Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG) failed to continue with its bull run in last trading session. The share prices declined more than 13% to close at $0.123. The drop in ECIG shares price indicates that the rally that begun two weeks ago is stalling. The company’s share price made a two-month high in last week. However, the decline on Friday’s trading session is indicative that it is time to book profits in the stock.
It is indeed true that Electronic Cigarettes is not like the typical penny stock venture. The company not only has a real and innovative product but also operates in an attractive industry. It is generating sizable revenues.
As per the latest financial results at the end of September 2014, it had $4.3 million in cash. The total current assets were $28.8 million while total current liabilities stood at $69million. The net income generated in the quarter was $41.1 million. The revenue came higher at $15.9 compared to $833,000 in the same period a year ago. The company posted revenue of $31 million for the first nine months of FY2014.
Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG) reported strong numbers, but its balance sheet is dented with high outstanding debt. When the company failed in its efforts to list on the NASDAQ, the holders of the outstanding ‘Notes’ commenced converting notes into discounted shares. The impact of conversion on ECIG share price was devastating.
The share price tumbled down to a record low of 3 cents from $4. The number of outstanding shares surged to more than 250 million in January 2015 compared to 82 million in November 2014. The crash was disastrous, and the management team of Electronic Cigarette has been taking measures to restructure the debt in books. Last month, it announced that a deal had been finalized with 85% of the holders following which the duration was extended by eighteen months.