VPR Brands LP (VPRB)

[OTC Shark]

10 Reasons VPRB will be 2018 OTC Stock of the Year

Ahead of the new year, for the benefit of new shareholders, I thought it would be helpful to summarize the top 10 reasons why I believe VPR Brands is long over due for a significant appreciation in the stock price. Full disclosure, I have been a buyer in the $0.02 to $0.06 range and continue to add on dips. Below is my own opinion and my interpretation of news releases and financial documents.

Before I start though here is a video presentation on the company’s strategy, in their own words, outlined by their COO, Daniel Hoff, in Q1-2017. At the time the stock was $0.40-$0.50.

1. Management - experienced and fully aligned with shareholders

Kevin Frija current CEO of VPR Brands, and former CEO of Vapor Corp, has literally “done it before”. He took his last company from $1 million to $25 million in sales and 5 to 50 employees. His last company ultimately was the first E-Cigarette company to list on the NASDAQ just shortly after his departure (see video below of him on CNBC). He spent a year off and is now the CEO of VPR Brands (late 2015). In addition, since VPRB is a limited partnership Kevin is the majority shareholder. Last time I looked he was taking a $60K annual salary – therefore, he is very aligned with shareholders to improve the share price as a majority shareholder. In past press releases he has openly stated he is committed to transparency and shareholder valuation. The cancellation of warrants/options is just another indication of that.

https://finance.yahoo.com/news/soleil-capital-names-kevin-frija-130000817.html

https://www.cnbc.com/video/2013/12/19/e-cigarettes-regulation-will-be-good-for-clarity-ceo.html

2. Current Valuation – is just insane

In my opinion it is important to understand how we arrived at the current valuation, as it explains why this investment opportunity exist. When VPR Brands acquired Vapor Wholesale assets for $870,000 they took out two loans – one was a $500K convertible with Diamond Rock @ either $0.50 or 35% share discount to 7 day average and the 2nd a $370K promissory note. For the convertible note it speaks volumes to me that Diamond Rock was willing to do the conversion at a price of $0.50 – although it did not pan out that way. A vicious dilution cycle consumed the stock in the 2nd half of the year as the share price hit a low of $0.01. It was especially hard because the stock started with such a low float and there just wasn’t much investor awareness of the company since they are relatively new. In addition, tax loss selling and likely shorting also impacted the share price. However, with that said, my estimated math has the conversion now complete. A second confirmation would be that I’ve also been checking share count frequently with the Transfer Agent and we have currently went 7+ trading days without ANY share issuance. The O/S share count has stopped at 68M. Overall, still not too bad considering the circumstance and that leaves us with a company with no short term cash needs due to last 8K selling ~$0.24M of receivables, personally guaranteed by CEO with a $4 million valuation.

Note: Vapor Corp valuation exceeded $100M at one point to gain perspective on opportunity.

Receivable Conversion – Last 8K
http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=12414601

3. Industry Sector Growth - wind at their backs

The Vaporizer industry is expected to grow to $50 billion by 2025 at a 23% CAGR. If VPR Brands can just MAINTAIN the business they have today sales could double nearly every 2 to 3 years.

https://bisresearch.com/industry-report/electronic-cigarette-market-size-forecast.html

4. Multiple Revenue Streams (Vaporizer pot/rec, online store, e-cig, private label)

A majority of their revenue currently comes from the cannabis related vaporizers per last press release. These opportunities are well known (CA, Canada, Global, new rec states, federal re-class of schedule 1 drug, etc.) I'll move on..

In addition, With the FDA ruling in August they can now have a "free runway" until 2022 selling E-CIGS. This is important because when Kevin (CEO) was w/VAPOR this was his bread and butter and crushed the growth of the KRAVE and VAPORIN brands. See news release and comments from company below.

