Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG) Slides Lower
The stock of Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG) began dropping down the chart at the start of August and it is still continuing to do so even now. Although yesterday investors showed increased interest in the company and the daily volume of 737 thousand traded shares surpassed the monthly average by more than three times that was not enough to push the stock to a green close. Instead ECIG registered a loss of nearly 4% closing at $0.239 per share. Compared to the high of $0.45 from August 8 in just two months the company has wiped close to 50% of its value.
Although the chart performance has been rather depressing ECIG have actually been moving forward with their business plan. As the September 15 PR informed us the company’s VIP brand has now opened its 100th kiosk almost doubling the 53 units from the start of the year. In addition the company also has 75 franchised kiosk. Back in August ECIG launched a 200-retail store test for its VAPESTICK brand. The expansion of their operations could result in better financials, which in turn could change the sentiment towards the stock.
The financial report for the second quarter of the year already showed some signs of improvement:
• $1.9 million cash
• $14.6 million total current assets
• $26 million total current liabilities
• $12 million net sales
• $7.6 million loss from operations
Thanks to a series of financing deals totalling $47 million ECIG were able to strengthen their balance sheet significantly. The infusion of funds allowed the company to deal with its preexisting toxic debt and to stop the devastating effect the rampant dilution had on the share price.
ECIG‘s success will depend on their ability to cut their expenses while keeping the revenues growing. Investors shouldn’t forget, however, that as part of the financing agreements 176 million warrants with an exercise price of $0.45 were issued. And while for now those warrants are unlikely to get exercised a new 8-K filing from Monday revealed that as part of a forbearance agreement warrants for the purchase of 5.9 million shares were issued and this time the exercise price was set to $0.2087 per share.
