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Thanks, Hostastock, it is sort of fascinating that I was basically agreeing with Blulotus in theory and with Decatsmeow in practice. Hopefully, the post I offered just before this one has brought more light than heat to the discussion, and Decatsmeow won't write me out of his will after all (LOL).
...and I actually do think it's less than a right than it is a privilege for me to be on this board as I'm neither long nor short in the stock - hopefully the analytical, nonpartisan frame of mind I bring to the table is helpful to the gang here most of the time, even and perhaps especially when I'm showing more caution than the prevailing mood may be at the time.
Enjoy Tuesday!
Sorry if indeed I am biased towards past events, even if in the case of VHUB, we've got the exceptional situation that the case can readily be made that management has been honest all along.
I'm actually eliminating a potential negative factor from consideration here, which puts me squarely on your side as it turns out. I imagine myself to be more of an analyst than a cheerleader; however, the interactions I've had on this board with some fine folks (include yourself in that category) have led me to wish them well in their investing activities.
...and as I've stated lots of times here, I'm not an investor at all. I am totally risk averse and have been fortunate to save up enough so that I could retire without assuming more risk than my psyche can tolerate. I was drawn to participate in this board when I was starting to get bombarded with boiler room calls and e-mails pumping VHUB, and I just wanted to see how long it would take for the company to fail. Instead, I was amazed and am still amazed at how strong management has become over these past couple of years.
There is really no alternative but to "hold tight" for awhile, but that time frame is going to be compressed to the extent that the stock will be leaping when it next trades. Everybody will have a target price for their planned exit.
You're going to have a great week, and there's nothing that will go on in this board that will make it any more or less great. Remember it was just last week that most of us were wondering, after all our discussions here, how the world could be so blind so as not to see the intrinsic value in the company. What goes on here probably doesn't influence stock price in the least, though as I pointed out in the past few days, I'd bet that the market makers take a look here every so often and plan to "go contrarian" on what the general sentiment is around here.
...and that's as close to a rant as I'll ever get...
Just as, Decatsmeow, you're doing by suggesting further research, I too would respect the point that Blulotus is making. Here's how I would actualize that respect, FWIW:
1. PLY is an LLC, so right now there is no stock for them to issue in conjunction with the VHUB transaction.
2. So if somehow in the midst of all this, PLY restructures itself so that it can issue stock, I'd reach a certain level of nervousness about the legitimacy of what's going on. After all, VHUB started its own corporate existence by being taken into the shell of DogInn, which was soon followed by a pump and dump scheme, which in turn drove VHUB stock down to sub-pennies from something like a $1.90 share price when the pumping was taking place.
3. If we see that the deal is all-cash, no stock, then - as I've mentioned earlier - look for something like a 20% discount to develop against the transaction price, in order to hedge against the possibility of the deal falling through. ...unless we find that a bidding war for VHUB is beginning to develop.
4. If we see that this is somehow evolving into a stock transaction (i.e. VHUB shareholders will wind up with stock in some newly-named company), I'd say realize the gain in the price of VHUB stock and find something else to buy. ...unless you potentially want to match wits against pumpers and dumpers.
5. One good test of "legitimacy" of PLY is whether the vape shop owners on this board - Hostastock and RPH - ever heard of PLY until this weekend and ever actually saw any of the products depicted on the company website.
6. The most immediate new knowledge that should become available in this first week of the new year is whatever letter VHUB will be sending to its distributor base. The vape shop owners who frequent this board are likely to share that note with the rest of our civilization, and we'll all be able to read into that note in accordance with where our minds and experiences will take us.
Overall, I think that Blulotus got it right in theory, namely that it is wise to beware of the red flags, i.e. to stay vigilant. I think the odds favor that the transaction is "on the up and up," as the three major shareholders, rather than having benefited from the 2014 pump and dump, were totally screwed by it, meaning that I think the company and its management are actually ethical. As ever, let me repeat that my career-expertise was in the financial aspects of the not-for-profit domain, so I certainly will give more credence to others who have had backgrounds more relevant to what's going on here.
Good "digging," Hostastock, and I followed up by going to the www.plycig.com website and confirmed that there is no linkage therein to "investor relations." This is truly a privately held concern, as I had written upthread, so the deal with VHUB sure looks like it will be a cash deal (i.e. no "funny money").
There is one other possibility, but it's really far-fetched and beyond my pay grade to figure out how it would work. Perhaps you'll remember way back in early 2014, VHUB as a publicly traded company came into existence. The DogInn company was used as a shell, and VHUB backed into becoming a publicly traded company. I honestly can't figure out - and this would be for the best if it's something that couldn't be figured out - how PLYCIG could do unto VHUB what VHUB did unto DogInn.
Now here's where you, Hostastock, can help us out here, and that would be by telling us if you had ever heard of the PLY brand until this moment and whether you think that its sales volume could possibly be some multiple of VHUB sales such that its finances could support an acquisition. Even if not, perhaps PLY's owners have sufficient access to capital so that the acquisition of VHUB will be easy to effectuate.
I think that there's a lot to this story that we don't know yet, but certainly everything points to a dramatic increase in VHUB stock on Tuesday morning. The Winthers have totally signaled that the company is "in play," so that it seems to me that the odds of a bidding war for the company are better than the chances of no deal taking place.
This is the point where I state my hope that the smarter folks than I will chime in and connect whatever dots I've missed along the way.
Happy new year, bgry, and thanks again for enjoying my poetic contribution. You wrote a post from about a week ago in which you asked to be awakened if VHUB shows some signs of life.
