Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
jimg, I may be able to resolve your question. See:
http://design.avnet.com/axiom/shark-tank-big-winner-saves-lives/
It is Axiom Magazine, rather than AXMM the company, which featured a story about the TV show Shark Tank, and neither that story nor the TV show had anything to do with AXMM the company or its products.
I had no prior memory of any of this. I just found your post sufficiently interesting that I Googled my way through the very understandable confusion.
ZJ, for confirmation and amplification of the truth you're providing, you can find such at
http://www.microcapdaily.com/what-do-you-know-about-axiom-corp-otcmktsaxmm/19755/
Beyond that, I've "enjoyed" at a safe distance the work that Brighton, acting through their Investor Edge and Analyst Review sites, has done on Monarch America and Vapor Hub. To be fair, there is one item as regards the latter that is not a certainty in my possibly too-trusting mind - I think it might be the case that last spring's pump and dump was orchestrated by other than the management that was in place then and remains in place now. As it's bad manners to deviate in a discussion board from the "named stock" of that board, I'll stop at that remark.
Thank you for being a keen watchdog in regard to abuses that somehow sadly still are with us. While there is a school of speculation which relies upon buying with the pump and trying really hard to get out before it's all dump, that's probably too much of a crap-shoot for most of us, I would believe. Have a good week, Sir!
I'll respond to your questions on an item-by-item basis, Malvern:
1. If Kyle can/will publish an operational plan to return the company to profitability after the second fiscal quarter lapse, including a plan to attain/maintain/enhance solvency that is derived from the operational plan, then he can go back on the airwaves and celebrate not only having ahead-of-the-competition products but also a company that may very well be a sound investment more than a trading opportunity. My concern here is that the company lost some credibility when it needed to take on the BofI loan so soon after the Typenex tranche-loan.
2. If the company does not execute a successful plan in regard to operational and financial matters, then there still is some hope that its proprietary products will make it at least a somewhat attractive candidate for sale of the company as a whole. My concern here is about knock-offs that our vape shop poster has seen.
3. You're not a fool, whatever happens with this company. At least in theory, this is one investment within your larger portfolio that has taken on an assortment of risks, and you would reasonably expect some to work out splendidly and most probably not to (given the nature of penny stocks).
4. I do believe that Paul Knopick is a true expert in his line of work which is to portray the company as the company's leadership would ask him to portray it, bounded by not being a party to any release which would violate SEC/FINRA regulations. No company, I believe, would reveal elements of strategy that, if known, would help its competitors counter that strategy. However, elements of strategy can often be shared, especially when these elements are obvious - for instance, VHUB's opening of a fancy lounge would indeed lead anyone to imagine that franchising is next up to bat for the company.
Malvern, let me respond to your invitation for comments. But first, I need to compliment Sgreg on his capacity to post as if he were a neutral observer even though he has taken an investment position baaed upon his analysis that this is the best investment opportunity within its emerging industry.
1. I'm honestly not sure if you'd actually want more "investor exposure" until there is some demonstrable evidence of sales and inventories being in balance (in other words that the company is at least stable and even improving in its cash situation). The company has great promise (real business, real products, real sales outlets, real social media sales presence), but returning to a loss in the second fiscal quarter after a profitable first quarter puts Investor Relations into a challenging situation in regard to attracting new shareholders.
2. Kyle's note of last week committed to a response this week of what the company is doing to get back on the profitable track. While I highly applaud the franchising initiative, I hope that the shareholders will learn from Kyle by the end of the week as to how sales are going in this third quarter which is close to its conclusion and how expenses in the general & administrative sector are being pared (my reading of the "57% reduction" note is that it applied to product manufacturing costs).
3. I'm sorry to get into the issue of "precise English," but I need to be sure that you defined one question the way in which you had intended. From your post: "...how the company will demonstrate that they have the ability to repay Typenex by 5/4." They only need to begin repaying Typenex in May, though they should have a strong idea by May 4 as to what ability they have to repay Typenex in the medium of cash rather than of stock.
4. Finally, let me circle back to the beginning. I actually would believe that VHUB does have a "new investor strategy," and that's what the interview exposures for Winther and Perlingos are all about. They're not "preaching to the choir," but rather looking to drum up new investor interest in the company.
This is just one response for your consideration out of many - a lot probably more worthy than this - that I hope you will receive.
Malvern, I do believe that VHUB's entry into franchising could be at least part of the big news you've been awaiting. In my opinion, franchising can provide upfront cash to the franchisor, and VHUB could really benefit from cash inflows. Forgive me this moment of gloating, but part of my post #3402 on February 22 included this paragraph:
Regarding an idea which I've plucked out of my Tochas, I'll repeat from an earlier posting of mine which offered the idea that the company consider getting into franchising vape shops. It seems that ECIG already has won the counter-space war, but I haven't heard that any producer other than VHUB has entered the vaping shop trade.
Incidentally, as regards the challenge of franchising creating more burdens on an already-busy executive team, I do know that the administration of the franchising process can be outsourced.
Have a good day for yourself!
Marchio, I think you've asked a very pointed question, and I'd like to respond in maybe an unusual way. One of the better posters here (and I'm sorry I've forgotten which one) often refers to this assemblage of stocks as the "cesspool" part of the stock market. To me, that means something like 70% of the stocks will eventually become worthless, 20% will just go nowhere, and 10% will make you ten times on your money (gross oversimplification, but just to make a point).
