ELEVEN FACT-BACKED REASONS WHY VPOR IS A MUST BUY (updated 11/17/14)
(mods, new sticky please? Thank you)
This is updated to include Q3 financials and the 11/17 PR. All these quotes and facts are from quarterly reports, 8ks, PRs and the pot stock radio. 1) VPOR has shown that they are building an investor friendly company!
Management has shown that they are not out to make money for themselves. One example of this is that they reduced the amount of common stock issuable to management via Preffered B by 33% from 750M down to 450M. Those are the shares that go to the people making these decisions! Not to mention those shares can not be touched until JULY of 2015! On top of this, Dror has said it himself that he does not have any plans for a R/S. He stated that (like most of us know) R/S's only artificially inflate the PPS for a short while and then it drops back down usually to where it was. He said he won't do it because it will only hurt the shareholders. Before we found out that the Hanover debt was tweaked to remove the automatic conversion clause, Dror even said (in the interview) that he wouldn't even use a R/S to get the PPS above the conversion cutoff. Hanover agreed to this change...why? Because even Hanover believes VPOR is going to be worth MUCH more than 0.15 PPS! Hanover could have converted, yet they didn't because they KNOW this will be worth over $1 someday, and thus their conversion rate at 0.15 will be much more profitable then a 30% discounted price. But we just saw them increase the A/S to 2.5B!
2) Before everyone goes to grab their pitch fork, let's examine why this MIGHT have been done.
Well it looks like Vapor's desire NOTE to dilute us has stood true. In the recent PR they stated that the A/S increase is simply as a means to protect shareholders from future conversions. It was obvious they weren't going to us the increased A/S for dilution. It would go against EVERYTHING they have ever done. We just saw them reduce the A/S to 1B a few months ago. There is one more possible future benefit to an increased A/S...should they come across a possible company/asset purchase or even merger, that they can use the common stock for such purpose. This wasn't the first time we saw the A/S go UP. The last increase we saw was on Jan 15, 2014. Less then a year ago...this A/S increase was a result of AvWork Avitiation merger with Vapor Group..."As a condition to be met prior to the closing of the Merger Agreement, the Company was required to increase its authorized shares of common stock to 2,000,000,000 from 500,000,000". Again, though, it's likely to be just as they said in that the A/S increase is simply to be there just in cause of future note conversion. To be honest, and I'll reiterate this again later, I'm fine with the A/S increase because they obviously know how to run a very successful company and it would simply be GROWTH. If they wanted to dilute us, then why not increase the A/S and the O/S at the same time? Why reduce the A/S a few months ago? Why would they listen to the investor's suggestions (ex. the reduced of Preferred B was investor suggested). We did see an increase in the O/S to 429M from 343M but as you can see that's because some convertible notes from debt were converted (more on that later). You can NOT sustain a company without growth, and Vapor's actions have enabled that growth.
Oh no, I want to here about those converted notes now!
3) Of coarse you do...I'll try to sum up the converted notes and the remaining notes
First, let me say that the converted notes are not a bad thing. Some investors actually guessed what was happening in the past few months and said that Vapor's books were "being cleaned", and they were right. This goes back to the whole idea of GROWTH. Now part of this will be covered later (liabilities), but this takes care of some of the old debt. This also shows that the companies/people that held these notes want shares now! Why? Because they know, just like Hanover, that this company is going to be worth a LOT of money. Forget "Silver coins" and start thinking "paper money" for PPS worth in the coming years. This helps clear the road for us too. This is also the reason why we saw the O/S increase, so that the converted notes (I believe tallied up to around 119M shares converted?) wouldn't eat up all the O/S space. Based on the fact that these notes were converted now tells me that we have a bright future in the near coming times. I think we might still be in the end of the converting phase, because notes were converted after the 3rd 10Q left off in detailing, but I believe we're at near the end. That means the panic can end. But they added more loans! They went from 2.6M in debt to 3.5M!!!
4) What is debt, and what is it's purpose. Lets examine.
First, here's the actual statement in the last 10Q. "The Company had notes payable totaling $4,488,423 face value as of September 30, 2014 and funds pending $905,000 making a net of $ 3,583,423, and the accrued interest thereon is $218,290 as September 30, 2014"....yes, it does say 4.4M before 900K pending funds, and as it was so nicely pointed out by an investor that that 900K is money from old loans that Vapor did NOT receive yet. This is perfectly fine. It's money that Vapor didn't get yet (many loans had divided payouts), money that Vapor didn't get to utilize yet, and thus money that isn't a concern. When the 900K comes they can put that right into debt payoff (...Think of the PR...1M in debt paid off ;), but it's likely it'll be used for inventory)....BUT WAIT, here's what you really wanted to talk about, new loans. This idea of new loans...well to put it simply, if you as an investor are worried about Vapor's new loans, then you're terribly displaced. Let's think. LETS IMAGINE...two companies. Same current revenue, same loans, etc. Company A used most of their gross profit to pay off a chuck on their loans...Company B didn't, because Company B used their gross product to buy MORE inventory, to hire MORE employees (and a franchise lawyer), to make MORE distribution deals...simply to GROW MORE. Let's go back to Company A. Since Company A used all their profit they couldn't do anything that company B did. ONE YEAR down the line, Company A might see their revenue double, while Company B had their revenue QUADRUPLED. You can't fuel growth without money, and the fact that Vapor took out even more loans tells me they must have hit the jackpot. They were making 1.3M QUARTERLY with the inventory they had, but if they took out an extra million in loans, then were do you think that money went? Inventory. What is inventory used for? Sales...and Sales = $. Here's PROOF from the words of Vapor themselves!
