ECIG will only owe a $350 thousand break-up fee.
If it comes to that, the $350 thousand wouldn’t really break ECIG. The aforementioned 10-Q contains among others:
- $4.3 million in cash
- $68.9 million in current liabilities
- $15.9 million in quarterly revenues
- $41.4 million in net income
That last line would probably impress a lot of people, but they should keep in mind that it’s mostly due to a $38.6 million gain recorded on advisory agreement warrants. This was the result of a sharp decrease in the fair value of previously issued warrants. Still, ECIG managed to grow its revenue to $15.9 million which is no small feat.
There are some other details in the report that shareholders probably don’t like much, but the biggest issue on their mind is probably the sliding share price, which seems to be tightly connected with the company’s surprising decision to postpone the offering and the listing yet again. Additionally, with the price as low as it is, if ECIG are still interested in listing on the Nasdaq they might have to go for a reverse split.
Whatever happens, ECIG shareholders have had a tough month, to put it mildly. This latest dive below $1 may have been the last straw for even the most hardened supporter. Only time will tell whether ECIG can recover.