Set your alarm for this coming Tuesday morning.
Incidentally, and here I'm commenting back primarily to Hostastock, since PRY is not a publicly held corporation as contrasted to being a Limited Liability Company, the deal that they will strike with VHUB will not involve PRY's stock (as such doesn't exist). That means on the one hand that the offer will be lower than what a stock deal might have been, but on the other hand the offer's real value won't need to be discounted by guessing how big a hit the acquirer's stock will take when all the former VHUB-holders bail out.
It's all good...
Happy New Year, Katloose, and thanks for reminding me that Monday is the legal holiday. It's funny how in retirement these details of regular working life can be forgotten so easily; without your reminder, I would have taken my recycle bin out to the curb on Sunday morning in anticipation of Monday pickup.
$10 million as a purchase price for the company - which is something like 11 cents per share - is defensible, given the sales uptrend. Somewhere upthread I came up with 9 cents as what the company would be worth if the toxic debt were to be refinanced (now essentially done) and the FDA regulations were to be made more manageable (on the near horizon due to new presidential administration). Still, from the point of view that nobody's going to pay around ten times the current price for anything, my guess is that you'll see something looking more like $5 million.
We'll know more on Tuesday. The one thing in all this that actually amazes me is that the stock price didn't have a significant bump upward in anticipation of the news, meaning that the story of the transaction actually didn't leak out in advance. Usually, somebody tells somebody who tells somebody, and that final person will spark a wave of buying in anticipation of the news, and the SEC will get a call from some unfortunate shmuck who wound up selling the stock too soon. In other words, after all the bashing we've done around here about the market-makers, the secrecy around this transaction suggests an honest marketplace.
And so, even in retirement one can still be amazed...
Hi Hostastock, as contrasted to your belief regarding "momentum" during the week, my guess is that you'll see a massive jump of the stock on Monday and then the stock will settle beneath that massive jump (but still a lot higher than where we closed on Friday) over the remainder of the week as folks begin to create a discount to cover the risk of the PLY transaction falling through. If some other unsolicited potential buyer comes along, watch for that discount to disappear in a big hurry as speculators will envision a bidding war. Any of this is subject to change based upon what VHUB would say in any press release.
I do think that a flock of the folks on this board are going to sell off enough shares to cover their cost and just let their profits ride (example: somebody bought at 1 cent and the stock goes to 3 cents; one-third of the holdings would be sold). There'll be, for awhile, a reduction of posts devoted to disclosing number of shares owned.
As ever, nobody died and made me king here, so I'm only guessing as to what will be.
I'm not the expert here in answering your questions, but I do believe this answer will be correct... If your stock is held in "street name," then your broker will get the money, whether from VHUB or PLY, and will credit the money to your account. If you have a "real live stock certificate" in your possession, then PLY would send you your money if they were to buy the stock. But in an asset purchase which we have reason to believe is what's going to happen here, what's left of VHUB would send you your money. If I'm incomplete or even just plain wrong, somebody here will give you a better answer, I'm sure.
Incidentally, the best thing you can hope for on Monday is a delayed opening due to an influx of orders, so don't necessarily lament if you see no shares traded in the first hour. The second best thing you can hope for is a press release from VHUB trying to explain what I've tried to explain this evening, only doing a better job of it.
Finally, I am appreciative that you would seek to have any post of mine "stickied."
OK, Ply will buy all of VHUB's assets. With the money VHUB receives, it will pay off the accounts payable and any other debt. There'll be lots of money left over, and that's what will go to the shareholders. In the end, it's not much different than if Ply just bought the company as a whole and paid the shareholders directly at the pre-set price.
You're in for a happy Monday - even happier if that 20% discount I mentioned in my post doesn't materialize, because you could always see an unsolicited additional offer or two materialize.
Ply Technology is an LLC, and here's the Wiki definition of an LLC just to give everybody the same starting point:
A Limited Liability Company (LLC) is a hybrid business entity having certain characteristics of both a corporation and a partnership or sole proprietorship (depending on how many owners there are). An LLC, although a business entity, is a type of unincorporated association and is not a corporation. The primary characteristic an LLC shares with a corporation is limited liability, and the primary characteristic it shares with a partnership is the availability of pass-through income taxation. It is often more flexible than a corporation, and it is well-suited for companies with a single owner.
In the absence of express statutory guidance, most American courts have held that LLC members are subject to the same common law alter ego piercing theories as corporate shareholders. However, it is more difficult to pierce the LLC veil because LLCs do not have many formalities to maintain. So long as the LLC and the members do not commingle funds, it would be difficult to pierce this veil.[5] Membership interests in LLCs and partnership interests are also afforded a significant level of protection through the charging order mechanism. The charging order limits the creditor of a debtor-partner or a debtor-member to the debtor's share of distributions, without conferring on the creditor any voting or management rights.[citation needed] Limited liability company members may, in certain circumstances, also incur a personal liability in cases where distributions to members render the LLC insolvent.
So, VHUB is indeed being taken private. Look for an Initial Public Offering in a few years. You'll know it's "the old VHUB" by virtue of the names of the products mentioned, e.g. Limitless.
Wow, I checked out to begin my Sabbath at around 4:15 PM on Friday, and when I came back here a few minutes ago, I started reading the posts I had missed from the bottom up. So I was all set to thank Knife for his kind comments, and then I kept on reading more posts. I kind of guessed that something was up when I saw that there were already ten posts on a Saturday.
So here's my take:
1. Subject to getting a deal done - and the Winthers would not have entered into this agreement unless they thought a deal would be done - my board colleagues are going to do very well here. It will be so much fun for me to read Cashbuyers Tweets.
