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Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG) Trades Lower After Dilution News

Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG) posted another nasty fall in last trading session, when the market had ample time to react to the news that maker of e-cigarettes has secured funding at the cost of extended dilution. The secured funds amounting to $26.6 million worth of working capital will improve company’s balance sheets, but again it comes at the cost of dilution. The shareholders don’t appreciate rampant dilution. They wanted to stop it as they voted against the increase in authorized shares that the company wanted to go through with.

The details

Electronic Cigarettes finalized a securities purchase deal with an institutional investor pursuant to which it agreed to issue 12% Convertible Notes and the “Warrants.” Pursuant to the deal, the Company issued almost $13 million principal amount of Notes and 2.26 billion warrants for $13 million before deducting expenses.

Financial report

Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG) was expected to file its 10-K financial report for the quarter ended December 31, 2014 last week. However, the company later confirmed that it will report financial results on a later date. The delay in filing results was accredited to impediment in completing financial statements and other necessary disclosures. Now, Electronic Cigarettes expects to post the results by end of March.

The drop

As Electronic Cigarettes announced the news of delayed filing, investors considered it wise to book profits in ECIG stock. The deferral of financial results was taken as a negative sign by investors who were holding the stock in anticipation of healthy results.

The scope

The only strong factor with Electronic Cigarettes is the industry in which the company provides its offering. The segment of e-cigarettes and other vape products is a growing and promising market. It is estimated to record strong gains in next few years as people switch from traditional cigarettes to e-cigarettes and vaping products.

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