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This almost seems like we're doing a "roll call" of this Board, and I too have no answer, not even a clue, why the report of a strong financial performance wouldn't get somebody to get in, or to get more, especially when the stock is available at under three cents a share.
Incidentally, I think that the news about "partnering" in vape shop financing (thank you, RPH, for this input!) is quite a positive as well, and it leads me to think that VHUB itself should soon be able to negotiate its own evolution from a short-term debt structure to more focus on long-term debt or even reasonably-priced (i.e. not excessively dilutive) additional common-shares.
Wishing all a good day...
Thank you, Boersi, for your appreciation! Meanwhile, I've done my second reading of the 10Q including my first reading of the footnotes, and I'd add only the following items to my prior observations:
1. On Page 24, the Gotama debt-conversion is again explained. Someone involved with VHUB is greatly to be praised for having negotiated covenants which allowed the company to force conversion at the level of 15 cents per share.
2. Operating cash flows would have been positive if not for the increase required in inventory to cope with the growing sales. Once cash flow turns positive, short term debt should finally show declines.
3. The company continues to assert that they'll need more money and they're looking for whatever suitable debt or equity may be found. Back in May, we saw a solicitation letter from the company, and it would reduce uncertainty (thereby making the stock more attractive) if the company would issue a progress report on how the search is going. I'm not counting rollovers and increases in short-term debt as being responsive to this matter, as short term debt is both expensive and ("doh") only short term.
It will be interesting to see what the press release will look like. The truth really is all the "spin" that's needed here - and the truth is that this is a rapidly growing company, which is being well managed (I haven't been that complimentary until now), and that doesn't have a lot of "goofy" transactions with its directors (in fact, the main thing the leadership is doing is personally guaranteeing loans).
I see that the quarterly financials have just appeared, and I have just a few immediate reactions:
1. That sales number for the quarter is nearly $2 million which infers annual sales of nearly $8 million - and that is very impressive indeed.
2. There is a positive "net income from operations"! If you take into account what I'd consider to be the cash aspects of interest expense (the first two items of the four-item list, as contrasted to what I'd consider to be accounting kinds of adjustments), a small positive net income still remains. That too is impressive.
3. Approximately 650K in short terms loans is not a lot for a company with $8 million in annual sales. Nonetheless, the balance sheet will look significantly better when some/much of these loans will have been refinanced to longer term debt, or even to equity (priced reasonably so as not to be overly dilutive).
I still need to go through the notes to the financial statements, as you'll generally find "lots of useful stuff" there. But, for whatever it's worth until the notes have been read, I think that this company has demonstrated "staying power" and deserves a valuation higher than the approximately $2 million (72 million shares at 3 cents would be $2.16 million) at which it is currently valued.
I'm sure that the readership will have much to add to this very rough first impression. Good day to all!
Yours is a marvelous post, and my quibble is small. The Gotama folks didn't choose to convert at 15 cents per share. The very unusual covenants of that loan permitted VHUB to compel that conversion (I've reprinted on this Board a few times from the prior 10K the relevant paragraph of the loan terms). My ultimate optimism is drawn from the fact that the key people of the company are providing personal guarantees of payment as regards various loans. Again, thank you!
Thanks to Bunkies and Hostastock for math review and improvement - this is my imagination of how a discussion board is supposed to work, namely that considerate collaboration makes a board most useful as well as pleasant. While I would still believe that average principal borrowed is the right factor to use in the calculations rather than total principal borrowed, I think we're all agreeing that the interest rate, even if it's what companies are used to in this phase of their operations, is a significant burden to bear.
Good day to all!
Good evening, Hostastock, and thanks for your earlier compliment,
For the sake of the readership, let me copy the terms of the new BofI loan into this post:
On November 3, 2015, Vapor Hub International Inc. (the “Company”) entered into a Business Loan and Security Agreement with BofI Federal Bank (the “Bank”). Pursuant to the agreement, the Company borrowed $125,000 from the Bank and received net proceeds of $93,615.51 after deducting the repayment of $31,384.49 in full satisfaction of the Company’s remaining obligations under that certain Business Loan and Security Agreement entered into with the Bank on June 2, 2015. The new loan is payable in 126 payments of $1,220.24 due each business day beginning on November 4, 2015, with the total repayment amount (subject to certain exceptions) being equal to $153,750.24 (the “Total Repayment Amount”).[Further along in the narrative, the story about the key people of the company personally guaranteeing the note is presented.]
Let's calculate the effective interest rate on this loan:
1. The amount borrowed is roughly 94K, and it's being repaid on an almost constant basis (for the sake of simplicity, let's say that each "business" day is every day of the week rather than five out of seven days of the week). So that means that the average loan is about 47K.
2. 126 payments of $1220 each multiplies out to about 154K, of which 94K is principal and 60K is interest.
3. If 60K is the interest on a 47K loan, and the term of the loan were a year, then the effective interest rate would be about 80%. 126 business days is about half a year (126 X 7/5), so I think that the company just borrowed money at a 160% annual rate.
4. The fact that they had to borrow more money means that it's unlikely that Q1 ran profitably.
5. The fact that they have to pay usurious rates to borrow money is not a good sign, partially offset by the fact that the key people in the company have co-signed on the loan, which shows confidence that the company will survive.
Overall, it's getting close to the time when the company will absolutely need to get long-term capital into place, whether it's a matter of bonds or of stock.
Sorry not to be able to cast the 8K into a more positive light.
Good afternoon, Hostastock,
Last year's first quarter 10Q was released on Friday, November 14, so perhaps we'll see this year's similar report this Friday, which will be November 13. ...or perhaps early next week, who knows...
For your convenience, here's the financial summary from last year's first quarter (sorry for my being format-challenged):
$
Gross Revenue 1,371,550
Cost of Good Sold 743,323
Gross Profit 628,226
General and Administrative Expenses 582,940
Income Before Taxes 45,286
Taxes 800
Net Income After Taxes 44,486
At September 30, 2014, the company's borrowings were 560K from Gotama (which have been converted into about 4 million shares of stock) and 88K from its own officers.
I have this feeling I'll be doing some analytics on Saturday evening.
Good evening, Auditor1,
Let me provide documentation for your claim that Cerp used to be a cheerleader. Just turn to Post 2008 of January 25, 2015, and, if you didn't know who had provided this post, you'd swear it must have been either RPH or Hostastock.