So, if one finds a particular stock like VHUB where the long-term odds might be that 50% of the scenarios will have the company going bust, 20% going nowhere, and 30% making you ten times on your investment, then that sort of stock would be a keeper for the long-term, presuming one has an overall portfolio that has a good mix of risk-situations.
I hope that no one will jump all over me for using the percentages which I have used here, but my overall theme is that I would believe that VHUB, being an "ahead of the marketplace" (attribution to our vape shop owner for always bringing facts to this Board) company in a booming industry has a risk profile which is better than most of the companies in this "cesspool" part of the stock market.
Yes, Malvern, I see your point, though I do think that two months into a fiscal quarter, a company has "actual" gross sales at their fingertips such that they're not dealing in projections for known historical events of two months. Of course, this is only the first week into the third month of the quarter, and that gives your semi-prediction of news this coming Monday some "legs." It takes time to create an analysis, even if dollar numbers are available in essentially real time.
Meanwhile, I'm trying to think of a time when the company had some unfavorable prediction or projection to present, and I haven't seen that yet. I think that credibility will increase when the company will have crossed the inevitable threshold of relating to the public that something not-good is going on or is reasonable certain to go on, as contrasted to springing a "negative" historical fact, such as a poor fiscal quarter, on the investing public.
I am hoping, in part for your sake as you are one of the good ones here (though I confess to chuckling just a little when you were writing about painting the ask at the end of a trading session in order to offset the downward manipulation that could be seen - even small acts of heroism are heroic), that the next news will be positive.
If Kyle Winther writes the same cogent line of thinking that you've presented, focusing on the fact that the dollar growth of sales is not the driver of the bottom line as much as it used to be (given the transition to self-manufactured products rather than re-sales), that will tend to lift one of the clouds over the stock. The question will then turn as to why Kyle might not have presented that line of thinking earlier - and what else might he present sooner rather than later, as the market generally tends to presume the worst about uncertainties.
Thanks, good discussion on a discussion board is not to be taken for granted anymore.
You make a good point, Malvern, in regard to seasonal influences. This now leads me to understand the phrase in the 10K where it was stated that the company believes that sales will not exhibit a seasonal pattern. I guess if there are equal seasonal influences (back to school, Christmas, spring break, and graduation), in the end there is no seasonality at all. That still leaves us eager to learn why sales exhibited a decline in Q2 and even more eager to confirm that sales are recovering in Q3. How that plays out will resolve the debate between you and BigAl who does well in representing the skeptical point of view.
Malvern, there is much for me to agree with on your post, and some for me to expand upon:
1. Yes, it is a true family business, and they themselves have indicated in management discussion and analysis that they're aware that adding outside directors would be beneficial (which is not yet feasible presumably due to the costs of the insurance coverage that would be needed).
2. Paul Knopick has indeed written/edited some well-crafted material for the company, and I found that the CEO's remarks from earlier today were particularly well-written.
3. I think you're absolutely right that it would be better for the company to have a capital structure that would less reliant on debt and somewhat more reliant upon equity. I'd be less tempted to wait than you are to get there, and in the end the forbearance of the vendors and debt-holders, if necessary, would dictate the timing of the partial dilution.
4. As regards the product-mix improvement towards higher-margin products, I would have felt even more positive on that score had the company not instituted their 10% sale to inaugurate their improved website. Higher-margin products also tend to invite competition.
5. As regards the amplification to be coming from the CEO as to his responses to the poor bottom-line of the second fiscal quarter, I think the shareholders will need to hone in on whether Kyle is speaking about processes or results (with two thirds of the third fiscal quarter having been completed, the shareholders probably can be told how sales are actually trending, even more than what's being done to boost sales).
Overall, I respect your confidence and optimism regarding the stock, especially as you have "read between the lines of the press release." Nonetheless, the company has two mountains to climb - 1) overcoming the shock of having increased the authorized shares first and explaining later (it is poor practice to surprise shareholders); and 2) demonstrating that sales did not have a "going back to college" bump in the first fiscal quarter that cannot be sustained.
If the bulls and the bears on this Board will listen to each other's points of view when stated calmly and respectfully, I think that the bulls will understand why the stock price hasn't sustained its raise further from the recent intra-day low of .012 and the bears will understand why they haven't been given the option to again purchase the stock at the tax-loss selling season low of .006. Malvern, you've stated the case for bulls about as well as it can be presented, for whatever my opinion may be worth.
BigAl, much like the comment I offered to Nebula, I'd also say to you that I agree with you, and I think you could have gone even further in your post. You wrote: "But cash is low, and revenues are in decline." I'd add that their short-term sources of credit are likely to be already tapped-out, given the exceptionally high Annual Percentage Rate loan they secured from BofI (too) soon after they had completed their Typenex tranche-arrangement. VHUB truly is a high-stakes game, likely to win big or to lose big, and somewhat unlikely to come out somewhere in the middle of the extremes.
Almost forgot, your comment that the Investor Relations firm is paid to market the company also deserves "a little love." They are retained to put the company's message out there, and it's the company that decides what the theme of that message is going to be. The IR firm just "puts the lipstick" on the message.
