Small-Cap Investor Forum

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Vapor Corp. (VAPO) (VPCOU) Capitalized to Capture Significant E-Cig Market Share

Successful Close of $41.4 Million Launches “The Vape Store” Retail Expansion

One of the leading U.S. based distributors and retailers of e-cigs, e-liquids, e-hookahs and personal vaporizers, Vapor Corp. recently closed on a $41.4 million capital raise (NASDAQ: VAPO) (NASDAQ: VPCOU). The newly traded 3.76 million units consist of one-fourth of a share of Series A preferred stock and 20 Series A warrants, offering an intriguing investment opportunity.

“Following the completion of our recent public offering, we are extraordinarily well funded and well-positioned to execute against our business plan swiftly and judiciously,” said Jeff Holman, CEO of Vapor Corp. “This significant infusion of capital will allow us to accelerate our retail expansion through a combination of new store launches and a roll up, in the form of purchasing existing, profitable vape store locations. The current retail environment is highly fragmented and ripe for consolidation. “

Vapor Corp. designs, markets, and distributes electronic cigarettes and accessories and has a broad array of products already available in the company’s portfolio, including the most popular disposable electronic cigarette in the industry, KRAVE®, which uses proprietary technology to offer consumers a product that looks and feels like a real cigarette, but without ash, flame, odor, tar, or second-hand smoke, Vapor Corp. has an established retail presence which will enable the company to expand quickly through both traditional and emerging channels. They have a commitment to innovation demonstrated by the early adoption of patent-pending biometric fingerprint locking system and the first-ever Mechanical Vaping Lock (MVL), important adaptations to help prevent minors from using the products.

E-cig sales in the U.S. more than doubled between 2012 and 2013 to over $630 million and Wells Fargo analysts put subsequent year-over-year growth at 47 percent for the overall e-cig market. Euromonitor data indicates equivalent growth for the space last year, with estimates of 40 to 50 percent growth to as high as $3 billion domestically and $5 billion internationally during 2014. Wells Fargo has even predicted that the e-cig market will outstrip traditional cigarettes by as early as 2024. Combined UBS and Wells Fargo data indicates that the U.S. e-cig market will likely be worth around $10 billion within the next two years alone. These estimates confirm projections out earlier this year by BIS Research, which put the overall industry as being on track to hit upwards of $25 billion by 2025, growing at a 22.36 percent compounded annual growth rate. This is explosive growth by almost anyone’s standards.

Even more compelling is the underlying structure of the deal which holds intriguing profit possibilities. Initially priced at $11, each unit contains one-fourth of a share of Series A preferred stock which is convertible into 10 shares of common stock and 20 Series A warrantsexercisable at $1.24 per share. However the warrants were valued at the offering utilizing the Black-Scholes valuation method. Black-Scholes is a mathematical model used by the financial industry to value derivative securities such as options and warrants. This model places the intrinsic value of just the 20 warrants at $21.80. Digging further into SEC filings reveals that even if the price of the unit declines the unit holders are entitled to more shares in exchange for their warrants virtually guaranteeing them a substantial profit (https://www.sec.gov/Archives/edgar/data/844856/000149315215003079/ex4-2.htm).

The track record of Dawson James in this arena is exceptional. The firm recently underwrote a similarly structured highly successful offering, Great Basin Scientific (NASDAQ: GBSN) (NASDAQ: GBSNU), which has nearly doubled since March.

Vapor Corp. now has the kind of capital momentum needed to execute its expansion strategy and, given the structure of the deal, investors have even more compelling reasons to own the units.

To learn more please visit www.vapor-corp.com