On February 20th, the electronic cigarette and CBD product company, Aspire, filed a registration statement to go public on the US stock market.
The company intends to go public on the NASDAQ stock exchange, with a proposed maximum share price of $9 and the aim of raising $155.25 million by issuing 17.25 million shares. The registration statement provides details on the company's current operations, risk factors, and equity structure.
The parent company of Aspire, a business department, is a manufacturer of vape and CBD products. The total global retail sales of vape products from 2015 to 2020 and the retail sales forecast for 2021 to 2024 are also presented in the registration document (see chart below).
Source: US Securities and Exchange Commission
According to data, during the early days of the company's establishment (2015-17), an open system was more welcomed by the market. However, since the gradual replacement of open vaping systems with closed ones, closed systems have become the mainstream in the market and surpassed open systems in 2019. That year, the global sales of closed vaping systems reached $9.688 billion, surpassing open systems' $8.392 billion.
The company predicts that closed systems will continue to dominate the market and that global vape sales will reach $66.8 billion by 2023.
Since 2019, the company has been expanding its CBD market in the United States and Canada. In 2020, the global sales of cannabis products reached $2.9 billion.
Source: U.S. Securities and Exchange Commission
In addition, the company also undertakes OEM/ODM business for electronic atomization systems.
According to Aspire's registration document, the company's main market is Europe, with the European market accounting for 61% of the company's total performance in 2020, followed by 22.6% in the United States. Their efforts to expand in the Asia-Pacific market have been significant, increasing from 0.1% in 2019 to 9.5%.
Source: U.S. Securities and Exchange Commission.
The risk factors listed in the registration statement of the company are as follows:
Existing and newly enacted laws, regulations, and policies could present barriers to the company's future business operations and have significant adverse effects. Currently, the company can only legally sell one product, Nautilus Prime, in the US, which accounted for less than 11% of the company's US revenues in the year ending June 30, 2020. As a result, the company can no longer sell products that accounted for more than 89% of their US revenues in that same period, leading to a decline in US sales in the six months ending December 31, 2020. The market for cannabis vaporization products is still immature, with most sales occurring in the US, and expansion in the US or globally is not guaranteed. Recently, joint statements from the US Securities and Exchange Commission and the Public Company Accounting Oversight Board, proposed rule changes from NASDAQ, and a bill passed by the US Senate have all called for stricter standards when evaluating the qualifications of auditors for emerging market companies, especially those auditors that are not subject to PCAOB inspections outside of the US. These developments could increase uncertainty around the company's issuances. If there is evidence to suggest or research to show that the use of electronic vaporization or cannabis products poses long-term health risks, the use of such products could significantly decrease, which would have a substantial adverse impact on the company's business, financial condition, and operating performance. The company's operations entail inherent risks and uncertainties, including developments in regulatory environments, medical discoveries, and the market's acceptance of electronic cigarette devices. The company faces potential adverse effects due to sales, product liability, and user complaints. Misuse or abuse of the company's products could lead to potential adverse health effects, leading to complaints, product liability claims, and negative publicity. The company faces competition in the electronic vaporization industry, including larger, more well-known companies with a significantly larger market share, and Aspire may not effectively compete. In addition, widespread outbreaks of diseases, natural disasters, or improper behavior by employees or distributors could harm the company's interests and reputation and have an adverse impact on its business operations.
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Reference:
Aspire has filed a registration statement with the U.S. Securities and Exchange Commission.
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