2. The Winthers would not have entered into this arrangement unless the deal would be profitable for them, meaning that it will be profitable for all shareholders. What will differentiate the Winthers plus Jake Perlingos from the rest of the shareholders is that the management team will all get sweet employment contracts going forward.
3. Don't worry about the difference between buying the company and buying the assets. Remember who's selling the assets, namely the company, such that the proceeds of sale will go to the company which will be left with a heap of cash to be distributed to the shareholders in a liquidation.
4. The proceeds from the initial piece of the transaction take the toxic debtor out of the picture. Can you only begin to imagine how much more the company is now worth with the toxic debtor out of the picture???
5. So I was wrong in thinking that the stock would soar this past Friday afternoon. It will take until Monday morning. The stock will sell at a substantial (20%?) discount to what you'll be able to get after the final deal goes through in order to reflect the always-present uncertainties that go along with tentative buyouts.
6. Watch for a record-breaking number of posts on this board on Monday morning. Lots of you will be selling out your positions and leaving the last 20% or whatever on the table, and that's perfectly logical. Others of you will be selling enough shares so that in your minds you'll have only your profits remaining as your involvement in VHUB. Whoever commented that the Winthers would not be making this deal unless it worked well for them was totally right on the money here. ...and whoever looked for anything about PLY and came up with little translates into that PLY is probably privately held, so my own prediction that VHUB might go private may be turning out to be not that far off the mark.
7. One of the greatest gifts we are given is "anticipatory grief." ...meaning that we begin to mourn before a loss when we know a loss is coming, so that the grief when the loss actually happens will be more manageable. So where in the midst of all this good news is a loss - I'll miss you folks when the time comes that this board will be shut down.
8. Overall, the gang here, especially Decatsmeow with his large number of shares, now knows the "operational definition" of "happy new year." ...meaning that Santa has arrived only a week late bringing profits with him as he descends the chimney.
We might reduce the unaccounted shares further by taking into the calculations the roughly 8 million shares held by the toxic lender. There's also another 400,000 shares that Gotama was converted into at the option of VHUB at 15 cents each. How many of those shares are still held we have no way of knowing.
I'm fascinated by the whole bunch of recent posts which fall into two primary categories:
1. Posts which lament how the market makers are conspiring to keep VHUB's price down. Give it a few more posts, and you'll be returning to the theme we had a little while ago that their main approach is to do naked shorting and then find a way not to settle up.
2. Posts which my colleagues on this board are sort of almost looking like they're conspiring to drive the price up through their trading strategies, such as hitting the ask.
I know that the naked shorting business is wrong from every conceivable vantage point. I also don't have the slightest clue as to whether there's anything not Kosher about trying to drive the price up when you're not pumping before you dump. But I have this nagging feeling - putting aside legalities - that somewhere there's a market maker or two reading what's on this board and planning to smile while making use against you of your very own strategies.
Or just to turn this on its head, do you think that if you actually knew what CDEL and NITE and whoever else were planning to do,you could trade more successfully than you're trading now.
I don't really want to stifle the discussion here as it's really fascinating to behold. But maybe there's some wisdom in restraint. I believe, though I really don't know, that when Decatsmeow gets to 5%, there'll be some limits on what he can say (I'm not an SEC lawyer and I haven't ever stayed at a Holiday Inn Express, so please don't take my word as Gospel or Torah).
It's going to be a fine year, my friends!
Good morning again, Decatsmeow,
1. I would not bet the farm that VHUB's management will take the company private. I do believe that if the stock price doesn't soon begin to reflect their (our?) belief of the intrinsic value of the company, then they'll at least consider taking the company private.
2. I'm happy that I've been helpful to you as regards the wash sales and the SEC filing requirements topics. Not to go all philosophical here, but the greatest personal requirement for retired folks who've had a great career is to still be relevant in retirement.
3. While it's inevitable that we'll all write about the share price, I also find it helpful to write in terms of the overall market value of the company. So if there are roughly 90 million shares outstanding, even a 5 cents share price puts the value of the company at under $5 million - and VHUB should do twice that (at least) in sales in this fiscal year.
I certainly can understand that the value of the company takes a hit for the uncertainty of the ultimate impact of the FDA regulations, and then another hit for being a family company without outside directors, and maybe a final hit for there having been a pump and dump in spring 2014 (albeit one in which the major shareholders did not benefit in the least, as they just held on to their shares on the way up and on the way down). But still, I do believe that the company is worth a s*&t-load more than its closing price on Thursday.
Have a great new year! This is a great board to be involved with.
I don't know if it's still true but a few decades ago you had to wait 30 days after selling a stock before buying it back again for you to be able to claim the tax loss realized from the earlier of the two transactions. It was called "the wash sales provision," if I'm remembering correctly. So everyone who sold by the end of November was beginning to buy back by the end of December.
So it wasn't psychology at work here as much as tax planning. Again, I don't know if the underlying tax premise is still true (not that I haven't been so smart not to have losses but rather I've stayed out of the market for a very long time, so I didn't need to keep current on tax provisions).
...joining you in wishing the whole gang here a great 2017!
I don't know, Hostastock, and perhaps the investor relations function will even be moved in-house, as, for all I know, the company might be believing that the better way to an improved stock price may be via a bigger bottom line rather than more publicity about a smaller bottom line. I neither know what they're going to do nor do I know enough to have a credible opinion on what they should do. I am continuing to have just a pure hunch that the Winthers are going to take the company private if the stock price soon doesn't start reflecting the valuation of the company that its prospects would support. Let's see how much of a bounce the stock gets at the end of tax-loss selling.
