Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG) Jumps Up The Chart
tags: ECIG
Last Wednesday a little over 2 thousand of Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG)’s shares were traded throughout the entire session. On the next day, however, the interest towards the company was much stronger with investors shifting 410 thousand shares and pushing the ticker 14% higher to a close at 16 cents per share. On Friday even more investors flocked towards ECIG and the intense buying propelled the company even further up the chart. The stock broke through the 20 cents per share mark reaching $0.202 by the time of the closing bell. Will the positive momentum survive the long weekend though?
ECIG‘s bounce may be impressive but it has nothing supporting it. In fact, ECIG have been silent for close to two months now with their latest PR, outside of the SEC filings, coming on May 16. Back then the company announced its financial results for the first quarter of the year and if you take a look at the chart you will see that the report left investors far from pleased. As of March 31, 2016, ECIG had:
• $950 thousand cash
• $10.1 million total current assets
• $108 million total current liabilities
• $11.7 million net sales
• $20.4 million net loss
While a significant part of the pennystock companies struggle to generate any revenues at all ECIG had close to $12 million in sales in just one quarter. Despite the sizable sales, though, the balance sheet as a whole fails to inspire much confidence. ECIG explained that the disappointing results were due to the limited funds of the company. The quarterly interest payments of $2.7 million put further strain on the their financials.
The management team has stated that they will be trying to restructure the massive debt of the company but they could be running out of time. According to the quarterly report in July and August notes totaling $19.5 million in principal will reach maturity.
If ECIG‘s report for the second quarter shows further improvement or if the company announces the successful renegotiation of the terms of its outstanding notes it could drive investors to show even greater support for the stock. For now, though, the red flags remain far too serious to be taken lightly. Any trades involving the ticker must be preceded by extensive due diligence.
