TRENDINGIFAN Financial Inc (OTCBB:IFAN) Bites the Dust
NAVIGATE
Reverse is Good: Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG) 1
BY AMY MURPHY ON MARCH 22, 2015MICRO CAP INSIDER, STREET WATCH
Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG) has been in decline the last few days as uncertainly rules regarding their late 10K and the looming reverse stock split.
Everyone seems to think that RS is bad and usually results in lower PPS as the result of panic selling etc., but if we really examine the issue we come to an entirely different conclusion. Yes in almost all cases when a non-revenue, sub penny co with a history of dilution does another RS it almost always ends in more downside. And this is the only logical outcome; if management is doing a RS so they can continue to further dilute shareholders why would any shareholder not sell.
At the other end of the spectrum when an established Company such as ECIG that already does significant revenues does a RS it almost always results in significant moves to the upside; let’s look at some recent established Company RS examples; CTSO did a 25 for 1 RS on December 1, 2014 the stock opened after the RS at just over $4 a share and quickly ran to over $12 in 3 weeks.
Another established Company RS recently was SIAF which did a 9.9 for 1 RS on December 16, 2014 the stock opened after the RS at just over $6 a share and was trading over $9 by the next day. Even if we look back farther and take MSLP (which had many similarities to ECIG when it traded for pennies) which did a 850 for 1 RS on November 26, 2012 opened after the RS at just over $4 and was trading over $12 a share within 6 months.
So I reject the general consensus that is going around that RS will result in a dropping PPS; on the contrary RS could be the catalyst that takes this one to the next level.
Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG) is the darling of small caps and quickly establishing itself as a market leader in the exploding electronic cigarette space. Growth has been nothing short of spectacular with revenues skyrocketing from well under a million several years ago to $80 million this year according to the CEO Brent David Willis.
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.
To Find out the inside Scoop on ECIG Subscribe to Microcapdaily.com Right Now by entering your Email in the box below
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 and resulted in ECIG hitting its $03 lows in January. The market valuation of ECIG dropped from well over $400 million to just $45 million at $0.15. Many would suggest this is where the opportunity lies as the underling Company is not the same but actually much stronger.
Last week ECIG announced the results of its Special Meeting of Stockholders. The proposal to give the Company’s Board of Directors the authority to effect a reverse split of the outstanding common stock at a ratio ranging from 1-for-5 to 1-for-20 was approved with 84.1% of the votes cast, representing approximately 66.5% of the shares outstanding, by a vote of 163,760,975 shares (for) to 30,556,095 shares or 15.7% of the votes cast (against), with 442,000 shares or 0.2% of the votes cast abstaining.
The proposal to amend the Company’s Articles of Incorporation to increase the authorized shares of capital stock from 300 million to 350 million, of which 330 million would be classified as common stock and 20 million classified as preferred stock, received 55.0% of the votes cast, representing approximately 32.1% of the shares outstanding, which is less than the 50% threshold of the voting shares for the proposal, and was not approved. The total vote was 79,090,556 shares (for) to 57,232,692 shares or 39.8% of the votes cast (against), with 7,437,566 shares or 5.2% of the votes cast abstaining.
We have a Monster Pick Coming. Subscribe Right Now!
ECIG is fully reporting OTCBB; the stockcontinues to be among the top traded stocks on the entire bb’s and once of the most exciting too; the Company controls some of the most popular brands in a skyrocketing sector , trades at a 90% discount from where it was this time last year and is quickly developing a loyal shareholder base that swears this one goes higher. We expect to see some significant developments on ECIG this week and we will be updating on ECIG on a daily basis so make sure you are subscribed to microcapdaily.com so you know what is going on with ECIG.
|