Happy about-to-be New Year, decatsmeow, and again thanks for being such a gracious "literary" critic regarding poetic contributions to this board,
This is a good moment for me to reinforce your bullishness on the stock by repeating a portion of my reply-post addressed to CoachMarc on November 29, which I now copy into this post:
"I remember back to the end of 2014 when the stock was being buried by the victims of the spring-season pump and dump, and then on the afternoon of the 31st, the stock climbed by something like 75% as people jumped back in. The difference between now and two years ago is that the company now has some really decent fundamentals (growing sales, a first quarter profit, declining toxic debt, increasing international presence, more experience in Kyle in particular)."
So I honestly wouldn't be surprised to see the stock soar tomorrow, and I'd toss in some of the technical analytical work provided recently to this board as one more factor running in the favor of a positive breakout.
Meanwhile, I should kid you ever so gently about your being willing to hit the ask, as at the moment I'm typing this post the ask (which frequently does some crazy things during the off-hours) is sitting at 2 cents.
More seriously, my trepidation as regards the stock won't kick in until the stock hits an intraday high of nearly 5 cents, as I can see a lot of the folks here trying to head for the exits all at the same time when the stock is bumping up against a multi-year high.
...and even if there is no leap in the stock price tomorrow, I would believe that the second fiscal quarter earnings release in mid-February will do good things for the stock if sales come in even as low as $2.4 million (given that the company said that its seasonality of sales has a low point in the quarter just about to end) and the bottom line for the quarter itself is around break-even.
Decatsmeow, I look forward to seeing your SEC filing if/when your ownership of the company crosses the 5% threshold. Until then, happy new year to you and to the rest of the gang here!
'twas the morning of Christmas
and all through this board,
people were waiting
for VHUB to soar.
Trump was elected;
regulations will fall,
But will that impact
the vapers at all?
The debt holders were laughing
and smiling with glee,
for what could be better
than toxicity?
The makers of market
were set on their task.
Could the bid ever be
even higher than ask?
The board so awaits
the next quarter's 10-Q,
hoping the future
will come into view.
Cashbyers was
in technical delight,
drawing charts
well into the night.
RPH and Hosta
sold all of their wares,
counting their money
with nary a care.
A couple of posters
in thoughts pure and deep -
we'll be sure to awake them
when VHUB stops its sleep.
But one thing is certain -
Decat's learned it well:
Don't text while you drive,
for BVAP went to hell.
This poem must end
even if it seems Scrooge-ish.
Yule verse shouldn't be written
by someone who's Jewish.
____________________
With my best wishes to all for Santa to come down the chimney with capital gains!
Kindness never grows old - thanks for the support, Decatsmeow! Meanwhile, as I think I mentioned upthread, look for a major upward bounce in the last few hours of the last trading day of the calendar year (this coming Friday)as all the tax loss selling will be out of the way and many of those who sold will be jumping back in.
Totally agree with your post, Hostastock! Transparency is for those who need cuddling (as you've phrased it well) and it's also for those who need an introduction to the company and its stock. You don't get an "accountable" management unless and until there are known objectives followed by explanations of what did and didn't happen.
Thanks for the invitation regarding ideas for VHUB to consider. After having learned more than I ever wanted to learn about Bitcoin this morning as the upcoming international currency of choice, I was almost ready to suggest that the company print all marketing materials in Esperanto. More seriously, here are some thoughts (after applauding you for your thoughts):
1. In order to more fully remove the "stain" of having been the subject of a "pump and dump" 2 1/2 years ago (such a stain can keep potential new investors out of the picture), the company should present whatever details of the episode of which they are aware. It's clear, to me at least, that the "family" wasn't among the bad guys, as they held their multi-millions of shares while the stock rose and then tanked.
2. Even at the price of Directors and Officers liability insurance increasing, I think it might be worth it for the company to bring on outside, non-family directors. There's been a lot of flak, even on this board (and even by me at times), about how even small intra-family dealings, such as consulting fees to the Winther CPA firm or property lease arrangements, can look improper even when not.
3. It was mentioned up-thread about how the company might be planning a shareholders meeting, and our colleague Cashbyers was kind enough to write that he'd be maintaining the questions I thought ought to be respectfully raised and satisfactorily answered.
4. Given that the price of the stock would, I believe, rise substantially in the absence of the remaining toxic debt, I think it would be worth it for the Winthers to take out the debt themselves by providing the company with more loans from officers on strictly-interest, i.e. no convertibility, terms.
5. Work with a nationally recognized medical center to create a smoking (cigarettes) cessation program. ...or maybe with the Veterans Administration, once the new leadership is in place, as the VA needs some "wins" and smoking cessation is a very public sort of win.
6. Connect with Trump's new anti-regulation czar, Carl Icahn, about the FDA-imposed mess on the vaping industry.
7. If the company would like some inexpensive, smart labor to use on whatever projects they've got going, MBA and MPH schools frequently require internships or practicums.
8. Just as an expansion of an earlier suggestion, it's time for one or more of their dealers to go on their board of directors (paging Hostastock and RPH). They're the people who'll have the best ideas as contrasted to theoreticians like me.
9. Speaking of self-serving ideas, it's the most obvious thing in the world that someone in the company be assigned to monitor this very discussion board, because maybe there's a good idea to be found here among all the swill.
