DANIA BEACH, Fla., May 15, 2014
/PRNewswire/ -- Vapor Corp. (OTCQB: VPCO; "Vapor" or "the
Company"), a leading U.S.-based electronic cigarette and vaporizer
company, today announced that on May 14,
2014 it entered into an asset purchase agreement with
International Vapor Group, Inc. and certain of its subsidiaries
("IVG") to purchase IVG's e-commerce, wholesale and retail
operations by acquiring substantially all of IVG's assets and
assuming certain of its liabilities.
IVG's retail operations include eight Company owned VAPOR ZONE®
retail stores, six of which were opened in the first quarter 2014,
the brands SOUTH BEACH SMOKE®, EVERSMOKE® and VAPOR ZONE®, and
Vapor Zone Franchising, LLC, a wholly owned subsidiary that will
conduct the franchising of Retail Stores.
Under the terms of the purchase agreement, Vapor has agreed to
pay IVG at closing approximately $20.8
million, of which approximately $1.7
million will be in cash and the remaining $19.1 million in 3,300,501 shares of Vapor common
stock (based on a price of $5.787 per
share which represents the 30-trading day weighted average closing
price of Vapor common stock, as reported on the OTC Bulletin Board
preceding May 14, 2014, the date of
the purchase agreement). Vapor has also agreed to pay IVG an
earn-out aggregating up to $29.2
million in shares of Vapor common stock. Earn-out payments
are contingent and based upon the post-closing performance of IVG's
e-commerce, wholesale and retail operations during the earn-out
period specified in the purchase agreement.
IVG's principal owners and operators Nicolas Molina and David
Epstein have agreed to become part of Vapor's management
team responsible for IVG's continuing e-commerce, wholesale and
retail operations. Mr. Molina will serve as Senior Vice President
of Retail & e-Commerce and Mr. Epstein will serve as Vice
President of Wholesale.
Completion of the acquisition is subject to Vapor obtaining
stockholder approval for issuance of the shares of its common stock
that will be issued at closing as part of the purchase price and
thereafter as earn-out payments, as well as additional customary
closing conditions. Vapor expects to complete the acquisition as
soon as possible but not later than July 31,
2014.
Additional information about the acquisition has been filed by
Vapor with the Securities and Exchange Commission in a Current
Report on Form 8-K and investors are encouraged to read the filing
for a better understanding of the terms and conditions of the
acquisition.
IVG's net sales for the years ended December 31, 2013 and 2012 were approximately
$15 million and $10.5 million, respectively.
"IVG brings to Vapor Corp. an established online customer base
and distribution channel that includes its own branded retail store
operations under the name VAPOR ZONE. We are excited to have
Mr. Molina head up these divisions. His previous experience
as an owner and co-founder of Let's Talk Cellular and
Wireless, Inc., where he opened 289 stores, will prove invaluable,"
said Jeff Holman, Chairman,
President and CEO of Vapor Corp. "With the stability for
Internet sales recently provided by the promulgation of the FDA's
proposed regulations, Vapor Corp. is very excited to be able to
react quickly and have the opportunity to take part in this segment
of the market, where gross margins are substantially higher than in
wholesale distribution. Mr. Molina's plan of re-launching Vapor
Corp.'s existing online stores, to work in concert with IVG's
websites, will immediately make Vapor Corp. a much more significant
player in the internet sales channel."
Mr. Holman continued, "Vapor Corp. and IVG have similar business
strategies that we believe offer significant economies of scale.
Outside of the top five companies, the electronic cigarette and
vaporizer industry is highly fragmented, which represents a
tremendous opportunity for Vapor Corp. to strategically acquire
companies that are complimentary to and allow us to further
diversify our product offering and distribution channels."
Nicolas Molina, CEO of IVG,
commented, "We are very excited to join forces with Vapor Corp. to
create an exciting multi-pronged strategy that includes an
industry-leading online presence, nationally ranked wholesale
distribution and award-winning company-owned brick and mortar
stores. Individually we were both successful, but together we
will enhance our positions as industry leaders."
Mr. Molina concluded, "We are especially eager to leverage Vapor
Corp.'s reach as we continue to expand the retail footprint for our
EverSmoke and South Beach Smoke brands, including our new South
Beach Smoke Air (TM) tank system. We are also excited to leverage
Vapor Corp.'s management's expertise and access to the capital
markets to help fund the anticipated growth of Vapor Zone
stores."
About International Vapor Group, Inc.
IVG is a leader in the industry of electronic cigarettes. IVG
leads through manufacturing, distributing, and marketing some of
the most recognizable names of e-cigarettes, including South
Beach Smoke, EverSmoke and introducing new retail concept, Vapor
Zone. IVG understands the needs of customers and how to stay ahead
with innovation. With a unique array of offerings for every
customer profile, IVG keeps everyone in mind.
IVG also has a direct to consumer business, Vapor Zone, which is
an online hub coupled with brick and mortar locations serving the
ever-growing and passionate vaping community. Everyone from vaping
newbies to the most experienced vapers get access to the most
technologically advanced electronic cigarettes and personal
vaporizes. IVG's premium quality 100% USA-made e-juices are offered in a large
variety of flavors and are customizable for customers'
enjoyment.
About Vapor Corp.
Vapor Corp., a publicly traded company, is a leading U.S. based
electronic cigarette company, whose brands include Krave®, VaporX®,
Hookah Stix®, Alternacig®, Fifty-One®, EZ Smoker®, Green Puffer®,
Americig®, Fumare™ and Smoke Star®. We also design and develop
private label brands for some of our distribution customers.
"Electronic cigarettes" or "e-cigarettes," are battery-powered
products that enable users to inhale nicotine vapor without smoke,
tar, ash or carbon monoxide. Vapor's electronic cigarettes and
accessories are available online, through direct response to our
television advertisements and through retail locations throughout
the United States. For more
information on Vapor Corp. and its e-cigarette brands, please visit
us at www.vapor-corp.com.
Safe Harbor Statement
This press release contains certain forward-looking statements
that are made pursuant to the "Safe Harbor" provisions of the
Private Securities Litigation Reform Act of 1995, as amended. Words
such as "expects," "anticipates," "plans," "believes," "scheduled,"
"estimates" and variations of these words and similar expressions
are intended to identify forward-looking statements. These
forward-looking statements concern Vapor's operations, economic
performance, financial condition and pending acquisition of IVG's
online, wholesale and retail operations and are based largely on
Vapor's beliefs and expectations. These statements involve known
and unknown risks, uncertainties and other factors that may cause
the actual results, performance or achievements of Vapor to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. Certain of these factors and risks, as well as other
risks and uncertainties are stated in Vapor's Annual Report on Form
10-K for the fiscal year ended December 31,
2013 and in Vapor's subsequent filings with the U.S.
Securities and Exchange Commission. These forward-looking
statements are made as of the date of this press release, and Vapor
assumes no obligation to update the forward-looking statements or
to update the reasons why actual results could differ from those
projected in the forward-looking statements.
Contacts:
Media:
Caitlin Kasunich
KCSA Strategic Communications
ckasunich@kcsa.com
(212) 896-1241
Investors:
Jeffrey Goldberger / Garth Russell
KCSA Strategic Communications
jgoldberger@kcsa.com / grussell@kcsa.com
(212) 896-1249 / (212) 896-1250
SOURCE Vapor Corp.