Update on The Vapor Group ($VPOR)
The company recently provided a guidance letter, indicating their first quarter revenues will beat last year’s, and underscoring the fact that 2014 sales beat 2013 by a staggering 125%. The audited financial report is due by May 15, 2015. Regarding outlook, revenue projections based on historical performance and industry estimates suggest that this company could bring in at least $8M USD for 2015. Reaching a cash flow positive state is possible this year as well, based on their significant 80%+ gross margin on sales. Looking to the future, industry experts expect the e-cig/vaping segment to mature around 2020, at which time they could easily be generating $50M+ in revenue. One could assume that big tobacco will try to aggressively enter/consolidate the space a few years from now, and mergers/acquisitions are to be expected. If they stay on this track, $VPOR shares could easily approach $0.04-$0.06 by the end of the year as market cap adjusts back to fair value.
The recent letter also acknowledged the balance sheet, and indicated that they have reduced their debt by 68% in the past three months, and that they had $1,441,314 left as of March 31, 2015. The stated goal is to have zero convertible debt by June 30, 2015, as they are approaching a cash flow positive (profitable) state and do not need to rely on such predatory financing for growth. Conventional doors will soon open up! This balance sheet cleanup will apparently be done through payments and debt-to-equity conversions, and if it is on track there is approximately $1.1M in debt left on the books. The industry and time The Vapor Group inhabits has placed them in a precarious position financially, but they have been able to grow and increase their market share, regardless of the headwinds.
At this point, the stock has been beaten into submission near par value by conversions, but it will rise again. Additional debt payments are expected in the coming weeks and strong earnings are due May 15. Anything under one penny will soon appear cheap, as the masses realize this company will soon be profitable and lean. I personally hold a core of this stock, and base my opinion on facts that have been given about the company and the industry. My one year price target is $0.05 per share.
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