10. As the company has a California location, perhaps there's a firm that specializes in product placements in movies.
I do realize that any idea above is of the brainstorming species, meaning that the best hope it has to become practicable is for folks to massage it. So, have at it!
Good morning, Decatsmeow, and let me give you some good news by addressing a small misconception in your post. It happens that VHUB is on a June 30 fiscal year, so we are eagerly awaiting Q2 results which should reach us in mid-February, as contrasted to the ten-week wait for annual results.
The company has already told us in the most recent 10-K that the current fiscal quarter is the seasonally slow period for the year. Accordingly, sales expectations should be modest (the benchmark would be $1 million per month, or $3 million for the quarter, so expect something less than that), so what you might think of as a poor sales performance may actually be in line with expectations.
Have a great week for yourself!
Good evening, Knife,
Just to document and amplify your correct info regarding the 5% threshold for SEC reporting, here's the blurb from the Investopedia website, copied verbatim:
The Schedule 13D form not only reveals who owns most of the company's shares, but also introduces the owner (or owners) to investors and provides contact information. It's filed within 10 days of any entity acquiring 5% or more of any class of a company's securities. It provides the following information:
Background information on the owner, including any criminal misbehavior, and the type of relationship this owner has with the company
An explanation of why the transaction is taking place
The type and class of the security
Where the money is coming from for the purchase
So, as you've advised, the "magic number" for VHUB is on the order of 4.5 million shares, at least until there would be more conversions into stock by debt-holders. It is interesting how the purchasers of one smart fellow can change the technical outlook of a stock, as I ponder CashByers post on improved technical indicators.
With best wishes for the season to you Knife and to the other "residents" here on this board...
Thanks, Hostastock, for sharing the serial-articles! I was hooked on it right away and couldn't put it down until I was done reading.
I would wonder, not unlike I imagine you did, whether there is any applicability to VHUB, as we all are curious by who might have been selling shares in recent weeks when the company's bottom line was turning positive and the prospect for a better regulatory environment has been improving (even as the company's percentage of foreign sales has been increasing, which is a strong hedge to domestic regulatory matters).
I think our board-colleague Cashbyers has been given a good topic for his graduate degree thesis when he enrolls.
...and thank you, CoachMarc, for your kind words.
There's been a sub-current on this board for a few days, so I guess I'll add to it. I retired at age 65 1/2, just under four years ago, and following VHUB has become one of my favorite hobbies, even when Cerp was giving me the business some months back (I remain appreciative, as there is a grain of truth to be found in every insult) and even when no one on the board believed me that VHUB could force conversion of Gotama's shares at 15 cents when the stock was then selling at a couple of cents a share.
I do agree with the main theme of your most recent post: "I really believe that the pps should be much higher and I think it will be after the first of the year." There is (at least) one aspect of all this that I haven't yet understood, namely how the market-makers go about manipulating the price of the stock and why they believe that their manipulations will be profitable to them, coupled with whether VHUB has any control over which firms will become and remain market-makers. It would appear to me that the Winthers plus Perlingos as majority holders of the common shares would have a vested interest in maintaining an orderly market - and "orderly" would mean that the stock would respond more or less logically to stimuli such as a massively profitable fiscal quarter and prospects of over 10 million in sales for the current fiscal year.
Have a good day!
On your way to buying the company, don't forget that there's some SEC filing you'll probably need to do when you cross a certain percentage threshold of ownership.
Seriously, first, it's good to hear from you again CoachMarc, and second, you might soon see the stock available in your buying range, now that we've entered tax loss selling season. I remember back to the end of 2014 when the stock was being buried by the victims of the spring-season pump and dump, and then on the afternoon of the 31st, the stock climbed by something like 75% as people jumped back in. The difference between now and two years ago is that the company now has some really decent fundamentals (growing sales, a first quarter profit, declining toxic debt, increasing international presence, more experience in Kyle in particular).
This company really is in need of the shareholders meeting that Cashbyers mentioned perhaps a couple of weeks ago by now.
Have a good day for yourself, and again, welcome back!
I'm with you, Hostastock - I passed the CPA exam back in 1969 so I've been around the block a time or two, but trying to figure out why debt has its derivative element split out makes my head spin faster than Linda Blair's in The Exorcist. Have yourself a fine weekend!
Hostastock, maybe I can help out here, not because I can figure out what the concept of "derivative liability" is all about but rather because I maybe can make it much less important/helpful to know about it.
I believe that the convertible note liability to TCA Global as of September 30 is about 500K, of which most is reported as a derivative liability and the rest is reported as part of convertible notes payable in the current liabilities section of the balance sheet. So what I'm saying here is that all that matters is that the company owes TCA Global 500K, and who cares about how that's split between the category of convertible note payable and the category of derivative liability.
Also muddying the picture is some debt owed to Iliad/Fife at September 30, but regarding which we learn from a footnote that it's been paid off between September 30 and the release of the 10Q.
Incidentally, the other (non-convertible) notes payable have to do with financing the purchase of a vehicle, financing the purchase of directors and officers liability insurance, and financing the general insurance policy. Don't worry about those, as there's nothing toxic nor dilutive about them.
Bottom line of all of this - the company has borrowed only around 500K that really matters. We don't need to worry so much about money borrowed to pay for insurance policies and money borrowed from the Winthers themselves. A currently profitable company, running at an annual sales rate of roughly $10 million, should feel thrilled to have so little debt.
