Endeavor IP Inc (OTCBB:ENIP) Marches On
Seven days ago, Endeavor IP Inc (OTCBB:ENIP) was stuck in a loop between $0.0001 and $0.0002 per share and it seemed like there was nothing that could get it out of there. Things are quite a bit different at the moment, but before we get to that, we’ll try to explain how the ticker found itself scraping the absolute bottom of the chart.
It all started two years ago when ENIP suddenly became the target of a $1 million promotion. Back then, the stock was traded at more than $1 per share and some people were saying that it could easily reach $3. Instead of doing that, ENIP experienced a few horrific crashes and it left quite a few people badly burned.
Then, the pumpers abandoned ship and some investors reckon that, left to its own devices, ENIP will manage to stay afloat. They did have a reason to be optimistic. The company is what’s commonly referred to as a patent troll, but unlike the rest of the OTC enterprises following similar business plans, ENIP has actually managed to win some lawsuits and log some revenues.
Despite this, the stock continued digging a hole in the ground and it once again brought tears to the eyes of many unfortunate people. There are two reasons for this.
First, while ENIP is indeed generating revenues, its financial situation is far from ideal. Here, for example, is what the 10-Q for the period ended July 31 looks like:
- cash: $142 thousand
- current assets: $242 thousand
- current liabilities: $3.5 million
- quarterly revenues: $752 thousand
- quarterly net loss: $201 thousand
You have to agree that apart from the relatively solid revenues, the rest of the figures above are pretty disappointing. They alone, however, aren’t enough to depress the price all the way down to the triple-zero range. That can only be achieved by colossal toxic-debt-related dilution.
Between October 2014 and July 2015, ENIP was forced to issue more than 412 million shares (about 59% of the most recently reported O/S count) as a conversion of $329 thousand worth of debt. That means an average conversion rate of $0.0007 per share. Subsequent to July 31, ENIP converted some more notes and printed at least 99 million shares at an average rate of just $0.00006 per share (that’s right, four zeros).
That’s how ENIP found itself dragging its chin along rock bottom. Right now, however, it’s not doing that anymore. The ticker first shot up on Tuesday when it reached $0.0004, yesterday, it closed at $0.0005, and about thirty-five minutes after today’s opening bell, it’s another 20% up at $0.0006 per share.
The reason for all the excitement is a press release from November 3 which says that thanks to a court ruling, ENIP‘s management team will be able to eliminate as much as $1.9 million worth of debt from the balance sheet. Investors are pretty happy about this, and so they should be because the liabilities sections of the future financial statements should look a lot better.
They mustn’t forget, however, that the debt that is being canceled at the moment isn’t convertible. There were some other notes at the end of July that, unless they’ve been converted already, should be outstanding at the moment. In case you’re wondering, they can be turned into common stock at discounts to the market price that range from 40% to 45%.
