Just for purposes of having some documentation placed adjacently, have a look at an excerpt from the annual 10K filing which happened to be dated on October 13, 2016, and also at an excerpt from the recent "Pre-14A" filing from February 21, 2017. One would have imagined that both the supply chain catastrophe and the unsolicited offer from "Company B" which had not yet been declined - both of these mentioned in the February 21 filing - perhaps should have found their way into the previous filing of October 13...
From the 10K which was dated October 13, 2016:
Sourcing
We use third party contract manufacturers to produce and finish our mods (“Mods”), including our Limitless Mechanical Mod, from facilities located in both Southern California and China. Our Mods, which are made from a metallic material such as steel, brass or copper, are custom machined to meet our design specifications. Once machined, unfinished products are delivered to our location in Simi Valley or to a third party service provider to be buffed, polished and to add various treatments and embellishments, such as paint and engravings. Finished products are then held in inventory for distribution and sale. In our fiscal year ended June 30, 2015, we relied on one manufacturer to machine all of our Mods and in the fiscal year ended June 30, 2016, we relied on two. Although we have relied on a limited number of manufacturers to machine our Mods, we believe manufacturing capacity is available to meet our current and planned needs. We do not currently have any long term agreements in place for the manufacture of our Mods.
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From the “Pre-14A” SEC filing dated February 21, page 27:
In May of 2016, the Company began to have IJOYGROUP Co. Ltd., a manufacturer based in China (“IJoy”), co-design and manufacture its “Limitless” branded vaping products and the Company received its first shipment of products from IJoy in June of 2016. The Company continued to receive product shipments of its “Limitless” branded products from IJoy until August, 2016. After this time, IJoy failed to supply the Company with products despite the Company’s continued efforts to secure supply, and purportedly manufactured and sold products under the Company’s “Limitless” brand without consent. As a result of not having an adequate supply of its Limitless branded products, the Company’s revenues significantly declined, particularly in the final three months of the calendar year ended December 31, 2016 and its working capital was significantly depleted.
On October 5, 2016, a broker acting on behalf of a medical marijuana company (“Company B”) presented an unsolicited letter of intent to acquire the Company. On October 6, 2016, Kyle Winther had a telephone conference with the broker to discuss the letter of intent.
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One other thing that I found fascinating, is taken from Page 38 of the 10K, which contains the auditor's certificate/opinion. Take a look at the excerpt below which comments on VHUB's revenues. That statement surely looks to me to be inaccurate and might cast a doubt regarding the auditing process...
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As discussed in Note 2 to the consolidated financial statements, the Company has no revenues, a history of incurring net losses and net operating cash flow deficits and has limited cash.
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It seems to me that there is some explaining to be done here. As always, it is wise to try to keep an open mind as long as possible, as there are always (at least) two sides to any story, and all we can see at the moment is the side of the story which indicates non-feasance, malfeasance, and whatever other terms people more competent and less retired than I use at these moments. I hope that this post is helpful to the cause of engendering a fair resolution to this big mess.