...which takes us back full circle to the question of why the market is pricing this company as being worth only a million dollars (approximately 90 million outstanding shares selling at approximately 1.1 cents per share). I can think of a few reasons, but no good reasons - the regulatory challenge is declining with Trump coming into office; the 2014 pump and dump is fading into history, not to mention that the Winthers did not sell into the pump and thus were hurt more than anyone by the P&D; it's a family company lacking some checks and balances, but now it is a profitable family company so there's less worry about the management being competent.
That's enough ranting for this extended weekend...
I'll take a shot at answering your question:
1. Technically, Cashbyers has provided the answer revolving around the moving average of the stock.
2. Fundamentally as regards the industry as a whole, I think that some specific word on the reduced regulatory burden on the vaping industry would help a lot.
3. Fundamentally as regards Vapor Hub itself, I think a progress report by the company on its financing-options progress would be constructive. The company did a lot of "road shows" via infomercial radio awhile ago and it really didn't do much for the stock.
4. As regards hyping the stock (in a non-pumping, Kosher kind of way), if one of the gang here wants to go on "The Woof of Wall Street" or similar board within Investors Hub, go for it.
5. Overall, the key to the puzzle may very well reside with the TCA Global Fund which is the major debt-holder. They have every reason to want the stock to move up, provided they convert their debt into equity - they'd be shareholders just like you and would want to see the stock perform (as contrasted to just dumping out at a fraction of what they could get if they were to hold on and the stock were to reach its value based on earnings prospects and value of its product-formulas).
6. If anyone wants to write Philip Morris (or whichever cigarette company) and suggest that they take over VHUB, go for it.
This is a start, anyway. I'm sure others on this board will have more and better ideas.
Hi Hostastock, while I don't want to go too far down this rabbit-hole of the company being taken private by the hedge fund (the fruits of my imagination shouldn't drive a lot of posting activity), I do need to acknowledge that, as usual, you're correct. To complete the picture, at least for the moment, the level a buyout would be set would revolve around (at least) three factors:
1. Probably most important, the then-current price of the stock, as there needs to be a sufficient premium to entice holders to sell.
2. Underlying asset values of the company, both those assets which show on a balance sheet such as accounts receivable, but also intangibles such as the real value of patents.
3. Growth prospects for the company if not fully reflected in the then-current price of the stock.
I'd be overstretching the limits of my knowledge and experience if I were to pick a takeout price, but it's safe to say that the price would need to be high enough to entice the family + Perlingos to sell their shares, coupled with employment contracts going forward which would necessarily include non-compete agreements.
If the major debtholder were other than a hedge fund like TCA Global, I wouldn't be barking up this tree at all.
Have a good day, and enjoy what I think will be the ride up in the price of the stock in the coming weeks. ...and I'll close with my extreme curiosity as to why the company would believe that the second fiscal quarter would be the least active in sales volume when Christmas giving activity falls within it (Hostastock and RPH can tell us how retailers sales activity behaves at this time of the year).
For the sheer fun of it, I thought I'd look up TCA Global which now holds the bulk of VHUB debt, and according to the Bloomberg website here's the description:
TCA Global Credit Master Fund, LP is a hedge fund launched and managed by Trafalgar Capital Advisors LTD. The fund invests in the public equity markets across the globe. It makes its investments in the securities of companies operating across diversified sectors. The fund seeks to invest in the stocks of small cap and mid cap companies. It employs a fundamental analysis to create its portfolio. The fund benchmarks the performance of its portfolio against the S&P 500 Index and the MSCI World Index. TCA Global Credit Master Fund, LP is domiciled in Cayman Islands.
Based upon what I read and what you're seeing just now about TCA Global, and predicated upon the majority of this discussion board's opinions about the current under-valuation of VHUB stock, I'll offer a far-out opinion.
If I were TCA Global, I'd convert the debt into equity - but then I wouldn't sell the newly-issued shares. Rather, I would take the company private via tender to the rest of the shareholders, run a couple of years of profits (and use those profits to deal if necessary with the FDA), and then I'd do an Initial Public Offering at a price looking a lot like the 9 to 18 cents valuation, or perhaps more as there'd be more of a track record of earnings.
Like the new series of Geico ads, if you're a hedge fund, that's what you do. As I've posted a number of times, I'm just a retired not-for-profit CFO who probably knows just enough to be dangerous, so feel free to rip this idea to shreds or improve upon it.
Good morning, Makinezmoney (great screen name, by the way!),
I agree with your enthusiasm though I can't understand your numbers. There are three "profit" numbers in the quarterly results:
1. The gross profit before general and administrative expenses came in at 936K. That 936K is not a bottom line kind of number.
2. The net operating income came in at 270K.
3. The (final)net income came in at 336K after taking account both "real" interest expense and various accounting entries having to do with accounting for debt instruments.
I think that followers of the company can be particularly excited about how general and administrative expenses for Q1 of this fiscal year actually declined from G&A of the prior year's first quarter, even as sales were increasing substantially.
Apart from what I've just written in this posting, I'm excited about one more aspect of the company's situation. If I'm reading the 10Q correctly, there's something like 70 million shares that could be issued upon conversion of the remaining convertible notes. That's not such a big price to pay in return for making the company nearly debt-free.
Let's say that the company could earn a $1 million final bottom line this year based upon annualizing the Q1 operating income results. If that $1 million were spread over 160 million shares, that's about .6 cents of earnings per share. Let's apply a price/earnings multiple of 30 to that (which is not outlandish in a growth company situation), then the stock would be worth 18 cents.
18 cents, or even just 9 cents - that leaves a lot of room for the price of the stock to grow from its current level of about a penny. ...to be reasonable, because the company still needs regulatory relief from the FDA and we can't be sure (though I think it will happen in the Trump administration) that there will be relief, I'd divide my 18 cents in half, and I'd view the current "value" of the stock as being 9 cents.
