DANIA BEACH, Fla., Nov. 6, 2014
/PRNewswire/ -- Vapor Corp. (NASDAQCM: VPCO) ("Vapor" or the
"Company"), a U.S.-based vaporizer and electronic cigarette
company, announced today, that it has executed a binding term sheet
("Term Sheet") to enter into a merger with Vaporin, Inc. (OTCQB:
VAPO) ("Vaporin"), a company whose primary focus is in vaporizers
and eliquids.
The Term Sheet contemplates a proposed merger with Vaporin to be
structured as a merger of equals with Vapor as the surviving party
in the transaction. As consideration for the merger, the Term Sheet
provides that the stockholders of Vaporin would be entitled to
receive the number of shares of the Company's common stock such
that the former Vaporin stockholders would collectively own 45.0%
of the issued and outstanding shares of common stock of the
combined company following consummation of the merger, subject to
any adjustments to the exchange ratio which would be necessary to
permit the respective financial advisers of both the Company and
Vaporin to make the determination that the merger consideration is
fair from a financial perspective.
The Term Sheet further contemplates, in connection with the
proposed merger, a series of financing transactions. The
first financing is expected to consist of a bridge loan where
Michael Brauser and Barry Honig (the "Investors") or their
affiliates will purchase $1.0 million
in senior secured convertible notes and warrants to purchase shares
of the Company's common stock. The Investors are shareholders
of Vaporin. Pursuant to the Term Sheet, a second equity
financing of $3.5 million is expected
to close contingent on the closing of the merger with
Vaporin. The Term Sheet also contemplates that the Company
may receive up to a total of $25.0
million in additional equity investments subject to
financial covenants and performance-based metrics still to be
negotiated and documented in the final definitive
agreements.
The Company believes the potential financings, if consummated,
would allow the Company to continue to execute its strategy to
attempt to capture an increased share of the rapidly expanding
vaporizer market.
By signing the Term Sheet, the parties have agreed to negotiate
in good faith and to execute definitive agreements as soon as
possible, but in any event prior to December
21, 2014, and to otherwise use best efforts to consummate
the transactions contemplated by the Term Sheet on an expedited
basis. The parties are currently in the process of
negotiating such definitive agreements, which are subject to
approval of each party's board of directors. The proposed
merger and financings remain subject to receipt of fairness
opinions, due diligence, stockholder votes, and other customary
closing conditions.
Financial Results
The Company will release its financial results for the third
quarter and nine months of 2014 after the market closes on
Friday, November 14, 2014. Highlights
will include six (6) new retail kiosk locations opened in major
U.S. shopping malls, since November 1,
2014, and reported net sales of $2,673,926 and $13,547,792 for the three and nine months ended
September 30, 2014, respectively,
which represent decreases of 58.3% and 28.5%, respectively compared
to the prior year periods. The decrease in sales is primarily
attributable to decreased sales of the Company's television direct
marketing campaign for the Company's Alternacig® and VaporX®
branded campaigns, decreases in sales from our on-line stores,
distributor inventory build leveling off in 2014 and continued
pipeline load in the e-cigarette category in 2013, and the
increasing prevalence of vaporizers, tanks and open system vapor
products that are marginalizing the e-cigarette category. Sales
were also negatively impacted by new national competitors' launches
of their own branded products during 2014. The Company
expects to report net losses of $4.8
million and $7.3 million for
the three and nine months ended September
30, 2014, respectively, compared to net income of
$0.3 million and $0.3 million for the three and nine months ended
September 30, 2013,
respectively.
About Vapor Corp. Vapor Corp., a NASDAQ listed
company, is a U.S. based vaporizer and electronic cigarette
company, whose brands include emagine
vapor™, Krave®, VaporX®, Hookah Stix®,
Alternacig® and Fifty-One®. We also design and develop private
label brands for some of our distribution customers. "Electronic
cigarettes" or "e-cigarettes," and "Vaporizers," are
battery-powered products that enable users to inhale nicotine vapor
without smoke, tar, ash or carbon monoxide. Vapor's electronic
cigarettes, vaporizers and accessories are available online,
through our company owned stores under the emagine
vapor™ brand, 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 and vaporizer
brands, please visit us at www.vapor-corp.com.
