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Vapir Enterprises Inc (OTCMKTS:VAPI) Is A Volatile Play

Vapir Enterprises Inc (OTCMKTS:VAPI) Is A Volatile Play
Written by
Jarrod Wesson
Published on
February 1, 2018
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Are you aware of the tremendous opportunity created by the new legalization of recreational cannabis in California? From January 1, 2018, all adults aging 21 and above can legally acquire marijuana pots in this state. As a result, its demand is increasing at a high pace and is also pushing up the need for devices that facilitate its consumption. Cannabis device producers are expecting 2018 as a productive year.

One clear case is Santa Clara company Vapir Enterprises Inc (OTCMKTS:VAPI), which commercializes vaporization devices, whose stock price jumped astonishingly on January 1, 2018. Have a look at the recent share price action:

1-year chart for VAPI

We believe that several market participants understood that the stock price could run on January 1, 2018, and acquired shares. We formed this opinion from the fact that the trading volume increased in December in comparison to that of November.

Also, in January, the share price jumped from the level of $0.1 to cross the one-year record highs of $0.6. Furthermore, the stock returns were extraordinary. But, the most interesting was again the volume. More than $0.5 million shares changed hands most days, which shows that many in the market became interested in the stock.

The company and its products

Vapir Enterprises Inc. was founded in 2009, is headquartered in Santa Clara, California, and manufactures its products in Guang Dong, China. It has invented several user-friendly medical-grade vaporization devices and is focused on their development and commercialization. The devices extract active ingredients from source by a proprietary process and deliver very high quality, natural vapor.

We believe that best is to watch the following video produced by Zamnesia, a popular shop on the internet:

https://youtu.be/LIwunNZj8pk

In total, the company markets five vaporizers; the Prima, VapirRise 2.0 ultimate, VAPIR NO2 Portable Digital Vaporizer, VAPIR Oxygen Mini Corded Vaporizer, and the New Vapir Pen.

Why are these products different from others in the market?

Patent Information -Vapir Enterprises Inc OTCMKTS:VAPI

We believe that the following feature is the most interesting. The company owns a proprietary technology (US Patent 6,095,153) that prevents the creation of toxic by-products whenever plant materials are inhaled. According to the company materials, this can be done by using "convection heat that induces the safe release of plant essences without burning the source material."

The experts in the field and the market participants interested in this patent can consult all the information here.

Recent Developments

Regarding the operations, the company seems to be growing at a high pace. We made this impression after reviewing the press releases put out in 2017. This year commenced very well for the company, which released, in January, the launch of the Vapir Pen; a high-quality portable pen vaporizer with a Micro USB charging port. It was presented with the following words:

“Vapir is again leading the industry as we introduce the Vapir Pen, a sleek, affordable and portable device that delivers an exceptional vaping experience utilizing our patented, proprietary vaporizing process. Unlike many other pen designs available today, the Vapir Pen can be charged directly with a USB cord, which is included in the box,” said Hamid Emarlou, CEO of Vapir Enterprises.

The start of new products is usually appreciated, as it is followed by increases in the revenues. However, the market did not react to the latest information, which, in our opinion, was not normal. We needed to wait until 2018 to see the stock appreciation. In our opinion, to understand the share price movement is critical to revise the announcements made in 2017.

On March 1, 2017, the company noted that its new device “Vapir Pen” would be available through VaporNation.com. The news was outstanding, as this site is one of the largest online sellers of vaporizers and accessories in the U.S. As it happened previously, the market did not react to the news even after reading that the CEO was expecting a great year. Check the words said by Hamid Emarlou, Vapir CEO:

"With the product now officially launched and heading to distributors and retailers, we anticipate that if market conditions allow, we may have a great year." Source

In March 2017, it was also noted that the company's vaporizers were going to be sold globally through the e-commerce retail channels of Namaste Technologies Inc. The announcement was interesting since this is a big distributor operating 24 stores in 20 countries.

Checking the revenues was critical

We believe that market participants could have realized that something good was about to happen in the stock chart. The quarterly revenues were indicating that the company was being prepared for a market run. From March to September, the revenue line jumped from $0.19 million to $0.371 million.

Check the following image, wherein an increase in revenues is evident.

Quarterly Revenue Increase - Vapir Enterprises Inc OTCMKTS:VAPI

In our opinion, the company was benefiting not only from the overall increase in demand for cannabis, but also from the rise in the number of products sold, and the number of distributors.

The most significant will be the next annual figures and what the market is expecting for the year 2017. We will need to compare those figures with those of the year 2016; $1.086 million in total sales.

Regarding the balance sheet, the last numbers reported showed an increase in inventories. From $0.11 million reported in June, the company noted $0.18 million in September. In our opinion, if the demand in January 2018 increases and VAPI can sell those inventories, the Q1 2018 may be okay.

Also, we believe that the market will be expecting a plan from the company to recapitalize the balance sheet and obtain some liquid assets. In September, it showed $0.01 million in cash, $0.4 million in total assets, and $1.9 million in total liabilities. Regarding the options, we believe that market participants will be approving an equity transaction if the growth in the year 2018 can offset the potential shareholder dilution.

Conclusion

Currently trading with a market cap of $14 million, VAPI is an exciting story among small caps. With a total amount of outstanding shares equal to 49,766,819 shares and a float of only 5,406,611 shares, we believe that share price volatility can be expected.

To sum up, this name is poised to surprise!

We will be updating our subscribers as soon as we know more. For the latest updates on VAPI, sign up below!

Disclosure: We have no position in VAPI and have not been compensated for this article.Image courtesy of Craig Lloyd via Flickr

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