All that aside, circumstances change and investors, like everyone else, are allowed to change their minds, so I'm not going to bash Cerp for changing his mind (though I do think it is generally wiser to proactively admit that you've changed your mind as contrasted to being "caught" doing that).
Within about two weeks we'll all learn whether the annual pace of nearly $7 million in sales (just annualizing the Q4 number)has been sustained. If it hasn't been, the company may be distressed. ...and even if it has been, if that level of sales volume isn't yet sufficient to drive the bottom line to a profit or at least damn close to a profit, then it really is time to ask Kyle and company what level of sales will it take for the company to become profitable, how long is it expected to take to get there, and can the company obtain longer-term loans and/or issue more stock to keep it afloat until it gets there.
Given the very rapid growth of sales from inception to now coupled with knowledgeable testimony from posters who are personally aware of the quality of the products, I'm personally bullish. But I think that we have to respect the opposing point of view (and by extension the posters who hold that opposing view, as long as they back up their opinions with logic that they're willing to share with the rest of the community on this board).
We can only guess "the why's" of what's been going on these past few days with VHUB's stock decline. Apart from Truthbetoldbeing lots smarter than the rest of us (which is not out of the realm of possibility by any means), here's my attempt at a list of possibilities:
1. On the fundamental side, sales for the first fiscal quarter haven't been disclosed yet, and when there is uncertainty, there is selling, or at least the delay of buying.
2. Also on the fundamental side, we really haven't heard since May how the company is doing in raising new sources of permanent capital (i.e. long term debt and/or equity, not short term loans). Again in the absence of information, pessimism becomes rooted. Remember that the company was still borrowing new money in the previous quarter even as sales were doing very well.
3. On the technical side, the stock broke support levels (the folks who relate more than I do to the various moving averages can chime in some more here).
4. Also on the technical side, we have the opposite risk of what was going on last year, beginning around this time of the year. Last year it was tax-loss selling. Right now it could be the folks who bought in at about a penny to a penny and a half wanting to take their gains and run.
5. Finally there is one possibility which does raise some alarm, namely the Gotama folks who "were inflicted" with shares at 15 cents as a loan-conversion rate of exchange could be selling some of their 4 million shares.
If things go as they usually go, just as I'm writing about the decline, the stock is probably beginning to recover... Seriously, I'd be interested in other folks' ideas.
Thanks, Sir! ...but if I were to buy the stock, my analyses wouldn't be as credible as I hope they are now.
Following this stock became a hobby after I got the endless stream of pump and dump e-mails/calls in Spring 2014, and it's been a pleasant surprise for me to learn that sometimes management may be at least relatively innocent, especially when a shell like DoggieInn has been purchased. But I'm old and otherwise retired, so my risk profile which centers on capital preservation for the grandchildren doesn't have room for penny stocks. So here I'll remain on the sidelines, respectful to all who have lots more b*&ls than I have, and commenting whenever I imagine that I can make a contribution to the causes of good analysis and civil discourse.
Good afternoon, Truth. You and I had a respectful exchange of opinions back in August, so let's go for it again.
1. I don't agree with you as regards the dilution angle. The company raised authorized shares primarily to have enough room to satisfy conversion covenants in regard to the November 2014 Typenex tranche-designed loan. In the end (see the recent 10K footnote on this) VHUB stopped using this credit facility after just two take-downs and then took out another couple of loans at much lower principal amounts than what had been left unused in that particular Typenex arrangement. Overall, as of June 30 the company has a little over half a mil. in short-term debt.
2. In fact, the opposite of dilution occurred when VHUB took advantage of a really (positive for the company) bizarre loan covenant in its roughly 600K of loans with Gotama, forcing conversion at 15 cents per share. It isn't dilution when you sell stock at something like four times the market price at the time.
3. None of this should be taken as an argument that the company doesn't have a capital funding challenge. It does - nearly all the debt is short-term at high interest rates, and it needs to be refinanced into long-term debt or into equity. Some dilution would be preferable to what we have here now for the capital structure.
4. As regards your claim of "bad management," there are points to be made on either side of the debate. In its favor, the company has grown from zilch to over $5 million in annual sales very quickly, has been able to secure financing (even if the term and rates are problematic), has seemed to repent from a pump and dump of Spring 2014 (one in which the management team was only hurt as they didn't sell their shares), and according to the experts on this discussion board has developed some very attractive and successful products.
5. In the other direction, supporting your claim, management is "a family affair" with no outside directors holding the strings of caution, has been optimistic on sales projections, has problems with internal controls (see the 10K), and needs to turn a profit pretty fast before sources of financing would dry up on them. Also, given the complexity of the financing challenges, it is unusual that a CFO with just an associates degree would be capable of taking care of business.
Overall, I think a reasonable case can be made for some of the points you have raised, but I think that overall the potential for dilution has been kept very limited so far and that management has done an above average job with the challenges of a startup situation. It also impressed me when looking at the 10K that some of the corporate loans have been secured with personal assets, so the criterion of "putting one's money where one's mouth is" has been met. Of course, in the end it all comes down to how quickly the company can actually sustain a profit and evolve its capital structure away from a preponderance of short-term debt.
In a penny stock world where (pick a number) 60% of the companies fail, a good bet is one where the potential of failure is maybe half that, if the fruits of success would be a (again pick a number) five-fold increase in the share price.
As it was in August, I remain open to listening to the reasoning behind your opinions. Thanks again! Almost forgot, having looked at some of your posts in other threads, I see that you have been a bull at least as often as you are a bear, so it is not fitting to call you some of the names that are used when bears are encountered on this board (you're just honestly calling it as you're seeing it).
Much appreciated, Knife! The UPOD mantra has served a lot of us well both in business and in personal matters (e.g. hints versus realities in holiday gifts we make). Management is responsible for selling not only product but also the fact that they are credible. The story with this company is so good (i.e. trend-leading products in an exploding new industry) that it should never resort to cutting corners in reporting and projecting "numbers," and of course also in touting the stock itself.
You and I are in the same place as we look at revenue growth (bordering on phenomenal, but let's see how consistent that growth will be) and balance sheet (their short term borrowings are something like just a quarter of their market cap - it's the interest rates that hurt).
...and we're also in the same philosophical place that it should not be constituted as bashing when we can point out where management should look within itself for maturation. Price/earnings (and there will be positive earnings!) multiples do improve when management does follow the UPOD principle.