Thanks, have a good evening, Sir.
Nebula, I believe that you're correct, though I think that you could have gone even further in your comment. I think we were all taught early in our investing years that, when there is uncertainty, the trading in any stock presumes the worst result for each uncertainty. Accordingly, even if VHUB issued a forecast that included some of its debt being repaid by stock-issuance (in other words, dilution as the term is most commonly understood), the stock price would still tend to increase.
The challenge to the company's being able to produce any positive-looking definitive forecast for cash flow, particularly debt repayment, is that they'd need to explain the recent quarterly decline in sales (yes, I do realize that most often a quarter of the fiscal year is best compared to the same quarter of the prior fiscal year, but this company is on record via 10K disclosure that it does not believe its sales pattern to be seasonal). For the sake of the bulls on this board, I hope that the company can honestly, and will, issue a press release that sales are back to trending upward in this third quarter of their fiscal year, noting with that press release that the company has already stated that the gross margin on sales is improving due to less labor involved in making at least some of its products.
Overall, it always amazes me that most of the time when investors are awaiting quarterly results and thinking that all their questions will be answered, the most typical conclusion of one set of quarterly results being issued is that the investing community is right back in the mind-set of counting down until the next quarter's results are in.
While lots of us on this board do not view VHUB as a marijuana stock, some do and others, particularly Sgreg, have promulgated the view that VHUB's stock price will be impacted by developments in the marijuana industry. And so, let me post this hyperlink to the board this morning...
http://www.baltimorejewishlife.com/news/news-detail.php?SECTION_ID=1&ARTICLE_ID=57805
The story here - and I think it's a pretty significant story - is that the "Orthodox Union," the country's most widely followed Kosher certification agency, is looking into the possibility of certifying (on a product by product, manufacturer by manufacturer, basis) marijuana products as Kosher. This is a level of "respectability" that I would view - for whatever little my opinion counts - as being a game-changer. ...not because all that many people give a hoot about any product being Kosher (orthodox Jews are perhaps 15% of the 3% Jewish population in this country), but because more health-oriented consumers are relying to some extent on Kosher supervision of products to make purchasing decisions.
My track record on this board as a non-owner (and non-shorter) of the stock is clear, I believe, of either bashing or pumping, so take this news for whatever you may think it's worth.
Yeah, Malvern, the academic study I posted does support your briefly (and well)-stated conclusion. The fact that the impact is short-lived (per the study) doesn't negate the finding. What it all means, and what I think the gang is saying on this board, is that everything one reads on a message board needs to be taken with lots of grains of salt, as most posts are saturated with the biases of the writer (and sometimes the writers are paid to have their biases, per Cerp). Have a good day, Sir.
FWIW, I Googled "influence of stock message boards on prices," and below is the title of one of the journal articles I found. I'm not really sure if the conclusion of the article, which can be found at
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1972098
favors one side more than the other in the debate going on here, but I thought that the topic was worth taking a few minutes to research so that the good people here might have a better chance to debate the issue constructively.
Do Internet Stock Message Boards Influence Trading? Evidence from Heavily Discussed Stocks with No Fundamental News
The authors are three professors from the University of Texas at Arlington, and the article appeared late in 2011 in the Journal of Business Finance and Accounting. Below is the abstract of the article, and I've put in bold print the main conclusion of the article which is that what's put on message boards temporarily affects stock prices.
Abstract:
This study extends the literature on the information content of stock message boards. To better understand the effect of online postings on trading activities and reduce the error due to stocks with small message board followings, we examine stocks with no fundamental news and high message posting activity. Such stocks tend to be of small firms with weak financials. For those stocks, we find a two-day pump followed by a two-day dump manipulation pattern among online traders, which suggests that an online stock message board can be used as a herding device to temporarily drive up stock prices. We also find that online traders’ credit-weighted sentiment index, but not the number of postings, is positively associated with contemporaneous return and negatively predicts the return next day and two days later. Also, absolute sentiment is negatively related with contemporaneous and next day's intraday volatility and positively related with the proportion of volume in small-sized trades. We conclude that message board sentiment is an important predictor of trading-related activities.
I'm sorry that this is such a long post. I just think it's worth the effort sometimes to bring facts to the table so that debates on really good topics have a better chance to stay on topic. Good night to all...
Auditor1, there are a couple of ironies going on here. First, Cerp has proclaimed his ownership of 1.2 million shares, and as it happens, your own first post on this board mentioned that your ownership, at least at that time, had grown to that very same number of shares. (I would write that no one has ever seen you and Cerp together, but I've found that subtle humor doesn't generally translate well on discussion boards.)
Second, with greater seriousness, I'd like to bounce an idea off you. Malvern earlier in the day brought this into my mind when he was expressing his hope for some good news, and I was trying to picture what good news might look like. I guess we've all heard the saying that in the matter of an expected positive event with a company, one should buy on the rumor and sell on the news.
Let's assume that this old wisdom works "in reverse" as well that people sell on the rumor of a negative event, then buy when the event materializes. I would therefore wonder if in the matter of something intrinsically negative such as dilution, lots of folks have been selling on the rumor/possibility, and that a "real act" of dilution, especially not to a horrific extent whatever that might be, might actually bring investors into the stock.
