Vapor Hub International Inc (OTCMKTS:VHUB) Climbs After Merger
Vapor Hub International Inc (OTCMKTS:VHUB) did what many other penny stock companies have done over the last couple of months – they changed their business plan. The transition became official on March 24 and, judging by the stock performance, investors are pretty excited about it.
Out of the six sessions that followed, only one ended in the red an although the climb hasn’t been explosive, we saw some interesting volumes yesterday which could suggest that more and more people are paying attention. Nearly 1.8 million shares changed hands in just six and a half hours of trading while the price jumped up by around 12%. VHUB closed the session at $0.73 which, at 68 million shares issued and outstanding, commands a market cap of nearly $50 million.
It’s up to you to decide whether the company actually deserves this sort of valuation, but we should note that it now looks a lot more appealing than it did a couple of months ago.
They entered the electronic cigarette market last week after they closed the acquisition of a privately-held enterprise called Vapor Hub Inc. According to the press releases, Vapor Hub have been around for a while and they already have their products on the market. They have the figures to prove it as well. An 8-K form containing the private company’s financial statements was filed a couple of weeks ago and it shows that as of December 31, 2013 they had:
- cash: $34 thousand
- current assets: $99 thousand
- current liabilities: $52 thousand
- revenue (between July 2013 and December 2013): $210 thousand
- net income (same period): $10 thousand
The financials are not perfect: VHUB have limited cash reserves and the bottom line, although positive, is not spectacular. They did, however, inform us that some sales were registered during a trade show in California and the recent filings tell us that they raised some money through a convertible debenture.
It’s clear that VHUB still have a long way to go, but there are some things to suggest that they might have the foundations of a relatively solid small cap enterprise. Before you get too excited, however, there is one tiny thing that you need to consider.
As we mentioned, the latest SEC filings inform us that there are just over 68 million shares issued and outstanding at the moment. 38 million of them are restricted and are held by the shareholders of the former private company. That leaves us with the question: “Who holds the rest of the outstanding stock?“. We might just have the answer.
If you take a look at page 14 of the 10-Q covering the period ended June 30, 2011, you’ll see that back in December 2010, VHUB (then known as DogInn Inc) received just $33,400 in exchange for 3,340,000 shares of common stock. Take the effects of the nine-for-one stock split into consideration, and this number grows to exactly 30,060,000.
Is this enough to stop the ticker from progressing further up? We’re about to find out. Should you bear it in mind? It might not be a bad call.