Have a great weekend!
For whatever this may be worth, I thought that this might be a good time to "resurrect" the Company's presentation at the LD Micro Investor Conference this past June 2:
[url]https://www.sec.gov/Archives/edgar/data/1515718/000151116415000305/vaporhubinternational.htm
[/url][tag]June 2, 2015, LD Conference Presentation[/tag]
If you scroll down to the financial "back of the envelope" projections included therein, you'll perhaps reach some of the conclusions which I did, namely:
1. They are talking about calendar years rather than fiscal years in that set of projections, as "2015" is showing a little over $8 million in sales rather than the $6 million they had guessed for Fiscal Year 2014/15 (or the $5.3 million they actually attained).
2. Even when granting it to be calendar years, they'll be fortunate to reach $6 million in sales for this current calendar year (and even if you annualize the excellent $1.7 million sales of Q4 2014/15, you get to "only" $6.8 million). That's a pretty long way from the $8 million in the company projections for 2015.
3. The final two years of the projection seem to be really "way over the top" and probably should be disregarded. A $17 million bottom line a couple of years out from now, driven by over $40 million in sales, is not going to happen.
4. Even so, I get the sense that the Company is not far from its breakeven level of sales. At that point, I think it would be relatively easy to turn the burden of the high-rate short-term debt into either long-term debt or into equity (without selling equity at a price that would be overly dilutive). In turn, the reduction of interest expense would give the company a better bottom line.
5. Once the company demonstrates its "sustainability," the stock price - even if there are more shares in the equation - might reasonably be expected to increase pretty sharply. ...as the stock price has been limited, in my opinion, by the chance that further financing will not be obtained.
6. All that having been written, I really believe that the company ought to come out with another set of projections, or at least publicly disavow these prior projections from this past June, as corporate credibility takes a hit when you're estimating a $17 million bottom line a couple of years out - and you know that there's now way in hell that it's going to happen.
Overall, despite some real red flags (which I think are factored into the current price of the stock), I think that the stock is attractive if you have the daring personality of the typical penny stock investor (and again for the record, I'm not in this stock, or in any other for that matter).
Thanks, I appreciate that! The various product-focused exchanges between you and RPH are really "good stuff" to see here, repeatedly bringing home the point that VHUB is a real company with real products and now a real operating history. I hope you two will continue to utilize this Board as your main source of exchanges as contrasted to the PM route.
I truly hope - and actually expect looking through "rational glasses" - that Kyle and family will soon take care of the two major items of business that need to be addressed for the stock to have a good run: (1) change the capital structure to more long-term debt and more equity, and less reliance upon short-term debt; and (2) reach that level of sales volume at which the company can run profitably, to the point of being able to afford outside directors.
I do believe that the bears on the stock bring this Board a helpful perspective, and that constructive exchanges with them can lead them to reconsider their stance from a risk/potential-reward perspective. Ironically, the stock price is so low (my opinion anyway) that "paid bashers" wouldn't have much of an interest in being on this board; thus the bears here tend to be lacking in specific knowledge of the company rather than having "an agenda." All that said, that quarterly earnings number is going to be interesting (i.e our view of the company and of the stock will be under review), whether taken in the context of the Q4 sales or the same-quarter Q1 sales of last year.
Thanks for digging, Hostastock, back to the source as regards release of quarterly sales figures. I would have guessed that sales figures for the immediately prior quarter would have been available by now (the 15th of the month following quarter's end) based upon their June 10 PR about May sales, excerpt follows:
Vapor Hub International Announces Top Sales Month in Company's History
[10-June-2015]
SIMI VALLEY, Calif., June 10, 2015 /PRNewswire/ -- Vapor Hub International Inc. (OTC: VHUB) (www.vapor-hub.com) is pleased to announce that revenues for May 2015 topped $630,000, the top month in the Company's history.
Perhaps because we're dealing here with quarterly sales which finds its way into 10Q reporting as contrasted with just one month in the quarter per the June 10 PR, we need to wait to learn Q1 sales for the new fiscal year.
I'd also agree with you that the PR of today reports good news - otherwise they would not have made a PR out of the events involved. The challenge is that the company's sales projections are in need of proving true, given that last May they were calling for $6 million in sales for the fiscal year with only around a month left in the fiscal year (and they came in at $5.3 million). This is a good company with some growing pains and challenges (and this is a good message board which keeps track of challenges and resolutions).
FWIW, I'm really impressed that you're selling at a rate of about 24K per year of VHUB products. 8 stores like yours in each state of the Union would get the Company almost up to about their $10 million projection in sales for the new fiscal year - 8 stores per state X 24K sales per store X 50 states = $9.6 million. I realize that this is the ultimate oversimplification especially as it omits Internet-driven sales, but it's one way how I get to feeling relatively comfortable that $10 million in gross sales is quite attainable in this fiscal year.
Have a good day, Sir!
Good morning, Auditor1,
Presuming that you and Knife are referring to the same story (linked to in Knife's post), this is actually the kind of thing that "makes me nervous" about the stock. Here we are, halfway into the fourth month of the new fiscal year, and it should be the case that the first quarter sales number is available to be shared with the public. ...especially since (presuming it were to be good news) this is a time when good news would really be welcomed, given that sales for the full fiscal year didn't quite get up to where the company thought it would be.
Instead, we've gotten treated to a "process" kind of press release which involves just a fraction of expected sales for the company as a whole. Thus, we are all waiting for mid-November's release of first fiscal quarter data, but waiting with maybe a little less confidence than we'd like.
It may be the case, though, that you were referring in your post to the release of the 10K being "the news" which is out. ...in which case, you'll see that I commented on the 10K within about three hours of its release on Tuesday.
Have a good day for yourself!
Thanks! The company needs to answer the following six questions so that thoughtful potential investors like you can make rational decisions as to whether to jump in:
1. What level of sales must be reached for the company to become profitable?
2. How is executive compensation determined?
3. What do you do to mitigate internal control risks when there aren't enough people to go around who could create proper segregation of duties?
4. How much would it actually cost to retain some outside directors?
5. How is the company going about trying to evolve from a short-term debt capital structure to one having more equity and long-term debt?