Just curious, or as you wrote "Just saying..." Thanks, I'm interested in your thoughts.
BigAl, always a pleasure for me to interact with you, so I'd like to comment upon one element of your post, namely:
"but i honestly don't have high hopes for vapor stocks. the industry will continue to grow, however there is nothing amazing about the technologies. except that its becoming more popular."
There are lots of ways to come up with the value of a stock - the current market value, the book (accounting) value, the takeover value, the present value of future dividend streams, and the break-up value, to name a few. Regarding the break-up value of VHUB, I had believed that there is a bunch of innovative, patentable technology and products to be found within this company. I believe you are getting across the point that it's really easy for any other company to "monkey around" just a little with what VHUB has and come up with its own "unique" product. ...meaning that an investor should not bet the farm that the worst case scenario for VHUB is to sell its patents at a high price and call it a day.
Am I reading you right here, Sir? Thanks for always advancing the discussion and being receptive to all commentary on this board.
Winningman, thank you for your response! It's really hard to conceptualize VHUB stock. Is it the stock that went from an intraday high of $2.01 last spring to a low of $.006 late this autumn? Is it the stock that went from $.006 during tax-loss selling season to an intraday high of $.0525 not that long ago? Is it the stock that went from $.0525 to an intraday low of $.012 on Friday, or is it the stock that went from $.012 to $.02 in just a few hours to close the week?
Is it the stock that Malvern thought he'd need to paint at the close on Friday to undo the 100-share trades/manipulations that had brought the stock down? Or is it the stock that had tremendous upside volume at the very end of the week, so that Malvern didn't need to do anything except smile?
One thing I think we know is that proficiency in executing trades is life and death in this stock when you've got a bid of $.014 and an ask of $.02.
I admire your tolerance to assume risk, and I hope you will be rewarded handsomely.
Nebula, this post is in your honor, since you have the most established record of patience with me...
For a change of pace, let me write about the company rather than about the stock. As a now-retired CFO, albeit in the not-for-profit sector, I imagine myself reasonably qualified to offer suggestions to the company based upon my very limited knowledge of which end is up at company headquarters. I'm basing my ideas upon my memory of reading the company's SEC documents, and my memory is very imperfect in my old age. But here goes...
Regarding Governance I have a few suggestions. First, the company says it could really benefit from having outside directors, but it can't yet afford them. I believe that the company's need is so pronounced in this area that they should think of asking the local MBA schools to suggest somebody to do a one year practicum on the VHUB board. Second, this would require the company to assess whatever Directors and Officers Liability Insurance policy it has. It's always good to assess your D&O policy annually. Third, I believe that the company should formally adopt a transparency policy which would, for instance, mean that the recent increase in authorized shares would have been explained more deeply into the breakdown between the shares required for Typenex and the shares required for the incentive compensation plans.
Regarding Marketing, again I have a few suggestions. First, I would suggest that the company endeavor to do what Stanley Steemer has done in the house-cleaning field, namely to secure an endorsement from some smoking-cessation organization as being that organization's designated vaping-alternative provider. Second, I would market the heck out of the company's stated non-involvement in the marijuana market. There really are, I believe, lots of potential investors out there who have enough of the "social investing" bug in them that they wouldn't touch a marijuana stock but would feel quite OK investing in the explosively-growing vaping industry. Third, I think the company ought to emphasize that it doesn't sell product to minors and doesn't encourage minors to take up smoking, e-cigarettes, vaping, and anything else along those lines.
Regarding Financial Management, these are my suggestions. First, I think it was a poorly thought out idea to retain Winther & Company, CPAs, which is lending money to the company, as the auditing consultant to address the company's self-identified material internal control weakness in regard to segregation of financial duties. It just looks bad, and somebody else needs to assess whether the problem has been adequately addressed and remediated. Second, I believe that the company ought to fully declare its adherence to FINRA rules, including stating for the record that it had nothing to do with the Investor Edge pump & dump of last spring (incidentally, Investor Edge seems to have done a similar number on BTFL in recent months). Third, the company needs to carry forth with its stated plans to control general and administrative expenses, plus get a better handle on inventory growth in the midst of a period of declining sales.
Regarding an idea which I've plucked out of my Tochas, I'll repeat from an earlier posting of mine which offered the idea that the company consider getting into franchising vape shops. It seems that ECIG already has won the counter-space war, but I haven't heard that any producer other than VHUB has entered the vaping shop trade.
I've counted up ten ideas in the paragraphs above. If just one or two have any merit at all, I'll claim that I merit forgiveness for having taken up your time, this message board's time, and the company's time with the ideas that don't have any merit.
You're very kind, Sir. I'm actually a CPA. My high school was Boston Latin School, and everyone who attends becomes either a literate graduate or a dropout. Regarding my current opinion on the stock, please let me defer to Sgreg whose background in investing/speculating is clearly superior to mine. I will, however, now provide a conceptual model for your own valuation of the stock at current levels.