As I wrote at the beginning of this note, Makinezmoney, I share your enthusiasm at the moment!
I've reread the 10Q, and I'll offer three more thoughts:
First, I do believe that Iliad/Fife no longer has any of the company's debt, per the following excerpt from the 10Q:
"As of November 14, 2016, the outstanding balance on the Second Exchange Note was $0."
Second, right at the beginning of the 10Q, the statement is made that as of the release date of the document, the number of outstanding common shares is the same number that existed at September 30. So we don't need to worry that further dilution took place between the end of the first fiscal quarter and today.
Third, I don't think I've been smoking any funny cigarettes, but I'm pretty sure I remember that the annual 10K told us that the seasonality in sales translated to the third fiscal quarter being the weak quarter, while today's 10Q tells us that the second fiscal quarter, yeah the one we're in now, is the slow quarter. This is one of those WTF moments that in the end isn't really all that consequential, sort of like that goofed-up CPA opinion letter in the annual audited statements that said the company has never had any revenues (I'm really amazed that this hasn't been corrected by now).
I do believe that some good times are ahead for those very patient shareholders who've stuck it out until now.
Cash and other board-colleagues,
I'm really happy for the gang here, as the 10Q has provided a bunch of positive fundamentals that I'm pretty sure have not been priced into the stock yet.
1. The bottom line, not just operating income, has turned positive. No longer does Paul Knopick need to restrain himself to writing about how sales have performed or how gross margin has improved - he can write about an actually profitable company.
2. Iliad (Fife) debt is way down, so the dilution is now mostly a matter of history, I would believe. Meanwhile, the TCA debt is not that dilutive in nature, as the 10Q states that the conversion rate is just a 15% discount.
3. The family has loaned the company some more money. Since they're putting money in rather than taking it out or letting additional toxic debt come into the picture, they're bullish on the future. Incidentally, it's a positive sign that accounts payable declined a lot in Q1, as the end of fiscal year number was rather high when viewed in relation to cost of goods sold.
4. One of our posters is still writing about how September sales must have tanked since July and August sales both hit the million dollar mark. The fact is that June and July sales hit the million dollar mark, and the it's only July that fits into Q1 of this new fiscal year. So September sales did not necessarily tank, as contrasted to both August and September moderating from the high levels of June and July.
5. I can't think of a good reason why the company shouldn't be able to issue more stock (not at bargain-basement prices) or take on non-toxic long-term debt to finance the work that would need to be done to be compliant with FDA regulations. Even better, I see those regulations disappearing under the incoming presidential administration.
You all know that I don't go "coo-coo for cocoa puffs" in one direction or the other when I do my analytical "stuff" on this company, especially since I'm not at all a participant in the penny stock world. But I do think that the lid is finally going to blow on this stock, beginning on Tuesday morning, even if Mr. Fife will be selling into the upticks.
Have a good evening, one and all!
Sorry but the conversions are not necessarily done, I do believe. The loan covenants specify that Mr. Fife's companies cannot hold more than 10% of the stock at any time, so when some debt comes due that VHUB can't pay with cash, there's a high interest rate accrued until Fife sells some of his existing shares - and then he can convert once again, and at a low price since his selling the pre-existing shares will have driven the stock price down. There's also a "true-up" provision in the loan covenants which means he gets more cheapies.
I am not totally certain that I have this completely right, but you will see in the 10K, if I'm remembering correctly, that some millions of true-up shares have been issued, which wss part of the explanation of how total issued shares grew to 90 million in the prior fiscal year.
Let's see what the quarterly 10Q filing tells us regarding whether issued shares grew beyond 90 million in the first quarter of the fiscal year...and let's also see how the loss (I'm guessing that there will be one) has been financed (I'm guessing that some of it will be via stretching out the accounts payable cycle).
All of this negativity aside, VHUB does remain a company on track for over $10 million in annual sales, with an improving regulatory climate due to the Trump election, and an increasing measure of foreign business which is less subject to FDA control...not even mentioning Cash's favorable technical analysis of the stock.
BobKS, while there were two back-to-back $1 million sales months, the first of the two was June (which belongs to the fourth quarter of the prior fiscal year) and the second was July (the first month of the first quarter of the current fiscal year). A few of us here had been getting curious why August revenues hadn't been celebrated, and now we know why - the string of million dollar months was broken...and presumptively not picked up again in September.
Apart from all this, as also has been pointed out (fervently by Katloose), $2.5 million in sales for one quarter is on track for $10 million for the full fiscal year...and thus it is a bit strange to see the company valued at only around $1 million, even with its debt structure challenges.
One addition to my prior post...
On the one hand, Kyle said that he's looking for something like $7.2 million in sales for this fiscal year based upon his goal for 10% growth. On the other hand, if we simply annualize the first quarter's sales, that would take us to $10 million. Now we already know from the annual 10K that the January-March quarter is the low-seasonal quarter, so perhaps that $10 million number might only be $9 million in sales for the year.
Hopefully there'll be a press release (or the shareholder meeting that Cash mentioned) that will begin to address the questions regarding sales outlook, prospects for profitability, progress on finding better sources of capital, degree of satisfaction with the market-makers in the stock, governance of a family company in a publicly traded environment, the explanation of "derivative liabilities," and probably lots more that I can't think of at the moment.
Thanks to the eyes-open folks who saw the delay notice re the 10Q. I think that there’s one incorrect belief on this board that’s been allowed to go uncorrected, so I’ll provide the correction along with documentation.