6. To what extent is the company stretching out the accounts payable cycle in order to float working capital?
As regards the unkind words that some folks on this board occasionally toss at each other (always because the other person has somehow come to deserve it), it's fascinating to see how even the most delightful people can put away their good manners for a few moments when given the dubious gift of anonymity via alias. When being on the receiving side, it actually does help to adopt the mind-set that there is a grain of truth in every insult.
diannedawn, thanks for demonstrating that civil conversations between differing opinion-holders really can be done here. I do agree with the underlying premise of your theme, namely that it is a red flag if a company deals with Shysters like Fife and Friends (just in case, Shyster is a proper Yiddish term, not to be confused with Shylocks which has taken on an anti-Semitic overtone over the years). I believe that the red flag becomes somewhat less red when the amounts involved are limited, as I would assert the case to be with Vapor Hub.
While there has yet been no dilution (and certainly the Gotama conversion at 15 cents per share is quite the opposite of dilution), at some point in time the company will/can no longer engage in the rolling over of debt. It is reasonably transparent that, while the company has paid all installments of all debt with cash, that cash has in effect come from taking on "replacement (and more) debt."
Sooner preferably and later essentially, the company will need to prove that it can reach sales volume levels which will sustain a profit. If it achieves that, I would believe that the stock will do very well, even if there is some dilution should some old debt be replaced by new equity. If it doesn't do that, one of two outcomes will ensue - either it will go out of business, or through the quality of its products it will become an attractive acquisition candidate that might have a good auction for its buyout price.
We'll pick this up later on, or maybe sooner if either your further digging into the 10K or my own occasional leisure reading takes us there. Until then, in between your laughs while rolling on the floor, it actually may serve you well to keep an open mind when interacting with the more fervent bulls on this board; I've learned a lot from them over the course of the months.
diannedawn, I think that I may be able to shed some light on the question of dilution (without being combative - you've been raising a number of good points worthy of discussion here). Your main frame of reference is the November 2014 Typenex loan, and indeed the company was required under the covenants of that loan to greatly expand its AUTHORIZED shares so that if there were to be repayment of the loan via stock issuance, there would be sufficient authorized shares to do so. As it turned out - well, let me just copy in here some phrasing from the new 10K:
On June 30, 2015 pursuant to the terms of the Company Note, the Company elected to deduct and offset the principal amount of $1,300,000 and all accrued interest thereon owing by the Investor under the remaining nine Investor Notes from the amount owed by the Company under the Company Note, leaving an outstanding balance of $252,188 under the Company Note as of June 30, 2015 and total unamortized debt discount of $60,096.
So, as I read all this complex language, it surely seems to me that there will be no further tranches of that particular Typenex credit facility put into play. In fact, the company's newer loans with BofI and Iliad (admittedly another tentacle of Typenex) have obviated the need to draw upon the November 14 credit facility.
This would leave you with a very fascinating question as to why the company wouldn't just sort of repeal most of the large increase in authorized shares. My answer would be that the company has already indicated that it's searching for new capital (via either debt or equity) and that some of those authorized but currently unissued shares would be needed if the equity route is selected.
When you take a look at the June 30 balance sheet, you see that the short term financing debt of the company is only around 577K (192K in convertible notes payable and 385K in notes payable). I would believe that what's the problem is not the size of the debt (I think it to be rather small in the context of the company having roughly $2.5 million market value of its stock). The problem is that the short term debt is short term debt which means all you can do is try to keep on rolling it over until the company starts making a positive bottom line. How close is the company to making a positive bottom line - just as a gross oversimplification, a one cent loss per share strikes me as being rather close.
This company could go under, it really could. But this company could also keep on growing its sales explosively and reach/surpass breakeven to the point where new cash would begin to be adequate to begin reducing the debt exposure. Where I come out on all this is that I think the company will do what it says it's trying to do, namely find some new sources of capital. I think that some of those new sources will indeed be equity, so that there may indeed be some dilution, based upon what price the company can get for new shares. Most significantly, I think the current share price of the stock has already discounted for that eventuality.
All this is just my opinion, and as they say "your mileage may vary." One can make a rational bearish case for the stock, but right now I think that the bullish case is somewhat stronger. We'll pick up this conversation again, I hope, when Q1 sales of the new fiscal year have been announced.
Excellent observation, diannedawn - I've noted in earlier posts that the effective annual interest rates on some of these loans has been in excess of 100% per annum. Of course, the rate needs to be so high as to compensate for the frequency of default on these loans. ...and that takes us back to my observation that the company's first order of financial business is to refinance lots of this short term debt into longer term instruments.
Again thanks and have a good day!
I've done my first reading of the 10K. I do believe that the CPA firm has done a terrific job here. As regards "how the results look," it's quite a mixed bag, and in the end I think that how the overload in short-term debt evolves into some mixture of equity and long-term debt will go a long way in determining what will happen to the stock price. Echoing/paraphrasing some comments by Sgreg some months back, some dilution here wouldn't be the worst thing in the world for VHUB.
*************************
What I liked most about the annual report was this section which strangely enough has nothing to do with dollars:
Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities.
This means to me that the company is embarrassed about Spring 2014's pump and dump, and "it ain't gonna happen again."
*********************************
What at first scared me most about the report was this section:
In the absence of a majority of independent directors, our executive officers, most of whom are also principal stockholders and directors, could establish policies and enter into transactions without independent review and approval. This could present the potential for a conflict of interest between us and our shareholders generally and the controlling officers, shareholders or directors. Although we anticipate seeking independent directors in the future, there can be no assurance as to whether or when we will be successful in appointing any new directors.
Later on in the report, mention is made of a code of conduct. In fact, the code is an exhibit to the report. If I can find the time, I'll read it.
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The net loss for the year was 614K. The net loss for nine months was 401K. That means that the loss for the final quarter was 213K. I do realize that the last quarter can contain various year-end closing and audit adjustments that can go either way, but I really would have liked to see that the company could run profitably in a quarter that had such high sales. To the company's credit, the layoff of some folks which happened later on, showed that the company is committed to creating a positive bottom line.
********************************
Beyond commitment to creating a positive line, one can read the strategic approach towards getting it done:
We expect our gross profit and profit margins to increase in subsequent periods as we sell more of our proprietary products, including, without limitation our Limitless Mods and Binary Premium e-Liquids and our newly launched Limitless Atomizer, which have higher margins than products we purchase for resale.
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You'll see that executive salaries have doubled from last year. I think that the salaries are reasonable, probably even low, for the positions involved. Still, with the company still having doubts in the going-concern arena, it's "not a good look."
