Replies to post #98343 on Vapor Group Inc (VPOR)

[Locksmith]

Here's one of the PRs from last year that will provide some background info on the split/divi:

MIAMI, FL--(Marketwired - Oct 19, 2016) - The Board of Directors of Vapor Group, Inc. (OTC PINK: VPOR), (the "Company", "Vapor Group"), announced today that it has completed the merger announced August 24th (the "Merger"). The corporation merging into Vapor Group is NewGen Concepts, Inc., a Florida corporation, ("NewGen Concepts") owning U.S., French, Swiss and Pan-European patent rights to Simple Cork™, a self-contained cork/bottle opener, usable by wineries worldwide, www.simplecork.com. NewGen Concepts also is procuring additional patent rights to both related and unrelated products serving other markets. As a result of the Merger, Vapor Group shall file a name change to "NewGen Concepts, Inc." and also file for a symbol change with FINRA. NewGen Concepts brings to the public company an exciting, fresh outlook, an entirely new business model, and adds new creative engineering and marketing skills that can scale the company to a worldwide enterprise.

As previously stated, the Merger was consummated by a share exchange of convertible preferred stock of Vapor Group (the "Share Exchange") for all the capital stock of NewGen Concepts. The Vapor Group preferred stock issued is subject to a holding period before conversion to common stock. As a result, the Merger results in no immediate dilution to Vapor Group's common shareholders. No common stock was issued in connection with the Merger.

Under the terms of the Merger, NewGen Concepts will immediately explore the spin-off of each of Vapor Group's subsidiaries as an independent, publicly-traded company, wherein the first spin-off would occur in early 2017 by a share dividend to existing shareholders of record on a given date of ownership. The first such spin-off will be Total Vapor, Inc., which is currently expanding its product offering into vaporizers and related products suitable to the growing market for legal Cannabis products sold in the United States.

As a result of the Merger, the existing board of directors of the Company is in the process of being reconfigured. The new board of directors will immediately initiate a search for a new President and CEO ("Chief Executive Officer") to further the new mission and strategies of the company.

About NewGen Concepts, Inc.

NewGen Concepts, Inc., www.newgenconcepts.com, was formed in 2016 to acquire, develop and capitalize on a portfolio of commercially viable intellectual property ("IP"), protected under U.S. and international patent and trademark law. Based on this IP portfolio, its strategic intent is to develop a portfolio of proprietary products and services to market, license and sell globally.

The first new U.S. and international patent pending product of NewGen Concepts, Inc. is "Simple Cork™", www.simplecork.com, designed to revolutionize the wine industry by introducing it to a new level of customer convenience. (For a video of how Simple Cork works, go to

.)

The U.S. and worldwide wine industry consumes billions of corks yearly, a sizeable portion of which can be replaced by Simple Cork which provides broad consumer benefits and a unique marketing edge to wineries. Initial target markets are the U.S. and major wine-producing European countries, France and Italy.

NewGen Concepts believes that the sales potential of Simple Cork will represent a huge incremental gain in future revenues and profits for the company. To that end, it plans additional multiple, foreign patent filings in 2016 and 2017 and the addition of new patents and intellectual property for related products and technologies. A campaign will begin in the next 30-days to create top-of-mind awareness for Simple Cork in the worldwide wine industry and to build on an industry buzz that has already started. NewGen Concepts has already begun Initial Smart Cork previews and discussions with quality California and European producers of leading, wine brands. From these discussions, the resultant indication of interest is high.

"Simple Cork" is in its final engineering development with application testing scheduled to be completed this year, and active product marketing, worldwide licensing and manufacturing beginning in 2017. Within the next 10-days, NewGen Concepts will place the assets of Simple Cork into a wholly-owned subsidiary of the same name in order to segregate it assets, business efforts and results into a specific entity.

[CashBowski]

I can certainly try to give more detail, but Lock gave a pretty darn good 'in a nutshell' explanation.

The idea behind a spin-off is very simple...

Either a unit or operation of a company does not fit in with the broad effort, or the aim is to unlock value for shareholders. Investors like focused companies to diversified ones.

For instance, if a portion of a business has different priorities, a spin-off will allow this portion to operate independently and can unlock tremendous value...In this case we have a vape and grinder business (Total Vapor) operating within the combination technology/tobacco/marijuana segment with a ~22 - 40 point PE ratio, and then we have Simple Cork within an entirely different sector. With a wide range of 30 point (or higher) ratio difference, you can see where it's more beneficial for each to be trading independently, so that one doesn't diminish the other in regards to proper valuation once they're both on track with a steady revenue stream.

In a typical spin-off, a diverse parent company like Vapor Group ( VPOR ) distributes to its shareholders new shares in a stand-alone unit. The idea is that the division’s value, in this case the Simple Cork segment due to its patent applications, and Total Vapor due to massive Easy Grinder sales is not fully reflected in the parent valuation, so splitting the businesses allows the market to properly value each part. It also allows each segment to more broadly explore mergers and acquisitions that are more focused within the appropriate sector.

The mechanics often mean that the spun-off company is orphaned at first, and handed to investors who for some, never intended to own shares and would prefer to sell the spin portion. At the same time, there are investors that are more interested in the spin-off portion and opt to invest in the parent ( VPOR ) just to be able to receive the free divi shares, and what I consider as BOGO. In short, the type of buying/selling can create excellent opportunities for savvy investors to uncover good businesses at favorable prices.

Often, post spin, the entrepreneurial forces motivates management of the subsidiary to run the business more efficiently. It's like a fresh start and management is often more incentivized to do things differently by avoiding previous pitfalls -- especially with an independent stock price that should reflect the market’s assessment of management's performance. The combination of accountability, responsibility, and more incentives to expand, all typically show up in the operating performance once liberated. It's my opinion that management will likely split the segments before announcing any major contracts with Simple Cork, or if they do so prior to the separation -- then it's a good sign that the spin-off isn't far behind.

Spin-offs are very attractive to investors and viewed as a win-win, especially on the OTC where it's quite a rarity. In the overall market the outsized returns from owning spin-offs have been so attractive and consistent over the years that, in theory, they should not exist.