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Sunday, September 25, 2022

A Look at Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIGD)

Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIGD) is moving up steadily since reversing off $0.27 lows in recent days.

ECIGD has captured the imaginations of many a speculator in recent months and was at the top of the volume leaders for months; most investors lost big on this however except for the lucky few who might have played the $0.032 to highs over $0.15 pop pre reverse.

Everyone including myself in covering this Company was fooled by the incredible amount of new stock coming into the market from the toxic debt. Every time we though the conversions might be coming to an end a new huge block of stock hit the market.

An eye opener of the 10k was the 34,879,194 shares of its common stock outstanding as of March 30, 2015 up from 19,931,334 as of March 24. So in less than a week ECIG almost doubled its share count.

ECIGD continues to be one of the most talked about stocks in small caps and does have a loyal following have suffered a ton of declines. They are hopeful about this latest reversal off $0.272 or $0.136 pre-split, which is the lowest that ECGID has ever traded. There is a large short position here that may rush to cover once a significant reversal of trend is established.

Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIGD) had a vision of being the global king kong of electronic cigarette with brands selling all over the world appealing to multiple markets. We all know the history; ECIG sponsored its fast rise through a number of large acquisitions paid for primarily with toxic debt including VIP for $50 Million, FIN for $133 Million and Vapestick for $54 Million.

Management thought they could pay back that debt during the $150 million capital raise but the plan backfired when the electronic cigarettes market took a dip on some new legislation. Ultimately Wells Fargo backed out of the offering and the debt holders took control flooding the market with blocks of newly minted shares. With no limit on price conversions, debt holders began shorting the stock; the lower the price, the more shares they got.

The resulting death spiral was the biggest in recent small cap history decimating ECIG market valuation from well over $500 million to less than 10% of that today. Many would suggest this is where the opportunity lies as the underling Company is not the same but actually much stronger.

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On April 1, ECIGD a global marketer and distributor of electronic cigarette and vapor products whose brands include FIN, Vapestick, Victory, VIP, and others, today announced financial results for the fourth quarter and full year ended December 31, 2014.

Fourth Quarter Summary

  • Adjusted revenue of $15.7 million, compared with $0.6 million in the fourth quarter of 2013
    One-off adjustments of $3.5 million, related to sales returns, allowances, customer concessions, credits and price adjustments
    Total revenue of $12.1 million, compared with $0.6 million in the fourth quarter of 2013
    GAAP net loss of $(336.2) million for the fourth quarter ended December 31, 2014, including impairment charges of $144.4 million which is primarily related to our “FIN” and “VAPESTICK” business units.

Full Year Summary

  • Adjusted revenue of $46.9 million, compared with $3.1 million in 2013
    One-off adjustments of $3.5 million, related to sales returns, allowances, customer concessions, credits and price adjustments
    Total revenue of $43.5 million, compared with $3.1 million in 2013
    GAAP net loss was $(381.6) million for the full year ended December 31, 2014. The net loss includes a goodwill impairment charge of $144.4 million related to the “FIN” and “Vapestick” reporting units.

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ECIGD has had a few weeks that everyone would love to forget with the 10k failing to meet expectations and the reverse stock split turning into the disaster it did. The long thesis on ECIG remains strong; the Company is a leader in a rapidly emerging industry, experiencing spectacular revenue growth that currently trades at a fraction of its former $500 million plus valuation. Behind this rosy picture the toxic debt conversions continue. We will be updating on ECIGD on a daily basis so make sure you are subscribed to microcapdaily.com so you know what is going on with ECIGD.

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Disclosure: we hold no position in ECIGD either long or short and we have not been compensated for this article.

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