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Overall, I think that Vapor Hub is an intriguing acquisition candidate. 72 million issued shares at roughly 3 1/2 cents market price multiplies out to a current market value of about
$2 1/2 mil. Circling back to earlier commentaries by Sgreg, that's not a lot of money for a company with great products (relying upon Hostastock and RPH here). Some larger, more established company, whether in traditional tobacco or in the new e-cigarette world, probably would find this the cheapest, best way to expand its product offerings.
I'm going to "coward out" on guessing how the stock is going to react tomorrow morning. However, I do predict that if the stock is headed downward in the morning, there'll be a press release from Paul in the afternoon about how great sales were in the first quarter of the new fiscal year.
Thanks to anyone who read all of this "giant economy size" post!
RPH, "I feel your pain" - and I'm not even a shareholder.
What is fascinating is that the company could now put out a press release about their first quarter sales for the 2015-2106 fiscal year, even if the prior year annual reporting were not yet released (which makes one wonder why they haven't, particularly if first quarter sales were to exceed the $1.7 mil. in sales of the immediately prior quarter or even the $1,371,550 sales of last year's Q1).
Let's remember that this is the first full year audit of their new CPA firm and that there are some specialized issues to deal with (the "going concern" footnote and how to handle the Gotama conversion, in particular), so some delay is not all that unexpected. Still, as much as I think of myself as a "give the benefit of the doubt" kind of person, I think that the company and/or its audit firm are running low on excuses at the moment.
If the resident bears on this board were to chime in that it couldn't possibly be the potential of good news which is holding up the financials, I'd lean towards agreeing with them at this moment. For, even if the Gotama conversion "gain" were to be run through net income, that still is just a one-time extraordinary event and shouldn't be counted on for more than it's worth.
Hang in there - one of these days we'll actually see the numbers. (and then this board will light up as to how to interpret those numbers and accordingly place a value on the stock)
Auditor1, in the "public domain" there actually is some good company news which hadn't been specifically circulated to the investor community (nor should it have been). Take a look at:
http://www.weddingwire.com/weddings/3885352/wedding_new_website#!/website/3383774
It appears that Kyle W. has gotten married. The fact that the wedding took place on July 25 might explain the delay in the annual financial reporting, as...
...my Googling did not come up with the duration of the honeymoon, but any time away by a key executive of a small company during the completion of the audit is generally going to delay the audit. In particular, Sarbanes-Oxley assertions take time to prepare and be reviewed (I'm speculating a little here, as my own career was in the nonprofit realm).
I view Kyle's getting married as good news for the company - apart and beyond from maybe explaining the delay in the release of the 10K - as (it was generally the case 46 years ago when I got married, and maybe something hasn't changed in all these years)newly married people tend to get more serious and diligent about their lives, including their careers. I'm not trying to open any debate here on demographic trends, human nature, etc. as much as I'm just trying to give the benefit of the doubt as regards the delay in financial reporting. Kyle may be even more driven than ever to make this company succeed, or at least I would imagine that to be the case.
You wanted good news, and that was the best that I could do. It's amazing, maybe scary, how much of our lives are just sitting out there for anyone to read - and how easy it is to access that info just via a search engine.
There is an element of irony with the delayed release of the annual SEC reporting, namely that the impact of the report, when released, is going to be less than would have been the case had it been released when originally expected (i.e. sometime in the last two weeks of September, with September 29 as the benchmark date as that was last year's date of release).
Why is this the case? ...because the first fiscal quarter results for FY2015-2016 might be released on or about November 14, as that was last year's release date of the Q1 numbers. If I were a betting man, I'd bet that the annual 10K release will have with it some managerial comment about how great sales were in the July through September period. ...and the investor community will all be waiting until mid-November to learn just how great those sales were, and whether those sales were sufficient to drive the bottom line to black ink.
And so, once again we who frequent this Board will all remain in "waiting mode" even after the annual results for FY2014-2015 have been released.
Let me add several afterthoughts to my prior post, as I went back to both Hostastock's and Auditor1's earlier notes and found that I may have answered every question in the world about VHUB except the ones I was explicitly asked.
1. Right now, I think that there's a 20% chance the stock will be at 15 cents in a year, a 50% chance that the stock will be at 9 cents in a year, a 20% chance that the stock will be at 4 cents in a year, and a 10% chance that the stock will be at 2 cents in a year. ...nothing but my intuitive guesses! So if we multiply out, that comes out, I think, to a weighted average of 8.5 cents per share, which pretty much is consistent with my estimate of 9 cents. That would mean that my guess of the current value of the stock might be 6 cents in order to allow for "the time value of money in a high risk environment" to discount from next fiscal year-end to right now. So I think that right at this moment - at the worst possible time to make a guess, namely right before we know what the FY2014/15 results were - the stock is undervalued by 50%.
2. That having been said, I think that anyone who gets upset at the bears just for being bears is not behaving well. You can get mad at them when they don't get into the "why" of their bearishness and seem to act the way that trolls would act, but they may very well turn out to be right. I personally have a lot of respect for them for having the courage to post in this kind of environment where the bulls/stockholders tend to believe that the bears will drive readers to either stay away from buying or even to sell their holdings (i.e. bears tend not to be received courteously).
3. As regards Auditor1's comment that there's no one selling if management/board isn't and all those holders of millions of shares who post on this board aren't selling either, sadly I must take issue with you. If you go back and read the postings when there was bad or even uncertain news with VHUB (like the speculation that the stock was going to be watered down via toxic debt conversions to equity), you'll see how quickly even some of the most vociferous bulls jumped ship. I don't blame them, as it is generally a virtue to change one's mind if one believes that circumstances have changed, but I miss their presence on this board.
4. Two other comments from out of left field: I thing that VHUB could make a lot of public relations hay by really emphasizing that it's not in the marijuana business. I also think that the marketing whiz they hired ought to approach some of the nation's leading respiratory hospitals and turn VHUB into their partner for their cigarette-cessation programs.
Good night to all.
This post is in reply to both Hostastock and Auditor1, both of whom I thank for giving me credence. I'm going to "rifle off" a bunch of thoughts, and hopefully something herein will resonate with one or both of you:
1. See my post #4191 on May 27 on this Board for my derivation of how I think the stock would be worth 9 cents per share in about a year from now if and when the Company would have attained $10 mil in gross revenues.
2.Read with a lot more credence than you give me whatever Sgreg posts whenever he does, as he is better both analytically and as to "having a feel" for the penny stock market.
