Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG) Sinks To New Lows
On March 24 Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG) implemented a 1-for-15 reverse stock split which left them with around 20 million outstanding shares. Simultaneously the share price of the company was bumped up and on that day the ticker opened at $1.84. By the time of the closing bell, however, the stock had crashed down to $1.39.
Since then the chart performance has remained extremely depressing and after correcting by another 9.3% last Friday ECIG are currently sitting at $0.263. During the session the stock registered a new 52-weeks low of $0.26. In a little over two months ECIG have wiped more than 80% of their value. The only time the company managed to make a more sizable push up the chart was when back in April ECIG announced a new $41 million non-dilutive financing deal.
Unfortunately the positive momentum generated by the news lasted for a single day only. Still, with its new found resources ECIG plan to improve their balance sheet with around $35.7 million of the funds being used to eliminate convertible debt. Dilution has been a major problem for ECIG and even after the stock split new shares continued to be issued with the outstanding count reaching 70 million as of May 15.
The company was in a dire need of fresh capital – at the end of the first quarter of the year their financial state had already become rather bleak:
• $1 million cash
• $12.7 million total current assets
• $183 million total current liabilities
• $11.1 million revenues
• $67.5 million net loss
With the recent financial injection ECIG now state that they have positive working capital. Some cost-reduction measures have also been planned. Will this be enough to reinvigorate investors though?
The company has reported increased revenues and if the financial report for the second quarter shows similarly encouraging sales the chart could see a reversal. Keep in mind however that as part of the April deal ECIG issued 176 million warrants with an exercise price of $0.45 which could prevent the ticker from climbing above that point.
Even if you believe in the potential of the company’s products and its ability to move forward with its business plan you should still exercise caution when approaching the stock. Any trades should be preceded by extensive due diligence.