Let's assume that YOU (not me) believe that there is a 10% chance that the stock will sell for 30 cents in a year, 10% chance for 15 cents, 10% chance for 5 cents, 10% chance for 2 cents,25% chance for one cent, and 35% it will go bust. So let's do the math together. (300 + 150 + 50 + 20 + 25 + 0)100 = an expected price in a year of $.0545, or discounted back to now from one year-out of perhaps five cents versus two cents currently. If these were your weighted probabilities, you'd think of the stock as a buy at current levels IF your personal risk profile is comfortable with about a one-third chance of being wiped out.
PLEASE, everybody, this is just an example of the weighted probability method of decision-making; you get to supply your own "probabilistic" numbers, your own discount rate from one year back to now, and your own risk taking/aversion profile.
I've answered your question as best I can within the limitations of my talent and my fervent desire to be respectful to both bulls, bears, and the company itself. Still, please remember that I personally would defer to Sgreg as an experienced investor in this particular market.
I'm not going to phrase this post as a response to Cerp's offering, as he already has asked me not to interact with him directly. He deserves to have his wish respected.
However, he brings up a few questions which merit answers:
1. The case being made in Cerp's post is not that I'm an idiot (though he claims me to be one, and I'm not going to debate that point), but that I'm nefarious in trying to put cues into my posts that somehow will impact the stock price negatively. I do believe a fair reading of my two prior posts will demonstrate that whatever nefariousness I have in general, it is not being expressed in this medium.
2. Cerp's sentence "Nobody will spend their useful time on anything without trying to benefit something out of it" is quite true. My benefit in being on this Board is not economic - I am retired, have enough for now to live a modest lifestyle, and I am exceptionally risk-averse in my own finances (no common stock at all, which indeed may prove correct the view that I actually am an idiot).
I explained my benefit on being on this board in my most recent prior post. I had believed that the company was the perp in the pump & dump of last spring, I now believe I was wrong in that belief, and thus I follow the company and the stock with a bias towards hoping both will do well as an atonement for my having jumped to a faulty conclusion. However, every stock at its current price has buyers and sellers, each making his own case for his actions, and many wise people try to understand both cases. It is not idiotic nor is it nefarious to try to understand what people are trying to communicate either by their trading decisions or by their posts on a message board.
I sure hope we all can get far away from me being a topic of discussion here, as I'm not worth anyone's spending "their useful time" in trying either to condemn me or to defend me.
Thanks, Lakingsphan, though I do believe that Sgreg is in a class of his own. He's a shareholder, and yet maintains an objective point of view at all times, while I'm not a shareholder. It's been a lot of posts since I described my bias in regard to VHUB, and I'll take a moment here to update so that, if I should post again, the readership can measure how many grains of salt to take me with.
I became interested in VHUB when I began to receive the relentless pump and dump e-mails from Investor Edge last spring, and I started to follow the fortunes and misfortunes of the company at that time. I wanted it to tank, because I thought that the company was behind the pump and dump, and I have some belief that "time wounds all heels."
Much more recently I've become convinced that it was not the company sponsoring the pump and dump, because it would not serve the major executive shareholders to tank the stock. At that point, I began to wish the company well, as I think it had become a victim, rather than the perp, in regard to the scheme.
Most recently, I've seen the press releases put out by E and E Communications, and I've found the releases to be well-written, plus I've found the tactic to get the executives on radio (or whatever the medium) quite a valuable concept. So I've become an E and E fan. Personally, I've begun to imagine that if anyone would visit the E and E website, that might serve as a positive screening device for potential investments.
So those are my biases, FWIW. Other than that, when folks posting on this board - whether they're bulls or bears - are considerate of others especially at times of disagreement, I become fans of theirs as well (chalk this up to how I was brought up far too many years ago). ...and yes I do realize that my being someone's fan plus $2 will get you a cup of coffee at Starbucks.
Have a great week, Sir!
Sgreg, sorry that it took until the conclusion of my Sabbath to get back to you, particularly because there is so much in your post with which I thoroughly agree, especially as relates to the peer-group comparisons of intrinsic and market value of the various companies in the peer-group. But let me address my one very minor disagreement first to get it out of the way.
With your permission, I'm going to stick to my guns for one last moment as regards the tranche-status of the Typenex loan. Let me quote back to you some 10Q language in that section relating to this loan:
"In consideration for the Company Note, Investor paid an aggregate purchase price of $1,600,000 (the “Purchase Price”), consisting of an initial cash purchase price of $200,000 and the issuance to the Company of ten promissory notes, the first two promissory notes in a principal amount of $100,000 each and the remaining eight promissory notes in a principal amount of $150,000 (each an “Investor Note” and collectively, the “Investor Notes”)."
Accordingly, I would believe that one might construe the $200,000 among the convertible notes payable as being that first tranche, or what in the 10Q is called the Initial Cash Purchase Price.
Continuing with the major theme of this posting, which is how emphatically I agree with you on your opinion of this stock, I would suggest that there is one more metric that stockholders might keep an eye on, if indeed the company will do any current reporting on this. That metric is Officers' Loans Payable. I believe that the Company is highly likely to be tapped out on short term financing sources, given the exorbitant annual percentage rate on the BofI loan. If the officers are feeding more of their own money into the company, on the one hand it is good that they would be putting their money where there mouths are, but it would be a troublesome metric nonetheless as regards the coordinated pictures of Revenues, Inventories, and Accounts Payable.