3. If I think the stock will be worth 9 cents in a year, you'd think it would be a slam-dunk answer to Hostastock's question that I'd buy the stock right now. But it's not so simple. The stock could be worth anything between Bupkes and say 15 cents in a year (it's not going beyond Gotama's conversion price in awhile, I would believe). Whether you buy/hold or not depends on your risk tolerance. The Company really could run out of money either by not selling enough but even also by selling so much that it will be really challenged to get the funding to tackle the growth in inventory and accounts receivable.
4. The greatest risk to this company and to its stock is the concentration of family in management/board.
5. The second greatest risk to the stock is Gotama's "compelled" holding of its 4 million or so shares. I got beat up on this Board in my early days here when I wrote that conversion was at the option of VHUB, as no believed such a clause would ever be allowed by a lender in a debt instrument - but this was one of those occasional moments when I was correct.
6. I learned about the world of pump and dump last year as I saw the stock go from about $1.80 intra-day down to $.006. Fortunately, I was just an interested spectator. I think all the "victims" must have done their tax loss selling last November and December, so I don't think there'd be much of an "overhang" on the stock from the victims going forward at this point.
7. I actually believe that management had little to do with the pump and dump, as they would have unloaded some of their 38 million shares in that process. I think that they stood by silently as the Doggie Inn folks ran that show - this is just a semi-educated guess, and I ask forgiveness from anybody I may have incorrectly maligned. But I do think that management could have done better ethically by publicly disavowing the pump and dump efforts - and press releases touting the company that were frequently issued during the pump and dump should have been responded to with more restrained facts then available to management.
8. I follow a bunch of penny stocks these days for the sheer fun of it, and I enjoy SportyNorty's board a lot in my leisure afforded by retirement. One thing that strikes me about recommendations from that source is that nearly every stock is down about 90+ percent from its high, and the play revolves around what the analyst thinks is an inevitable bounce. But in the end, most of those stocks tank after that bounce. The point here is if let's say 80% of penny stock companies eventually go out of business, then a company which has only a 40% (let's say) chance of going out of business is relatively a good investment if it has a high upside. ...and that's where I think VHUB fits into the picture. Given its fine products (attribution to Hosta and RPH here), this company could really be in on the ground floor of the vaping revolution. I even think that such is the case, more likely than not. But "not" may have a 40% chance of happening due to working capital needs and "parochial" management.
I hope somehow this post has been worth your investment of time. I'm going to be offline Monday and Tuesday, FYI. Thanks, gentlemen!
Good morning, Hostastock,
I looked at the various May 7, 2015, SEC filings, and at that time it looks like Perlingos, K. Winther, and Lori Winther each held 12.7 million shares. More recently, options have been issued as part of the incentive compensation plan (Justin Moreno also got some options), but we have no filings to indicate that any options have yet been exercised. So, in total, it looks like "the big three" in the company hold about 38 million shares, and this substantially verifies your post which gave an estimated number of about 30 million shares.
Good luck in both your stockholding and commercial vaping-products endeavors!
Good morning, Auditor1,
I don't have a position in the stock. My interest came about from my having been deluged with pump and dump e-mails from Investor-Edge (also known as Brighton)in Spring 2014. I wanted to follow how long it would take and by how much the stock would inevitably tank. As it turned out, I enjoyed the camaraderie of this message board so much that I have remained a constant reader and an occasional commentator.
For the most part, both the bulls and the bears have been patient with my long-windedness, and occasionally some good discussions come about, without as much of the fan-boy on the one hand or bashing on the other hand that one sees in the threads relating to other stocks.
As regards the low float, if you take the historical number of issued shares, which is 68 million, add the Gotama-exchange shares which is about 4 million, and subtract the shares owned by management, which may be about 48 million (working from memory here, so consult the 10K when it comes out), you get 24 million shares as the float. Some would subtract the Gotama shares, as they may be hanging on until they'd see their conversion price of 15 cents. Most people on this board view this as a low float. I look forward to learning of your perceptions here.
Have a great weekend!
Knife, thanks, your response makes a lot of sense, both in regard to the revenue projection (we'll see soon enough if the plausible answer you offered turned out to be the actual answer) and your generally bullish tone on the stock. The low float also tends to explain the stock price volatility, and perhaps I should be less critical of the market-makers in the stock.
Regarding the low float, it will be interesting to learn, if we even can, about whether Gotama which involuntarily (the conversion was at the option of VHUB)became the owner of about 6 million shares will stay in the stock until the stock would reach Gotama's entry price of 15 cents. I'm somewhat surprised that they didn't want a seat on the Board, given the size of their holding.
I'm looking forward to exchanging commentaries with you when the 10K will be ultimately released. I'll be offline this coming Monday and Tuesday, so I'm hoping for a release earlier or later than that. Good luck!
Knife, I'd like to further document one point I made earlier, and I'm curious how a logical investor as you are would factor this in within his bullish context on VHUB.
The most recent quarter's sales have come in at around $1.8 mil to take the fiscal year number up to $5.3 mil, as the recent SEC reporting just told us. I therefore wanted to locate the source of the earlier estimate for $6 mil., primarily to confirm that such estimate was indeed for the fiscal year ended on June 30, as contrasted to the calendar year having one more quarter to run. ...and here it is:
________________________________
Vapor Hub International Reports Nine Month Sales at $3.59 Million
SIMI VALLEY, Calif., May 26, 2015 /PRNewswire/ -- Vapor Hub International Inc. (OTC: VHUB) (www.vapor-hub.com) recently announced in a 10-Q filing with the Securities and Exchange Commission that its revenues for the nine months ended March 31, 2015 totaled $3.59 million. Gross profit for the nine month period totaled $1.44 million.
The Company said revenues in the third quarter ended March 31, 2015 were $1.09 million with a gross profit of $351,778. In the same period in 2014, revenues totaled $188,540.
"We anticipate reporting revenues totaling $6 million for this fiscal year and we are very pleased by our growing success as a public company," said Kyle Winther, VHUB CEO.
__________________________________
So here's the problem - On May 26, Kyle projected gross revenues of $2.4 million for the quarter which was nearly two-thirds completed at that time. The full quarter actually came in at $1.7 or $1.8 million. So, the one-month June projection was missed by something like 600K, which is a pretty significant percentage, especially for such a short window of projection, i.e. five weeks from May 26 to June 30.
