VPR Brands LP (VPRB)

[Potfolio]

A solid Q3 by VPR Brands

After a strong Q2 that showed profitable operations and accelerating revenue growth - I believe that we may have just had an even better Q3. We will see the numbers in a few weeks - but there were SO MANY EVENTS that happened during the quarter that show the business continues to grow and drive value for shareholders. I'll do my best to fill you in on what I picked up on and please feel free to share your thoughts.

Current Price: $0.044
O/S: 81.1 million
Market Cap: $3.6M (so undervalued)


Top 10 things that happened during Q3:

1. The restructuring of debt with HCMC and getting a $500K loan at 7% to vastly improve liquidity

https://www.sec.gov/Archives/edgar/data/1376231/000149315218013138/form8-k.htm

The company was able to secure 7% financing from HCMC and restructure their original purchase agreements. Long story short, VPR Brands (i.e. Kevin Frija) acquired the Wholesale vape assets from HCMC in 2016 for 870K (2 different loans) and was able to restructure the remaining 87K and add $500K @ 7%. Kevin was former CEO of Vape Corp (now HCMC) and helped them grow from $2M to $30M+ in revenue and they ultimately listed as the first E-CIG company on NASDAQ.

Why in the world did HCMC give them $500K @ 7%? Are they insane?
No, but apparently if you read 4.2 "Release" section in the terms they apparently launched a new product into the Wholesale channel with MJ Holdings.

"Borrower, Kevin Frija and the Lender, including any claims related to the Lender’s Exclusive Distribution Agreement, dated August 13, 2018, with MJ Holdings Inc"

OK, so in the original purchase contract VPR Brands had a non-compete with HCMC, they apparently broke it, and based on the SEC filings VPR Brands released them from any wrong doing.

Here is the original SEC Filing:
https://www.sec.gov/Archives/edgar/data/1376231/000149315216011941/ex10-1.htm

Here is the non-compete clause:

"(ii) Vapor covenants and agrees that it will not, at any time during the period of time beginning on the Closing Date and ending on the date that is three (3) years after such Closing Date, compete with VPRB in the wholesale distribution of the brands of electronic cigarette products that comprise the Assets"

Great...wait a minute what was the MJ Holdings/HCMC deal anyway?

https://www.msn.com/en-us/finance/companies/pot-stock-mj-holdings-soars-50-25-on-e2-80-98q-cup-e2-80-99-dispensing-unit-order/ar-BBNzlTd

Facts are that HCMC/VPR Brands are still connected in some way --- likely from relationships since Kevin use to be CEO....definitely in financing....it's logical to assume that there could be opportunity here to do some business together. Time will tell - regardless, just further upside potential.

Bottom line here - the biggest knock and hindrance on the company heading in the quarter was LIQUIDITY. There financing was enormous. They were constantly out of stock on key products. This should improve interest expense in the coming quarters and vastly help the business grow.

2. International Sales Launch

http://vprbrands.com/vpr-brands-lp-announces-international-sales-launch/

The international business opportunity is enormous. It appears there are multiple European distributors now that are fully stocking online the Honeystick brand of vaporizers. Here is an example:

http://www.paraliar.com/index.php?route=product/search&search=honeystick


3. CBD Goldline Launch and Order Acceleration

https://cbdgoldline.com/

The website looks much better than it did at the start of the quarter. The entire functionality and user experience has been vastly enhanced.

How do you know orders accelerated?
I've purchased multiple orders and tracked the order # multiple times through the month. It went from 2XXX to 5941 as of today (10/6) with a vast acceleration in the order numbers the past 3 weeks. The numbers always seemed to be sequential. I also don't believe they include Wholesale orders? Either way, BRAND launched, website VASTLY IMPROVED, and there are more customers then they had in Q2.


4. VPR Brands EBAY account Order Acceleration

If you go search here:
https://feedback.ebay.com/ws/eBayISAPI.dll?ViewFeedback2&userid=vprbrands&ftab=AllFeedback&myworld=true&rt=nc&_trksid=p2545226.m2531.l4585

You can then see user reviews the past month. This has grown from 60 back in April to 180 range end of September. It doubled from Q2 to Q3. So it seems like a fact to me that there online EBAY store orders is growing. I don't believe this to be more then 10-15% of their revenue, but it is growing and the margins are likely 20-30%?


5. VAPORSTOREDIRECT YouTube rebranding to VAPEHONEYSTICK and acceleration of subscribers.

https://www.youtube.com/channel/UCT9-kiDrSCd1RDq1SJzlvqg

They rebranded to VAPEHoneytsick which was likely a very smart idea since the most important thing for them it to continue to invest in their brand name and image. (Note in the quarter they also rebranded Instagram accounts and no longer use VPR Brands or Vapor Store Direct --- just vapehoneystick and officialvapehoneystick)


The subscribers of their channel grew from approx. 400 to 917 in the quarter. Solid!


6. CBD HEMP Launch and NACS Show

https://markets.businessinsider.com/news/stocks/vpr-brands-showcasing-its-goldline-hemp-brand-at-nacs-expo-in-las-vegas-1027594060

Obviously yet another market channel (CBD, International, Hemp!) The packaging looks great. A new website as well.

7. TRADEMARK filings continue to occur

I am not going to get into this but feel free to check the activity during Q3.

https://www.trademarkia.com/company-vpr-brands-lp-4614846-page-1-2


8. Hiring of another sales rep

They appointed a International Sales Director in the quarter mentioned above but also when viewing linkedin apparently hired a rep for CBD Hemp. He looks to be up an running!!


9. Social Media campaigns with "dabbinhippie" and "dana_Kaylynn22".

It appears they used some monies in the quarter to work on product placement.

10. Formation of Cannabis vape Life website.

However, not sure if this is "miriamperez17" own creation to help drive sales or owned by VPR Brands. Either way, great idea, she has a lot of followers and should only help drive shareholder value.

Website (appears still to be under construction)
https://cannabisvapelife.com/


Bottom Line: All of these events point to continued acceleration of top line growth, brand recognition and a much improved liquidity position. I continue to own a large position and will continue to add this very undervalued Vape, MJ, CBD company with strong management and a passionate team