A simple analysis of VAPEs value using a simple logic tool.
Assume someone bought the whole company for $100,000.
Every share. $100,000. What would that person actually get?
A quick look at the very basics of the financials shows that during the first qtr of 2015 VAPE had a reported gross income of $415,000.
The COGS for that revenue was a reported $297,000.
Meaning VAPE has a GROSS profit margin of around 29%. Thats before ANY expenses other than cost of goods.
This they generated with a reported $296,000 in advertising. Which is a cost of around $.70 per gross revenue dollar earned.
So. With COGS and advertising only! It cost VAPE $1.42 for each $1 of revenue generated. Before any other expenses at all. (bonuses were given for this result so our fictional owner will be responsible for those too)
Accordingly, total expenses resulted in a net operating loss of at least ($576,000). FOR THE QUARTER! (bonuses were given for this result too)
We know they lately borrowed at least $2Million. Doesnt really matter the terms. With these numbers VAPE will never be able to pay that back without diluting - hence the term "toxic" debt.
We know that anyone can buy the ceramic stuff from China or Mexico easily in bulk with very small minimum orders. ($500?) So no competitive advantage or protection from competition.
We know they just "bought" a research company. Research companies are known cost centers which is why 9 out of 10 companies hire consultants on an as needed basis. There are dozens if not hundreds of these consultants available.
That way the costs are contained to known parameters. Doesnt make sense these days to pay for a research facility unless you are someone like du Pont and have unlimited resources, i.e. need a tax write off.
By the way. "BetterChem" is run out of a 3 bedroom house in a residential neighborhood. Easy to verify using google maps etc. So no real assets to speak of.
At the same time ALL of VAPEs employees are working on their own new companies instead of for VAPE. Wages are still being paid lets assume for the sake of the analysis.
This is just a quick snapshot taken from their financials filed with the SEC and their press releases.
So our imaginary buyer, bought the whole company for $100,000.
He/She gets, a 29% gross margin on sales while they last.
Resulting in AT LEAST a $1.42 cost for every $1 generated.
Losses up to ($500,000) per quarter for the foreseeable future.
No protection of income stream through any visible competitive advantage.
AT LEAST $2Million in debt. (How can the business pay that back when it costs AT LEAST $1.42 to generate $1)?
And the privilege of paying some guy to research something from his basement.
AND the privilege of paying employees while they work on their own stuff.
That is the sum total of VAPE.
On balance I would say VAPE is worth somewhat less than $100,000.
I am not sure you should take it if they give you $100,000 to go with it. Once you own it, that $100,000 will last less than 1 month at VAPEs current burn rate.
Is this the reason for all these new companies? I seem to remember the insiders at Growlife miraculously getting out just in time.
"Having learned and worked at the arm of GrowLife's current CEO, Sterling Scott, gives me an excellent blueprint on the right way to do things in this industry." Kyle Tracey.
This is an analysis taken from public information sources only.
Anything resembling a conclusion is just my opinion. Everyone should do their own DD.
AI