As I pointed out in my earlier post, $1.8 million in quarterly gross revenues annualizes out to over $7 million in a year - so one can make the case that VHUB really is booming, and really is well on the way towards $10 mil in annual sales, which was the "one year out" estimate in the letter that Paul sent in mid-May when the company was looking for additional equity capital. But, Knife, with how many grains of salt would you take this forecast from management (and to be fair, a management which by the majority of accounts on this board has developed some great new products)?
I think it's the yin and yang between sales which are actually booming versus projections that are somewhat "off the wall" in their optimism that makes this stock so volatile. I was guessing a few months ago, in the midst of a dialogue with Sgreg, that VHUB stock could logically be selling for 9 cents by the end of 2016 (my analytical approach wasn't a whole lot different from yours, Knife). If pressed, I'd stick with that guess as my best guess, but I've got to tell you that I don't have a lot of confidence in it (meaning that the bears on this board, when they are actually presenting their case, rather than when they are just mocking the bulls, deserve to be listened to attentively).
As ever, I've taken up a lot of space, but I hope that this has been worth reading and will elicit some responses.
Knife, thanks much for your projections. If I may, I'd like to "stand on your shoulders," i.e. build upon what you wrote.
1. To me, the most fascinating piece of the Fiscal Q4 reporting, and by extension the annual reporting, will be how the company will be reporting the "gain" on the conversion of the Gotama debt, as the conversion price was 15 cents per share at a time when the stock was selling around 4 cents per share. There was about $580,000 of debt-principal involved, or about 4 million shares including interest accrual (if I'm remembering anywhere near correctly). And so, we're talking here about more than 400K which could be either run through the bottom line as a one-time gain or just become part of "additional paid-in capital." This may be the discussion with the auditors that's holding up release of the financials.
2. The second most fascinating piece of the annual reporting puzzle will be how the "going concern" footnote will be worded. All of us are pretty much aware that just about all fledgling companies get this footnote, but the wording differences can be significant (running the range from the company needs more money to survive and only God knows where it's coming from, to, if the company continues to grow it will require more capital, and a number of sources are being explored). This item, like the first one, could be what's holding up release of the annual reporting.
3. Another footnote item will be the disclosures of transactions between the company and its officers. We read about the lease for office/warehouse space recently, and I wonder if there will be a footnote indicating that the monthly lease is comparable to what the company could have obtained on the open market.
4. Finally, I'll chime in with an opinion about the Q4 gross revenues. I would have viewed $1.8 million as impressive, but somewhere in the company correspondence or press releases, the projection was made of $6 million for the fiscal year - and here we are at $5.3 million. Is that close enough to make the investor community happy? Perhaps it is, if one annualizes based upon $1.8 million in Q4 and takes note of all the specialty equipment (rhodium, platinum, pick a metal) that is sold the moment it becomes available.
Overall, what's most amusing is that both the folks who were looking for six cents per share and the folks who were looking for two cents per share recently got what they were looking for, almost within hours of each other. It may be that exceptional volatility of the stock which is scaring potential investors away (one could get really suspicious about how the market-makers do their job).
Again, Knife, thanks for some excellent analytical work here, and I wish you well.
Truthbetold, it's generally entertaining to go back a ways in the posts and see who has turned out to be correct/prophetic, so I'll congratulate you upon the stock touching, albeit briefly, two cents this morning consistent with your prediction of last Monday. Would you like to share with this community another prediction?
I'd like to try to answer RPH's question about how VHUB with its annual gross revenues probably around $5.5 million for the fiscal year ended in June could nonetheless be argued by some to be overvalued at its (just about up to the moment) price of 2.6 cents per share (roughly $1.8 million overall market value, given the recent increase in shares due to the Gotama debt conversion to equity). Given the recent tenor of the discussion on this board, I think RPH's question deserves a respectful answer rather than a sarcastic response.
1. I personally don't think that the stock is currently overvalued, but I think for any stock at any price a case can be made that it should be selling for more or for less. Calling anyone who disagrees with one's own point of view a fool or troll or whatever else really doesn't move the ball down the field (and being a troll absolutely doesn't accomplish anything).
2. In the case of VHUB, the bear case for the stock begins with remembering that what one thinks of the company and what one thinks of the company's stock can be very different. Even if one knows from personal experience as a vendor that the products are cutting edge and top quality, the stock price may be either more than reflecting that fact or less than reflecting that fact.
3. The bear case for VHUB revolves around three points, I believe.
First, while sales growth probably has been strong recently(we don't know for sure about the June quarter but we've gotten all sorts of press releases about individual products and weeks), we don't have a history yet that the company has controlled its costs (whether cost of good sold or administrative & general costs) such that the company is yet profitable. In the end, what good is sales, if they're not profitable?
4. The second factor in the bear case is that while the company has trumpeted that debt and related interest have been paid back in cash rather than in dilutive stock conversions/issuances, given the increases in overall loans, one could just as easily make the case that debt has more been rolled over into new loans rather than repaid.
5. And the third factor in the bear case is that this is a family-predominated company without the benefit of substantial external consultation at the board level (though I think they have fine consultation as regards investor relations and legal matters). Unfortunately, they found themselves in the realm of a pump and dump by Investor Edge and related entities around April of last year. It's hard for a company which has been a P&D to regain the trust of the investing community.
So FWIW that's my version of the bear case. The bull case, I believe, is a better one right now, but I think I've already intruded enough for one afternoon. As I've mentioned every few months when posting, I don't hold a position in this company - I got interested to see what would happen after I got bombarded with the P&D material last year; I became pleasantly surprised that this actually sure looks like a legitimate enterprise (as our seller and wholesaler have so well pointed out) and just have enjoyed following the company, its stock, and the conversations on this discussion board when they've been civil.
Thanks, Lakingsphan, for the head's-up regarding the 8K announcement of the latest borrowing by the company. My read of the documents is that they're borrowing 200K (not 245K as they get to use only 200K), paying interest (or equivalent) of 45K, and the term of the loan is half a year (there is an alternative shorter term, but the effective interest rate would be so high as to make one wonder why the loan would be prepaid). So to me this comes out to an annual effective rate of 45%, which means that the company is still so averse to dilution that they're OK with essentially usury.
