Inspire Technology Inc. - ISPR
Quick Take
In a sea of destruction, what are the odds that Prime Number Capital managed to find even one company that isn’t ready to absolutely implode? Check out their list of underwritings. Their most recent, WRNT, is a doozy. From $5 to $0.60 in a couple of months. AIXI. ZJYL is currently having their moment in the sun, making wheelchairs of all things, but the paltry 1M share float could prove deadly. OMH. PEV. OST. They even had a SPAC with the ticker PNAC that merged with something called “noco-noco” and is now trading under NCNC for under a buck. The list goes on.
And then we have something called Inspire Technology (ISPR), a maker of tobacco and cannabis vaping products down here in beautiful Torrance, California. They sell their tobacco products under the Aspire brand everywhere except for China, the US, and Russia, while their cannabis hardware products are only sold in the US currently, but Europe and Canada are apparently coming soon. 78% of their tobacco revenue comes from Europe and most of the rest from the Asia Pacific region, while 100% of their Inspire-branded cannabis vaping products revenues come from the US. Oh, why not China or Russia? The CEO owns the technology and the manufacturing company (actually 95% of something called Shenzhen Yi Jia) behind everything they do, and while ISPR has the rights to the technology everywhere else, he has retained the rights to those 2 markets. Why not the US? They pulled most of their tobacco products from the US back in 2020 due to extremely poor sales.
The offering the company did back in April was a bit unusual as well. The original offering was for 2.7M shares at $7 per share plus a 405k over-allotment option (they are located off the 405 freeway, coincidentally). The CFO agreed to purchase $1M worth of stock on the offering, while a couple of investors in the predecessor company decided to sell an additional 1.75M shares of their own stock separately from the offering. I guess they couldn’t wait for the stand 180 day lockup period to expire. If the 10K is accurate, there should be something over 4M shares in the float plus whatever the 2 insiders have managed to sell.
So the story at this point is their cannabis vaping products both here and in Canada and Europe. Tobacco products grew maybe 11% in FY2023 (ended June 30th) but their cannabis vaping products doubled from $20M to $40M. Profitability is still a problem, a huge spike in accounts receivables may or may not be a problem, and the related party payables growth seems kind of interesting as well. While the company hopes to start some manufacturing here in the US along with Vietnam, he and his wife still reside in China where they apparently develop all of these wonderful products. Both are business majors, neither has any technical knowledge or degrees, and yet they have managed to put together about the only vaping company on the US markets (MO is a disaster).