The truth is that VHUB actually did have two consecutive months with over a million dollars in sales. The incorrect belief is that those months were July and August, as contrasted to the truth which was that those months were June and July. Thus, the conclusion that was drawn that September sales amounted to only 500K is likely to be on the low side, as August sales most likely didn’t reach the million mark. Beyond that, the company’s own goal – as you’ll read in the August 29 press release – is “to grow at [only] a 10% rate month over month.”
Now follows the documentation I promised, then followed by some commentary I’m offering this evening.
From August 29 press release regarding an interview with Kyle:
Q: What milestones can investors expect over the next 12 months?
A: Vapor Hub International has a goal to continue to grow at a 10% rate month over month. We plan to achieve these goals by continuing to develop new products, increase the marketing, and hire seasoned sales representatives. We had our first $1 million sales month recently. It is important to note that we are a public company. Now is the time to become part of an industry that experts believe will outsize the current tobacco industry. We are very aware of the need to increase shareholder value.
From August 17 press release regarding sales for June and for July:
Bolstered by a strong marketing effort featuring the release of new, innovative products and increasing its strong international presence, Vapor Hub International Inc. (OTC: VHUB) (www.vapor-hub.com) today announced that sales in July 2016 topped one million dollars for the second consecutive month, a first in the Company's history.
"Sales totaled approximately $1.2 million and the Company's profit margin again increased. Our creativity in designing and marketing products that consumers want at an affordable price combined with increased worldwide sales has allowed us to post these sales records," said Kyle Winther, VHUB CEO.
Putting this all together, since the prior fiscal year’s sales totaled $6.5 million, the company is looking for maybe $7.2 million in the current fiscal year, which is a crapload less than the $12 million I had been imagining based upon annualizing the June and July average, and then discounting by maybe 10% to allow for my lifelong tendency towards undue optimism.
All that having been said and properly lamented… as others have pointed out on this board, a penny stock running over $5 million in annual sales should be carrying a market value more than the roughly million dollars that VHUB is currently carrying.
But I’ve got to be honest here regarding my current disappointment in the quarterly gross revenues. VHUB, with its constantly being almost at the cusp of profitability, reminds me of Milton Berle’s (I sense some of you youngsters running to look up the name in Wikipedia) old self-disparaging lines: “I have sex almost every day. I almost have sex on Monday, I almost have sex on Tuesday…” VHUB for the past year-plus has seemed ready to really bloom and then something goes amiss, like FDA releasing regulations or ijoy flaring up or paying debt with cheap-stock.
It will be interesting to see how the stock reacts on Tuesday…
Good Saturday evening, Cash,
Here's what I'm looking for this week in the earnings release:
1. I would hope to see quarterly revenues in excess of $3 million (I'm harder to please than Hostastock with his #2.8 million expectation), because I am keeping in mind that the 10K spoke of the January through March quarter being the seasonal low - and I really hope the company can do no less than $12 million in sales for the full fiscal year. ...which would be well on the way to $16 million that was in a forecast made by the company around a year and a half ago when they were first publicly stating that they were looking for additional capital.
2. You write about wanting earnings to be "bullish." Let's divide that into two components. I would want "operating earnings" to remain positive, as was the case for last year's Q4 taken in isolation, but I'd also like to see the final bottom line be at least within 100K of breakeven, as anything worse than that would infer that the company will need to borrow more money.
3. But the first place I'm going to be spying out on the earnings release is the number of outstanding common shares to see what sort of an increase, if any, there's been since the 93 million number reported at June 30. If there's been a substantial increase while at the same time convertible notes payable has accordingly been decreasing, that's not a bad thing, as that means that interest expense is on its way down.
4. I too would think that the stock is once again going to blow upward past the roughly 1.6 cents that was the conversion price for a number of Mr. Fife's shares. I don't think that at the moment he has that many shares left to sell, given the high volumes of daily transactions we've been seeing.
5. Since I ought to disagree with you on something/anything so as to maintain something resembling credibility here (it's actually hard not to be just an echo for you, as you're the best poster we've had here since Sgreg who hasn't been here for months), I'll choose to repeat an earlier comment that technical analysis does not maintain its usual validity when you've got a unique source of supply, like Mr. Fife, having the privilege to torpedo the stock price whenever he might decide to dump shares. And so, I would tend to refrain from your optimism when you conclude that the longer term uptrend remains in place. This stock is sufficiently screaming "buy" due to its fundamentals.
Have a good week, and I look forward to our exchange when the quarterly earnings release is put out to our pasture. Your Twitter account, incidentally, remains fun to follow (I've forgotten whether you've cross-referred from your Twitter to Investors Hub, just as you've cross-referred from here to there - if you haven't done so, you might consider doing that as a way to further boost your "brand").
Good afternoon, Cash, and thanks for taking a proactive role here in your role as moderator. The prospect of the company conducting its first general shareholder conference call (I presume, as contrasted to the sham of making folks travel) is quite attractive. It's one of the antidotes/controls to being a family-dominated company. I hope at least a few of us will use this board to aggregate questions for management when it is learned when the meeting will be conducted.
Meanwhile, the stock price continues its recent decline, and to me it seems that shares beyond Fife's have been unloaded, given the transaction volume. The improvement in regulatory climate ascribed to Trump's election hasn't yet translated into the stock price, nor has the strong growth in sales, especially the intensifying focus on foreign sales.
Within a week, the first fiscal quarter's 10Q should be released. Maybe that will explain something - we'll see.