"IF WE ARE UNABLE TO MANAGE ANY FUTURE GROWTH EFFECTIVELY, OUR PROFITABILITY AND LIQUIDITY COULD BE ADVERSELY AFFECTED."
"IF WE ARE UNABLE TO INCREASE PRODUCTION CAPACITY FOR OUR PRODUCTS IN A COST EFFECTIVE AND TIMELY MANNER, WE MAY INCUR DELAYS IN SHIPMENT AND OUR REVENUES AND REPUTATION IN THE MARKETPLACE COULD BE HARMED" ...simply put, it takes money to make money. If they are in the position to need even more money, then that tells me they found themselves in the position to make more money. Okay, but what is a stock without revenue? 5) Good point! That's why VPOR's revenue has only increased!
I admit I stole some of my thunder already by saying Q3's revenue was 1.3M, which is an increased from Q1's 1M (30% increase). Don't forget though that in early 2013, the revenue for Q2 was barely 100K! So in exactly a year (2013 Q2-->2014 Q2) they increased revenue by 1000%, but they haven't even stalled out yet! They increased revenue 30% in a matter of three months between Q2 and Q3 of 2014. Now picture Q4's revenue. After you start getting buckets of money due to new distribution deals, new products, new franchised stores...We'll get to that later, including an update in the recent PR (keep reading!).
Yea, but VPOR is a weed stock, and now that weed is over VPOR is over!
6) VPOR is not weed DEPENDENT. VPOR is weed related!
BUT it does get revenue because of weed. Thanks to the November elections we now have FOUR new places that have approved some type of legislation involving weed (D.C., Guam, Alaska and Oregon). Of the three, I believe D.C. is going to make this biggest impact and for two reasons. First, D.C. legalized recreational Marijuana, BUT you can't sell weed. ANYONE can grow weed (up to 6 plants) AND SHARE THEIR WEED. Now, what this means is that for the companies in the business of growing weed or selling weed...well they're out of luck. However, vapor makes products/accessories that can be used with weed! Vapor is literally in the best possible position to benefit from marijuana in D.C. WAIT, because then there's that second point...D.C. is a place that Dror has stated as a target for product expansion on two separate occasions! ON TOP OF THAT, we have places that already legalized weed...places like Colorado. From the recent PR..."In the State of Colorado, we have established statewide distribution of this vaporizer line, and in fact have several of our proprietary line being "private labelled" for numerous dispensaries across the State. As a result, in Colorado, we are rapidly expanding our month-over-month revenues."...go back to thinking about the Q4!
Okay, but VPOR has nothing to do with weed so elections doesn't matter
7) Are you not listening? Lets review.
First, VPOR is always coming up with new ideas. They're releasing new designs and new products NEVER before seen. Take for example their newly released product that features non-combustible coil-featured vaporizer for...dry herbs :). You're not going to be smoking parsley with these things. That's where vapor and weed become one. Not to mention that Vapor always has their CBD oil in their back pocket. Dror said in the pot interview that he is waiting to see the legal issues of it through first, but said "likely" get into it once he knows there won't be any negative consequences. He also said that NEW products will be coming in the near future! These new products that we're talking about? "Distributors interviewed said that the products are perfect to be sold in convenient stores of all types." These products already started shipping this week (2nd week of Nov.). Who cares if VPOR doesn't post profit! Ha!
8) MADNESS?...THIS IS PROFIT! (sorry, I had to)
Even a quick glance can ease you mind on gross profit. Gross profit for Q1 of 2014? Just over 300k. Gross profit from Q2? just over 500k. Gross profit for Q3? Over 800k. But what about the net loss? No fears! Actually, the pairing of high gross profit can be a good thing (Which for VPOR it is), because they're putting all the money they make into making even more money then before. Remember that this company went from making nothing to million, but they don't want to stop there. They're using that money for furthering Vapor, paying their new employees, franchising lawyer, paying for the brick and mortor stores, advertising and distribution plans. Therefore, to me Gross profit is simply profit. If they left all their gross profit alone and thus came through with a net gain I'd be worried, because they're not growing. They're never reach that 40M revenue goal if they don't grow. Yep, VPOR's dead and you're lying 9) Okay, here's a breakdown of what I think will affect future profit.