Forward Looking Statements
The foregoing contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including but not limited to those regarding the proposed merger
and proposed financing. Such statements are not historical
facts and include expressions about management's confidence and
strategies and management's expectations about new and existing
programs and products, relationships, opportunities, taxation,
technology and market conditions. These statements may be
identified by such forward-looking terminology as "expect,"
"believe," "view," "opportunity," "allow," "continues," "reflects,"
"typically," "usually," "anticipate," or similar statements or
variations of such terms. Such forward-looking statements
involve certain risks and uncertainties. Actual results may differ
materially from such forward-looking statements. Factors that may
cause actual results to differ from those contemplated by such
forward-looking statements include, but are not limited to, the
following: failure to enter into a definitive merger agreement;
failure to enter into a potential financing transaction, reaction
to the proposed merger of Vapor's customers and employees; the
diversion of management's time on issues relating to the merger;
the inability to realize expected cost savings and synergies from
the merger of Vapor with Vaporin in the amounts or in the timeframe
anticipated; Vapor's operations and its ability to successfully
execute its current business strategy changes in the estimate of
non-recurring charges; costs or difficulties relating to
integration matters might be greater than expected; changes in the
stock price of Vapor or Vaporin prior to closing; material adverse
changes in Vaporin's or Vapor's operations or earnings; the
inability to retain Vapor's customers and employees; or a decline
in the economy, as well as the risk factors set forth in Vapor Form
10-K (and as supplemented by Item 1.A. in Vapor's Quarterly Report
on Form 10-Q for the quarterly period ended March 31, 2014) and the Vaporin Form 10-K.
Neither Vapor nor Vaporin assumes any obligation for updating any
such forward-looking statement at any time.
Additional Information and Where to Find It
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. In connection with the proposed merger
and upon the execution of a definitive merger agreement, Vapor
intends to file a Registration Statement on Form S-4 that will
include a joint proxy statement of Vapor and Vaporin and a
prospectus of Vapor with the Securities and Exchange Commission
(the "Commission"). Both Vapor and Vaporin may file other
documents with the Commission regarding the proposed transaction.
If a definitive merger agreement is executed by the parties, a
definitive joint proxy statement will be mailed to the stockholders
of Vapor and Vaporin. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO
READ THE JOINT PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES
AVAILABLE, AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE
COMMISSION, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THE
DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors and security holders may obtain a free copy of the
registration statement (when available), including the joint proxy
statement/prospectus and other documents containing information
about Vapor and Vaporin at the Commission's website
at www.sec.gov. These documents may be accessed and
downloaded for free at Vapor's website at www.vapor-corp.com or by
directing a request to Harlan Press,
Chief Financial Officer, Vapor Corp., at 3001 Griffin Road,
Dania Beach, Florida 33312, telephone (888) 766-5351 or
at www.vaporin.com or by directing a request to Jim Martin, Chief Financial Officer, Vaporin,
Inc. at 4400 Biscayne Boulevard, Miami,
Florida 33137, telephone (305) 576-9298.
Participants in the Solicitation
This communication is not a solicitation of a proxy from any
security holder of Vapor or Vaporin. However, Vapor and
Vaporin and their respective directors and executive officers and
other persons may be deemed to be participants in the solicitation
of proxies from Vapor's and Vaporin's stockholders in respect of
the proposed merger. Information regarding the directors and
executive officers of Vapor may be found in its Annual Report on
Form 10-K for the fiscal year ended December
31, 2013 (the "Registrant Form 10-K"), which was filed with
the Commission on February 26, 2014,
and its Current Report on Form 8-K dated April 25, 2014 , as filed with the Commission on
April 28, 2014, both of which Reports
can be obtained free of charge from Vapor's website.
Information regarding the directors and executive officers of
Vaporin may be found in its Annual Report on Form 10-K for the
fiscal year ended December 31, 2013
(the "Vaporin Form 10-K"), which was filed with the Commission on
March 27, 2014 and can be obtained
free of charge from Vaporin's website. Other information
regarding the participants in the proxy solicitation and a
description of their direct and indirect interests, by security
holdings or otherwise, will be contained in the Joint Proxy
Statement/Prospectus and other relevant materials to be filed with
the Commission when they become available.
SOURCE Vapor Corp.