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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of Earliest event Reported): December 30, 2014

Vapir Enterprises, Inc.

(Exact name of registrant as specified in its charter)

Nevada		333-185083		27-1517938
(State or other jurisdiction of incorporation or organization)		(Commission File Number)		(IRS Employer Identification No.)

2365 Paragon Dr., Suite B

San Jose, California 95131

(Address of principal executive offices)

(800) 841-1022

(Registrant’s telephone number, including area code)

FAL Exploration Corp.

431 Fairway Drive, Suite 260

Deerfield Beach, Florida 33441

(Former name of former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

This report contains forward-looking statements. The forward-looking statements are contained principally in the sections entitled “Description of Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “seeks,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. These risks and uncertainties include, but are not limited to, the factors described in the section captioned “Risk Factors” below. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Such statements may include, but are not limited to, information related to: anticipated operating results; licensing arrangements; relationships with our customers; consumer demand; financial resources and condition; changes in revenues; changes in profitability; changes in accounting treatment; cost of sales; selling, general and administrative expenses; interest expense; the ability to produce the liquidity or enter into agreements to acquire the capital necessary to continue our operations and take advantage of opportunities; legal proceedings and claims.

Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report and the documents that we reference and filed as exhibits to this report completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

Unless the context otherwise requires, all references in this Report to “we,’’ ‘‘us,’’ ‘‘our’’ and “the Company” refer collectively to Vapir Enterprises, Inc., a Nevada corporation, and its subsidiaries, including Vapir, Inc., a private California corporation.

Item 1.01

Entry into a Material Definitive Agreement

On December 30, 2014, we entered into a Share Exchange Agreement (the “Exchange Agreement”) with Vapir, Inc., a California corporation (“Vapir”), all of the stockholders of Vapir (the “Vapir Shareholders”), and our controlling stockholders.

Pursuant to the Exchange Agreement, we will acquire all of the outstanding shares of Vapir in exchange for the issuance of 38,624,768 shares of our common stock to the Vapir Shareholders. The shares to be issued to the Vapir Shareholders shall constitute 80% of our issued and outstanding shares of common stock as of and immediately after the consummation of the Exchange Agreement.

Upon closing of the Exchange Agreement, Vapir became our wholly owned subsidiary and we have ceased our prior operations.

A copy of the final, fully executed copy of the Exchange Agreement is attached hereto as Exhibit 2.1.

For additional information with respect to the Exchange Agreement and the business of the acquired entity, please see the disclosures set forth in Item 2.01 to this Current Report, which disclosures are incorporated into this item by reference.

Change of Business and Sale of ownership interest in FAL Minerals and Land in Alabama

In November 2013, the Company entered into a Real Estate Purchase and Sale Agreement (the “November 2013 Land Sale”) with certain sellers (the “November 2013 Sellers”) for the sale of real estate properties located in Clay County, Alabama. The purchase price was $400,000 and was paid as follows:

	(a)	issue of 160,000 shares of common stock of the Company (the “November 2013 Land Sale Shares”); and

	(b)	a promissory note (the “November 2013 Land Sale Note”) in the original principal amount of $200,000, payable to Seller bearing interest at the lowest imputed rate, with no payments of principal or interest due or payable until the 36 month after Closing (the “Maturity Date”).

In connection with the Exchange Agreement and our new business as a vaporizer company, we decided to sell our ownership in the real estate that we purchased in the November 2013 Land Sale. On December 11, 2014, we closed on the sale of the 2 properties located in Clay County, Alabama that we purchased in November 2013 Land Sale. The proceeds we received from the sale of the 2 properties were used to: (i) pay any taxes owed on the land and legal fees associated with the sale; and (ii) pay-off the November 2013 Sellers. In exchange for the payment, the November 2013 Sellers agreed to forgive any outstanding amounts due on the November 2013 Land Sale Note and return the November 2013 Land Sale Shares that were issued in connection with the November 2013 Land Sale.