This involves several aspects to stay with me. Lets first remind ourselves that while VPOR is weed related, it is not weed dependent. So Does that mean their profit is done with? Well, some DD will tell you otherwise because: VPOR has opened THREE brick and motor STORES. By the way, these stores are only meant to serve as a prototype for future franchise owners. Only one store was FULLY reflected in Q3, because the 2nd and 3rd stores were opened in August, and so will only reflect 2/3rds worth in Q3. Vapor has been very actively expanding their distribution ability (Like they're announced expansion to CA and CO). There are so many factors that play into this. First, there's the two execs that Vapor hired. Those execs were responsible for OVER HALF of their old company's sales. A company that Dror said was even larger than Vapor. That team to two had distribution deals with places like Rite Aid. Second..remember AMERICAN SMOKE? Well Dror sold it to Yaniv, and those revenues make from the inventory of American Smoke started feeding into Vapor STARTING QUARTER 3! Third...at the time of the interview, Dror said their current inventory for American Smoke was equivalent to 1.87 MILLION bottles of liquid, which is sold anyway between $1-$1.35. You do the math. I know they sold American Smoke, but remember they sold it to Yaniv and he is paying Vapor back now. Fourth...we should all know that Vapor is actively looking to franchise their Total Vapor store. Their target to start opening franchise stores is early 2015. The total cost of this for a person to start up their own store is figured at 30k. Vapor will then make about 4-5k as an upfront franchising fee, then they make more money because the store has to buy 70% of its products from vapor, and finally anything non-vapor that is sold will include royalties that go to vapor. Finally fifth...think about the NEW distribution deals (like in CA, DC and CO)...here's a REALLY interesting note alllllllllll the way back to the pot stock interview. Dror said if they landed a big distributor they were going to "go to California or Washington right away"...now, reread that last PR released that mentioned California. Check out the link at the end of this paragraph, and think. Think about the new Execs distribution experience. Oh yea ;)....what...you want a bonus reason. Fine....SIXTH...first, credit goes to windsortrader519 for this find. Okay, now parlez-vous français? No? Well if you don't speak French, then you can always use this google translate site itools.com/tool/google-translate-web-page-translator to translate stuff like...VAPOR'S FRENCH BASED TOTAL VAPOR SITE! www.totalvapor.fr....and you were worried about future revenues (This is from a distributor that will supply ALL of Europe and has their inventory IN FRANCE).I mean, that fact alone could explain the need for more loan money, in order to supply inventory solely for EUROPE. Also, check this out. https://mobile.twitter.com/YanivNahon/media/grid?idx=6&tid=508756913962487808
But they spent X amount on advertising, and I can prove it in the next quarterly report!
10) Have you read the past Q's? VPOR spent almost 200k last Q in advertising and even more in Q1. Is advertising bad?
Advertising is not bad unless you don't want to sell products. Now what most people are up in arms about is that whole "200k" pump. Take a look at the recent 10Q. 90k spent in advertising. That's nothing. I mean, even if VPOR did support of pay for increased awareness it wouldn't have really been a bad thing. You seen, longs here know that for a LONG time volume was terrible. It didn't matter what happened because no one knew about what VPOR had going on! We were lucky to see 2M in daily volume. And now? We usually see 2M in volume in the first two hours of trading! The past few weeks we've had volume that wasn't seen since this stock was at 0.45. Volume precedes price...and price will come!
Oh yea...well...(I'm running out of objections haha)....oh yea, HANOVER! Look what they only paid!
11) Did they pay off as much as we wanted? No. Did they deal with it? Yes. So did they tell the truth? Yep. Read the rest though.
I know everyone wanted to see as much of the Hanover loan gone as possible, but just remember what VPOR is doing at the same time. They're opening and running new stores. They're making new products. They hired a franchising lawyer. They hired new sales executives. They had the cock tail party to increase awareness and look for distribution deals. Remember also if you're looking at the 10Q that Hanover is represented as a few loans listed in the notes section, so it's not an additional add-on to the displayed notes. The debt was handled. It will be paid off. Not to mentioned they reworked out the deal with Hanover to remove the clause for default under 0.18. HERE'S THE THING. In the pot interview Dror even said the conversion would never happen. He said, why would Hanover want to only get a 30% discount when they can get shares at 0.15 when this stock "goes to the moon". EVEN HANOVER believes vapor is going to explode! And by the way all that loan money went entirely to inventory!. More telling, Dror said it himself that given the choice he would rather spend money on adding additional revenue then use that money to pay off the loan. This makes sense now that we now for sure the conversion wouldn't happen. Dror can potentially add millions in revenue from what he could have used to pay off a single million in debt. Then those NEW revenues can go to pay off the debt and more. Dror is a very smart and aware man.
This company has a plan, and Dror has personally told you most of it. Despite that, people panic and spread rumors and dump their shares.
I'll finish with saying this. What has this company done wrong? Think for a minute. Now think what has this company done right? Take longer, you'll need it. Finally, now think about what this company has planned, what it is just waiting to unveil, and has lined up for the future.
The last question is...do you want to make money? If not then sell...if so, then VAPE ON!
All IMO and all that stuff ;). Do your own independent research, but this might help. In investing you should always make decisions for yourself. GLTA
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