Sometime I think I'd really benefit from learning how you strike your own balance between the concepts of "buying the fear" and "don't fight the market." It's clear from your most recent post as well as from earlier postings that you've really munched this around in your mind quite a bit.
Have a great week, sorry that I've been so wordy here but hope I haven't wasted your time...
Sgreg, I join with others that you've made a great post here. Could I quibble with you on two items, which your own review of the 10Q will lead you either to confirm my version of the facts or to correct me (in either case, I'm grateful). Please turn to both the balance sheet and to the footnote on Convertible Note payable. I believe you will find that the Convertible Note liability consists of two components:
1. $560,000 loan from Gotama Capital which has three completed tranches. The loan terms are quite interesting as to convertibility.
2. $200,000 which is the first tranche of the Typenex loan. Again, I commend you for having reminded this Board repeatedly that the remaining tranches are well-timed to meet cash needs of the Company, presuming that sales do indeed pick up and General & Administrative expense will be controlled, both of which are among the Company's intentions.
Also, the company does indeed have its BofI loan which is presented as a Subsequent Event to the December 31 cutoff of the financial statements, and its non-interest bearing loan from officers which is due on demand.
None of what I'm offering here is an attempt to guess what's going to happen with the stock; I leave that to better posters and more knowledgeable investors. Have a great weekend!
BigAl, there was one element of your posting that, even though you believe that the matter is widely known, was actually new to me, and I'm always appreciative to anyone who teaches me. The matter involved the tendency of companies to promulgate bad news, or what would be interpreted by the market as bad news, after the market had closed for the day or even/especially for the week as a whole.
So as to gain more insight on what you had mentioned in sort of an offhand way, I did my own research, and it not only confirmed your point (not a surprise) but also expanded upon it. Accordingly, I am obligated both to thank you and to share the expanded discussion with you - refer if you'd like to this hyperlink:
http://www.investopedia.com/articles/stocks/08/earnings-tricks.asp
Thanks and have a good evening.
Nebula, thanks for your interest in my thoughts, though I think there are wiser eyes than mine on this discussion board. Here are a few first impressions:
1. The Company is having growing pains, and that's actually to be expected. Product launches are not inexpensive, and the question is how much of the general and administrative cost increase from the first quarter to the second quarter is just a one-time phenomenon. The Company states that it's putting a lot of effort into containing G&A expenses, and that's a start.
2. The growth in inventory also is to be expected, but this cash-strapped company needs to really put its best brains on how to stock as little as possible while still being able to fulfill orders as rapidly as possible. If I write any more, I'll start talking about matrix algebra and the theory of economic order quantity, and most of the folks on this board will think of me as (more of) a windbag.
3. What would trouble me most is that sales for the second quarter actually declined from the level of sales in the first quarter, even as inventories were increasing. Thinking about the growth of inventory again, I realize that stocking up is a necessary precursor to product launches, but inventory growth and revenue decline do not make a pretty pair.
4. If you read nothing else of the 10Q, read the Going Concern section and the related section shortly thereafter on financing needs. The Company says that the Typenex loan wasn't sufficient and that the BofI high-rate (that 27% number in the text of the 10Q is about a fifth of the annual percentage rate)wasn't sufficient, and the Company freely admits that it will either need to borrow or to issue more shares. Now here's where I insert my opinion FWIW - issuing new shares is dilution only if and when the shares are issued for less than they're worth (and everyone's sense of this will be different, though most will take the easy way out and say that the then-current market value is the right number).
Overall, I believe that this is a company with: wondrously innovative and leading-edge products (attribution to RPH on this board for his knowledge of the market!), an ambitious marketing strategy focusing on the new world of social media, and a burning desire not to dilute the stock. But it is a company that needs to transform some debt into equity soon, as the 50K or so cash that it had left on December 31 may be even lower than that by now. I actually think that this company will survive, but there will need to be as much energy poured into the less-fun activities of financial management as there is being poured into product and market development. My cautious optimism is partly based upon the willingness of the officers to lend funds to the company on an interest-free basis.
I hope I've been fair here, and I would expect to take a proper "beating" from the group if I've been anything other than that. I do reserve the privilege to take another look after a good night's sleep. I look forward to reading the greater wisdom of others, and that includes you, Nebula.
Fascinating, Malvern - the five Statements of Beneficial Ownership were able to be filed today, but Mr. Knopick has taken the safe road by indicating that the governmental office weather-closure situation might impact the system-acceptance of the 10 Q on this same day. I guess it's always best to under-promise and over-deliver.
Additionally, I'm going to make a guess - and it's only that, because my memory is imperfect and my logic is questionable far too often in my old age - that several of today's Statements of Beneficial Interest are telling us that the executives Gary P, Kyle W, and Lori W were granted newly-issued shares as part of the new incentive compensation plan. I recall some ownership interests from before as being 12.5 million shares, and now I'm seeing 166,667 more shares in at least two cases.
On the one hand, some would view this as dilution, and on the other hand, other folks would view this as an indicator that the to-be-released financial statements are sufficiently "good" (in whatever way that might be defined under the incentive compensation plan) that the executives have earned some rewards.
As you've stated, the facts will soon come out.