This financing development makes me wonder if they're still pursuing an infusion of equity, as was circulated in May (I'll leave it to someone else to ask Paul Knopick). It also means to me that they still haven't achieved profitability - or if they have, it's at the cost of building up receivables. While everyone is looking forward to the income statement for the year, which we'll see in mid to late September, it's the balance sheet which will be almost as interesting to read (of course what's always most interesting to read is the footnote section of the documents).
Finally, though the lender of record is Iliad, that's just another arm of Typenex where most of the debt has been sourced. It says something that Typenex is convinced of the financial stability of the company that they keep on lending.
Truthbetold, thanks for being my partner in an intelligent conversation. It is an unfortunate part of human nature that lots of folks in "anonymous" situations like discussion boards get to feel very comfortable in getting into name-calling with folks whose opinions differ from their own. While our conclusions on the stock differ, I'm pleased to be going back and forth with you in a way we could tell our kids (grandchildren in my case) "that's how we relate to others in the sandbox with us."
You've brought some new information, at least it's new to me, to the table. You wrote about "the faulty AR Mod." This would be the mod that preceded the Limitless Mod, correct? I hope that our vape shop owner on this board might provide some more history/verification here. Regarding the juice options and quality, I'd be curious as to - presuming that you're not a dealer - how you formed or became part of a community of consumers so that you have a "valid sample" when you write about "most of the people" that you know thinking that VHUB should not be in that segment of the industry.
As regards not a lot of people knowing about this stock, two thoughts:
1. Paul Knopick, the investor relations consultant, has had Kyle Winther doing lots of infomercial shows, and I think that lots of people now know about the stock but nevertheless are still staying away until there will be more clarity on VHUB's search for further equity funding (not to mention the earnings release coming in the second half of September).
2. This company is not in the marijuana industry, which on the one hand gives it some enhanced measure of "respectability" as regards the social investment community. But on the other hand, the marijuana stocks have a potential growth factor due to the wave of state legalization which VHUB does not have. ...though I do think that the explosiveness of the e-cig market per the Wells Fargo analyses which have been quoted a lot on this board is sufficient to cause momentum to build in this industry and in this stock.
Overall, I still don't think we'll be seeing 2's in this stock unless we get a nasty surprise as to pricing of new equity or unless the annual earnings report is a dud (which is entirely possible, because all the company public-focus has been on sales growth rather than on expense control). The bulls on this board have been tremendously tuned into sales growth as the reason to be a bull on the stock. Also, they've been tuned in to the stock not having been diluted to pay back debt and interest thereon, but haven't, in my opinion, fully seen that it's been more a matter of rolling over debt than of paying down debt.
As ever, time will tell as to who'll be right as to whether five cents will be seen on this stock before two (plus whatever fraction)cents. If you're right, I'll be the first to commend you, and if I'm right then I promise you zero gloating on my part.
Have a good week!
Good morning, Marchio. Please refer to post 4458 from Hostastock on July 30, and you'll see the answer is "sometime after September 15." Last year, the annual 10K form came out on September 29.
I'm not going to "pile on" the abuse you've been getting, because I think that a forum needs all opinions in order to be useful. And I do think that a case for being bearish on the stock can be made (though I think that the case for being bullish is stronger right now).
Let's start with where I agree with you. I too think that technical indicators are not very reliable with this stock, because we have frequently seen end-of-day small orders being executed where it seems the purpose of the transaction is merely to "create" the technical effect of the chart.
Secondly, I think it might be logical for the Gotama folks who were compelled into converting the debt they hold into shares at 15 cents per share to try to do a pump so they could dump. The fact that the VHUB board wasn't expanded to include a Gotama representative does give me a bit of unease. But I think if there were going to be a pump and dump, it would have happened by now.
Where I disagree with you pretty vociferously is in regard to your evaluation of their products. While I'm not a consumer, this discussion board benefits from the presence of a couple of dealers, and they have a good track record of supporting their beliefs with actual experience.
Overall, while buyers always need to beware in the realm of penny stocks since it appears to me that most of them go nowhere at best and down the drain at worst, VHUB is a legitimate company with strong sales. If they can get their expenses under control and become profitable, I think we'll look back at the current stock price level as having been a bargain. Also, we do need to learn if their search for additional equity capital is going to bear fruit, and if so, at what pricing of the new shares. Finally, I think that the company will be better off when it can add outside directors (it appears that the incremental cost of the D&O insurance is the barrier that right now).
In the end, for all we know you may be able to buy on a dump - the stock has a thin market, and the Yogi Berra saying about how predicting is hard when it's about the future seems suitable here - but I think that the case for the bulls is a better one right now than the case for the bears.
Thanks, Hostastock, for the info from Paul. What this means, I believe, is that there will be a greater chance that the search for additional equity funding will carry a greater influence on the stock in the short term than expectations of what will be found in the annual reporting. Based on recent press releases and postings from you and RPH, it seems to me that the company is trying (successfully, it would appear) to carve out its niche in specialty/higher-margin products.
RPH, you may be closer to the situation than I am, but I'm not yet as sure as you are that fiscal year-end financial statements will be presented in mid-August. I know that we've been seeing quarterly/interim financial statements at about the six week time frame after the end of the quarter. However, it was not until September 29, 2014 that the (annual) 10K became available after last fiscal year-end.
Further, a new CPA firm took over during this fiscal year, so this will be their first year-end audit, and that generally carries a delay factor. Perhaps you've already checked in with Paul Knopick, and you've got the mid-August date based on confirmation with the company.
Meanwhile, we still await whether the company's pursuit of additional equity funding (beyond the welcome contribution from Gotama at 15 cents per share upon debt conversions)will be productive, and I would believe that the pricing of the new stock will be as much a factor in stock performance as the upcoming earnings report.
Finally - getting back to the upcoming annual financial statements - one of the most interesting elements of the report will be how the "gain" on the Gotama conversion (15 cents conversion price compared to roughly 4 cents market price of the stock at the time, applied to about 4 million shares) will be treated for accounting purposes. If it's shown as an element of income, the company could be looking at close to breakeven for the year when this extraordinary item is factored in. If it's shown as "additional paid-in capital," then the gain is not run through the income statement. ...makes a big difference in the "optics" of the bottom line. I don't know what the proper accounting treatment is.
Wishing you continued success in selling fine products...
Thanks, your response makes perfect sense to me. It would seem to me, therefore, that it rarely would make sense to buy a shell situation until after the inevitable post-transaction dumping has occurred (though with Axiom there appear to have been two separate rounds of dumping).