What I quickly dug up
Regarding this recent news, I am saddened and conflicted in my future outlook for the company. I wasn't expecting a complete turn around this quarter, but I did expect improvement over last quarter. To see these preliminary numbers is very shocking, as I can't see how they got squeezed so damn hard this quarter.
On the other hand, we have this acquisition to think about. At first glance, the numbers seem like VPCO is getting hosed on the deal, but show potential bright spots. VAPO is a tiny pink sheet stock right now, but so was VPCO not long ago, so I won't count them out for that. They only recently started generating revenues this year. Their sales have increased significantly quarter over quarter, however the numbers are still small and they are still running fairly high net losses. What the acquisition appears to have going for it is:
for one, there is a small 4 store chain that comes with the deal, and I imagine the plan is to expand upon this retail chain.
But more importantly, Phillip Frost is a 10%+ shareholder in VAPO. Frost is a self made Billionaire, Doctor, Investor, and Inventor. Based on my quick research, VAPO is operating out of the same building as Frost's Main company Opko, which is a medical technology company, specializing in diagnostic equipment. Being that VAPO operates in the same building, I assume that means Frost will be very involved in the day to day of the company. I am curious if there is some sort of medical play or push with vapes in the future? Frost also has a very good track record with his investments, as that is where the majority of his wealth comes from. Although OPKO has grown Revenue nearly 100% year over year since 2011, they are still incurring net losses due to High operational and R&D costs, so their future is yet unknown; but such is the case with most unestablished medical companies.
One very important fact to note is, Frost has shown himself to be a huge insider buyer with his own company. I used to follow OPKO somewhat closely, and Frost for a while was buying tens of thousands of shares Daily. During this time I watched the price go from just over $2 to around $7-8. The stock later peaked at $11-12 and has since leveled out in the $8-9 range.
So I am curious to see what type of involvement and plans Frost has for VAPO and potentially VPCO. Will he end up buying a lot of the float and drive the price up? Will we see a medical play? and are his expertise and investor/business savvy enough to bring VPCO out of the dumps?
So Based on these facts I am conflicted. Terrible quarterly results vs the potential that comes with this merger. My hand was shaken today reading the financials, but I can't help but wonder if this is indeed a great move for both companies involved in the merger. Dilemmas.... What do you guys think?