Yes, Nebula, I understand how your having seen the April 15, 2014, 10K filing covering the fiscal year ended December 31, 2013, would have led you to believe - in the absence of further research - that the Company has maintained the calendar year as its fiscal year. (It's also a bit confusing trying to define "the Company" in the era when the corporate shell was intended to cover the operations of a dog-hotel operation.)
It is interesting to note, by the way, that since the Company didn't have a full reporting year for the period from January 1, 2014 through June 30, 2014, that did make it a correct statement that the company had become profitable during its first fiscal year, based upon the results of the fiscal quarter ended this past September 30, which is the first fiscal quarter of the current fiscal year.
Please don't be overly concerned about honest mistakes. When I stop making them, I'll have won the privilege to be more judgmental about people. We're all so fortunate to have this discussion board where there are lots of great folks who are eager to make whatever corrections are necessary so that no one will be mis-led for very long.
Malvern, I think we may differ on the nature of dilution, and that's OK (this is not about a fact, but rather about opinions, and this is not a zero-sum game in which either of us has to be right for the other to be wrong). Please bear with me for a moment, and I'll even stipulate that I'm often a fool even if I'm not intending to play the part.
I believe that dilution has a more complex and nuanced meaning beyond just issuing stock which has been authorized for issuance. Dilution, I believe, occurs when the stock which is issued is not issued for sufficient value to the company in return. So if VHUB were to issue additional shares at a tenth of a cent at the moment, that would clearly be dilutive.
However, if the company were to reduce its most expensive debt via the issuance of stock to prepay/pay that debt, this might or might not be dilutive. In general, I believe that well-managed companies aim to maintain a certain debt-equity ratio, and that being "all debt" is viewed as too risky and being "all equity" is viewed as not being willing to take reasonable risks.
In particular, I view that part of the increase in authorized stock to allow for incentive programs for management and directors to be non-dilutive in principle, though we need to learn how the incentives will work in order to reach our own conclusions as to whether this is dilutive in fact or not.
Thanks for your patience with me!
Nebula, please forgive me (my religious background dictates that I praise publicly and correct privately, if at all possible), but I do believe that if you click on the hyperlink below...
http://www.sec.gov/Archives/edgar/data/1515718/000151116414000547/0001511164-14-000547-index.htm
...you will find that the most recent 10K for VHUB was posted on September 29, 2014, covering the annual period which ended on June 30, 2014. Many aspects of the company and its stock may be in doubt (perhaps to be resolved by the quarterly SEC reporting), but its fiscal year is a certainty.
Thanks.
Thank you, Cerp. You represent a strong example of what differentiates "hope" (as Timmy has used the term) from a "rational expectation" (which I believe that you are demonstrating based upon your building on the facts of an excellent, expanding, and profitable - as to gross margin - product line).
This doesn't necessarily guarantee that you'll do well with this stock, as lots of goofy shite happens between expectations and results (probably especially in cases where the executive corps has a lot of family representation). But I do think that sound thinking does improve one's chances.
I hope that you will have a chance to interact with doubters and even bears who politely present their cases for your consideration on pillars other than the red herring of dilution-potential. Of course there is no current dilution-reality, though I personally believe that the company might be better positioned for activities like acquisitions if the capital structure were already less debt-intensive.
Malvern, you and I have interacted well in the past, and I hope that the question I am putting to you here will not be interpreted as bashing or disrespectful but rather as an honest and legitimate question. Let me quote from your post/response to Timmy:
"What you can't control is the contents of the upcoming financials, which if good, as most expect they will be, will likely lead to a rally to around .04 cents."
If most folks indeed do expect the upcoming financials to be good, why would not the expected level of "goodness" already be built into the current price, such that it would take an incremental level of "goodness" - beyond that which is currently expected - to push the stock towards doubling from the current level?
If I were forced to have the courage to make a guess as to what will happen with the stock when the income statement, the balance sheet, and most importantly the management discussion and analysis that goes with the financial statements are released, my guess would be that the stock price change in one direction or the other would be far less dramatic than posters on this board are expecting. We'll all see soon enough, and I wish you well.
I'm not sure when, if ever, SportyNorty, I've enjoyed reading an intelligent, well-phrased, and entertaining response as yours to my curiosity about the capacities/limits of technical analysis in the modern era. The promoters, indeed and sadly,still are around, as until recently (when the stock returned to plunging) Investor Edge was huckstering Monarch America, which appropriately has the verbalized ticker symbol of "buttful" (spelled BTFL). Still, Monarch America's former name of Cannabis Kinetics, having the symbol CANK, was not the greatest thing since sliced bread either.
Your discussion-board has answered fully and positively whether there is a place in the I-hub domain for intelligent exchanges devoid of name-calling, other than condemning unethical promotional schemes.
As this note is far too serious, I'll close with one of my favorite stories. The exalted but vain professor was holding class, and one student was totally dying to ask a question. It took all the student's energy and courage to pose the question which he prefaced with "I hope this is not a stupid question.." The professor began: "There are no stupid questions; there are only stupid people who ask questions!"
Wishing you all continued success,
Bernie (I didn't want to use my actual first and middle initials)
Dear SportyNorty, thank you for the compliment you offered me in regard to my posting regarding VHUB. I could not "private reply" you back, as I'm not a dues-paying member of I-hub, and by the context of your note it would appear that Member Mark #6 is in fact complimentary. I have looked a bit at this very discussion board and am very impressed with how civil the tone is here.
