BobKS, the best part of retirement is that I can determine more than before how I'll devote my energy, and the cause of the gang here is a very worthy place for me to be concentrated. So, just for "s*its and giggles," here's an excerpt from the risk section of the last 10Q the company filed. I believe that this has a November 21, 2016, date attached to it. It's up to you and to your legal counsel to figure out if this disclosure is sufficient given the known catastrophe of the manufacturing situation...
We use third party contract manufacturers to produce and finish our vaping devices (“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 the quarter ended September 30, 2016, we relied on three manufacturers to produce all of our Mods. 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.
With respect to our custom designed atomizers which we market and distribute globally, in our quarter ended September 30, 2016, we sourced these products from one manufacturer located in the United States. We believe that suppliers for our atomizers are available to meet our current and planned needs.
We source our proprietary E-liquids (such as our Binary Premium E-Liquid) from an ISO Class 7 certified manufacturer in the USA, which helps ensure their purity and quality. In addition to sourcing our own e-liquids, we also purchase e-liquid from other reputable American suppliers for resale through our distribution channels.
While the last sentence of the first paragraph tells a lot of the story as regards the long-term challenge of getting a supplier or two contracted, it says nothing about how things were already in a catastrophic state at the time the 10Q was released. You and your legal counsel get to figure out if the 10Q was fatally flawed and how you'd assess the fault between the company and its CPA firm.
Have a good weekend!
