Due Diligence for Investors in Vapor Corp.
In the company press release we can read about expansion in the VPCO distribution system and the addition of new retail outlets. The Form 8-K linked below advises that VPCO faces de-listing on the NASDAQ if its share price doesn’t get to $1.00. The Jay M. Taylor article gives a comprehensive snapshot of VPCO one year ago, important as to where the company has gone from then till now. The company 10-Q, also linked below, for the period ended June 30, 2015 has important information regarding share and debt structure.
Our View: When we read the year old article by Jay M. Taylor we asked, what has changed at VPCO? He was writing about shares that had fallen from $5.00 to $1.50 from July to September last year. Today we are writing about VPCO share dropping from $1.50 to $.48 in roughly the same period this year. Both share price drops are around 70%. The late, great Yogi Berra might have said “is this Deja-Vu all over again?” Now the company is under threat of losing its NASDAQ listing due to the share price requirements.
Sales have dropped dramatically even given the “booming market” predicted by the analysts, falling from $10 million in the first six months of 2014 to nearly half of that in the same period this year. The company lists its biggest asset as goodwill, $15 million worth or 65% of its total assets. As of June 30th this year they had an accumulated deficit of $24 million; $8.7 million of that was added this year. On July 7, 2015, the Company had a one-for-five reverse stock split to its common stock and to increase its authorized common stock to 150,000,000 shares.
On July 30, 2015, the Company closed a public offering of 3,761,657 Units at $11.00 per Unit for net proceeds of approximately $38.7 million. Each Unit consisted of one-fourth of a share of Series A preferred stock and 20 Series A warrants. Each one-fourth of a share of Series A preferred stock is convertible into 10 shares of common stock and each Series A warrant is exercisable into one share of common stock at an exercise price of $1.24 per share. This dilution could not have been good news for investors and none of the financial data above indicate a thriving company.
Many investors thought at one point that VPCO might be acquired by big tobacco as an entrée into the e-cigarette business, but with the big tobacco companies already marketing their own brands, that exit seems highly unlikely for VPCO; they need to survive on their own. We will sit on the sidelines to see if VPCO turns itself around or self destructs.
VPCO – Press Release – September 9, 2015
Seeking Alpha – Jay M. Taylor – September 14, 2014
VPCO – Form 8-K – September 18, 2015
VPCO – Form 10-Q – August 14, 2015
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