In case you didn't read any of my earlier posts regarding VHUB, I began to follow the company and its stock when last spring I was the blessed recipient of countless pump & dump e-mails and a few telephone calls to go along with it. I thought I might like to see the inevitable descent in real time. Curiously, in the end I became reasonably convinced that the company itself was not behind the sinister activity, as there would be the lack of a motive on the part of the company and its executive shareholders. So now I'm just chiming in every so often on that board when I think I have something to offer and can find a way to write it such that the bulls don't find me to be a basher and the bears don't find me to be a bull. I don't want to be the underlying cause of anyone's bad manners.
I do have one discussion topic to put before this board, if anyone would like to run with it. I believe that in the "old days" (define as you wish) technical analysis was exceptionally helpful because it was known to the few and explained the tendencies of the many, so that those tendencies could be properly exploited by the few. Nowadays, it seems that everyone is sprouting technical analytics which leads to trying to anticipate what the next day's technical analysis will turn out to be. ...which I think makes technical analysis not quite as helpful as it used to be.
I would also believe that in the penny stock arena (with which I honestly have next to no familiarity, so that my beliefs are worth the paper they're printed on) the fundamentals of the companies are generally so tenuous and subject to such rapid change that actual information about a company and its markets is really what's at a premium. Also, I'm not sure how the market makers operate in reality, as contrasted to the theory that they exist to provide liquidity to the marketplace.
I'm just tossing these thoughts on technical analysis out there in case anyone finds the topic interesting, though perhaps this has been covered earlier in the history of this board (in which case, sorry to be a bother). I hope that everyone is having an enjoyable and meaningful holiday weekend, regardless of your local weather.
CoachMarc's designation of VHUB as a "vape shop," while very incomplete as a description, did start me on a train of thought. I do recall from VHUB's September 10K that they would like to open additional retail outlets beyond their current two.
The company clearly does not have a surplus of working capital at the moment (this is not a "bash" in any way, just merely reflecting the debt which has been taken on via the Tympenex loan and the high-rate smaller loan which followed), and so I'm wondering out loud whether at least a piece of the company's future might be found in franchising the growth of their retail operations as contrasted to limiting themselves to company-owned stores.
I do know that it has become popular to outsource the franchising function, so that the current lack of "extra" working capital might not be all that troublesome.
I just thought that this discussion board might be ready for a change of pace from the general "antsy-ness" (the Yiddish word "Shpilkes" describes this perfectly) going on in anticipating the release of the quarterly income statement (though I think that the balance sheet will be every bit as important to reflect upon).
Let me wish you all a good week ahead, from our resident 1.2 million share-holder to Citadel Securities which probably is more current on reading this board than any of us.
Two comments for your consideration, Malvern:
1. I believe you are absolutely right regarding the investor relations theory of saying as little as possible so as not to be publicly wrong later. Nonetheless, the now-familiar refrain that comes with just about any company info release "These statements contain forward-looking, etc." tends to soften that particular point.
2. This comment will gratify the bulls on VHUB, I believe. Some of the loans that this company has are with their executives and some of the loans (I believe this to be the case with the most recent loan) are personally guaranteed by their executives. To me, this almost turns debt into equity. Or otherwise phrased, a bull would celebrate that when an executive is putting his/her money where his/her mouth is, then there is a greater likelihood that the company is legitimate, which in the end will entice others to invest in its stock.
I sincerely wish you well. Mutually respectful conversations on this board are a treasure.
Agreed, Malvern, your scenario is the most likely, and my only lament is that the company could have explained that positive situation to the stockholders.
Malvern, I don't think management is incompetent, far from it. They are first and foremost brilliant product-developers. I only believe that it raised a question when the Tympenex borrowing was followed by the 47-week loan that carries an exceptionally high effective interest rate. I believe that the question about that most recent borrowing could have been answered by management had they chosen to do so. ...and that question will be answered in large measure when we look at the cash flow implications of the forthcoming income statement.
Accordingly, in the context of my limited capacities to assess the company's skill in investor relations, I think the company is still learning how to get it right. Few companies, if any, are equally strong in all the facets of management, and if one found a company where nothing could be questioned, then something actually would smell a little fishy in that circumstance.
I hope that's a fair response, and thanks for your patience with me.
Thank you, Nebula, you've improved my day! I confess that when all the conversation was going on about pathetic-ness, I was not only sad over the shifting of the conversation away from the stock but also smiling just a little at my being 67, thus having a longer opportunity than all of you youngsters on this board to develop my own pathetic-ness as far as I have.
Thank you, Cerp, for the overall compliment, much appreciated! I would quibble with you about your interpretation that I'd believe that the financials would be weak when we get to see them. I actually think that the income statement will be outstanding in reflecting a rapidly growing business with its sales focused in its most profitable product line.
I was trying to convey my belief that the stock price is constrained for the moment by those potential investors who are fearful that the income statement might not turn out as well as the bulls on this discussion board believe it will turn out.
We'll all see within a few days what's going on with VHUB. As ever, the commentary from management about both the income generation and the state of the balance sheet (is the revenue actually being received fast enough to pay down debt and build inventory for rapid customer order fulfillment)may actually be at least as meaningful as the numbers themselves.