"will reinvigorate the ecig industry and that puts us in an opportune position. Both our KRAVE and our VAPORIN brand of e-cigarettes are still very popular and gives us the foundation on which to start increasing sales within the ecig category," says Kevin Frija, CEO of VPR Brands LP. "We will begin shifting our focus back into the ecig category where our brands were once the top industry performers and now with a new 5-year clear runway from the FDA will allow us to grow sales and penetrate the market once again."

I personally believe this is huge news...since it aligns well with past experiences of management, brands they acquired, etc. From what I can tell their E-CIG sales were being phased out due to potential regulations.

In addition, their online store sells not only their own brands but other brands as well. Vapor Store Direct has a growing social media presence and a easy to use website. Lastly, opportunities remain to do more private label and/or licensing deals with other industry players.

FDA E-Cig Announcement and Company Response

https://finance.yahoo.com/news/vpr-brands-lp-welcomes-fdas-123000860.html

Last Shareholder Letter (online store and more..)

https://www.otcmarkets.com/stock/VPRB/news/VPR-Brands-letter-to-shareholders?id=156806&b=y

5. Expansion of Gross Margins

Due to their online selling and private label business gross margins have improved for 4 consecutive quarters up to over 40%.

6. Up listing off Pink Sheets in Progress

From April press release:
"We have improved our capital structure by eliminating all outstanding options held by management, which totaled 30,000,000 shares. We have also started to reduce our potential short/long term debt exposure by working with investors to increase capital. We expect that this will all have a positive impact on long-term growth. As a public company, we believe that full transparency is the only way to gain shareholder trust. To that end, we are in the process of uplisting to the OTCQB and have authorized our transfer agent to participate in the OTC Markets group transfer agent verified shares program in an effort to aide current and potential shareholders in their due diligence."

https://www.otcmarkets.com/stock/VPRB/news/VPR-Brands-letter-to-shareholders?id=156806&b=y


7. Brand & Product Reviews Online --- strong brand, awesome product, don’t take my word for it

Multiple websites and social media forums have mentioned that the Honey Stick brand is either “now back in Stock” and/or “Out of Stock, taking orders”. Compound this with positive reviews flooding the internet. I’ve seen 8-10 websites with nearly all 5 star reviews. Here are a few.

https://vape-smart.com/shop/honeystick-beekeeper-vaporizer/#reviews

https://www.vapornation.com/honey-stick-bee-keeper-vaporizer.html

https://www.directvapor.com/dry-herb-wax-vaporizers/concentrate-vaporizers/bee-keeper.html

Did I mention the HONEYSTICK brand is award winning….

VPR Brands HONEYSTICK and Gold Nugget Extracts Place 1st, 2nd, and 3rd at the High Times Cannabis Cup

https://www.marketwatch.com/story/vpr-brands-honeystick-and-gold-nugget-extracts-place-1st-2nd-and-3rd-at-the-high-times-cannabis-cup-2017-04-27


8. Online Websites & Social Media – growing….

They have a strong social media presence as they are up to 11K followers on their Instagram page. In addition, multiple websites are well put together.

https://www.instagram.com/vpr_brands/

http://www.vaporstoredirect.com/

9. Already turned first profitable quarter

The last quarter they were profitable. In Q4, I expect them to actual post a loss due to the A/R conversion to raise cash. However, short term I don’t think a small loss matters. What matters is that people love the product, they prevent dilution and build strong new products time after time.

10. New Affiliate Program

They recently launched an affiliate program (link below) that is just another way management is adding value. The jury is out on this idea, but could be something that catches on. I’m unsure how this will play between the different channels and price points.

https://www.instagram.com/p/BdNft-vFqhV/?taken-by=vpr_brands


There are many other reasons I am a buyer but these are the top 10 as of now. I ignored the trading opportunity here as this stock has lagged other marijuana companies in the sector – but it’s more than that. It’s a real company, with strong & experienced management, real revenue growth, expanding margins, small float, insane valuation and is profitable – it’s a company that could be worth 20x in the next several years.

All credit for this post goes to Potfolio. It has been reposted so it can be stickied.