Additionally, on December 30, 2014, we returned our 19.6% membership interest in FAL Minerals, LLC because we are no longer in the business of land exploration and will not be participating in the operations of this entity.

Item 2.01

Completion of Acquisition or Disposition of Assets

On December 30, 2014, we entered into the Exchange Agreement with Vapir. Pursuant to the terms and conditions of the Exchange Agreement, we acquired all of the outstanding shares of Vapir and we issued a total of 38,624,768 shares of our common stock to the shareholders of Vapir, which constitutes 80% of the total issued and outstanding shares of our common stock immediately following the closing.

After the closing of the Exchange Agreement, our capitalization of the Company is as follows:

Shareholder	# of Shares Owned		Percentage Ownership
Vapir Executives		38,624,768		80.00	%
Whalehaven Capital Fund Ltd.(1)		5,751,230		12.15	%
Adam Kotkin		1,200,000		2.53	%

Total Outstanding		48,280,960

(1)

Beneficial ownership of the securities is held by Elizabeth Leonard and Michael Finkelstein.

The purposes of the transactions described in this Current Report were to complete a reverse merger with the result being that Vapir became a wholly-owned subsidiary.

The foregoing description of the Exchange Agreement, closing and related transactions does not purport to be complete and is qualified in its entirety by reference to the complete text of the Exchange Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K.

Following the Exchange Agreement, as of the date of this current report on Form 8-K, there are 48,280,960 shares of our common stock issued and outstanding. As a result, our pre-merger stockholders hold Twenty Percent (20%) of our issued and outstanding shares of common stock.

The shares of common stock issued to the former stockholders of Vapir in connection with the Exchange Agreement were not registered under the Securities Act of 1933, as amended (the “Securities Act”), and were issued in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act and Regulation D promulgated thereunder, which exempts transactions by an issuer not involving any public offering. These securities may not be offered or sold absent registration or an applicable exemption from the registration requirements. We have not committed to registering these shares for resale. Certificates representing these shares contain a legend stating the restrictions applicable to such shares.

On December 30, 2014, we closed on the Exchange Agreement and filed a Super 8-K that contained current “Form 10 information” regarding the business operations of Vapir, Inc.

Changes to the Business. We intend to carry on Vapir’s business as our sole line of business. We have relocated our executive offices to 2365 Paragon Dr. Suite B, San Jose, Ca, and our telephone number is (800) 841-1022.

Accounting Treatment. The Exchange Agreement is being accounted for as a reverse merger and recapitalization and Vapir is deemed to be the acquirer in the reverse merger for accounting purposes. Consequently, the assets and liabilities and the historical operations of the Company that will be reflected in the financial statements prior to the closing will be those of Vapir, and the consolidated financial statements of the Company after completion of the reverse merger will include the assets and liabilities of Vapir, historical operations of Vapir and operations of Vapir from the Closing Date of the Exchange Agreement.

Tax Treatment. The reverse merger is intended to constitute a tax-deferred exchange of property governed by Section 351 of the United States Internal Revenue Code of 1986, as amended (the “Code”), or such other tax free reorganization or restructuring provisions as may be available under the Code. Any gain required to be recognized will be subject to regular individual or corporate federal income taxes, as the case may be.

DESCRIPTION OF BUSINESS

Vapir, Inc. was incorporated on October 26, 2006 in the State of California. Vapir, Inc. specializes in the revolutionary technology of digital aromatherapy which is the art and science of utilizing naturally extracted aromatic essences from plants to balance and harmonize while freshening the environment with pleasant and distinctive fragrances. We invent, develop and produce revolutionary and easy to use digital aromatherapy devices. The unique value proposition of the Company’s proprietary technology (US Patent 6,095,153) is to prevent the creation of toxic by-products whenever plant materials are inhaled. This is accomplished by using convection heat that induces the safe release of plant essences without burning the source material.

Corporate History

We were originally incorporated under the laws of the State of Nevada on December 17, 2009 under the name Apps Genius Corp. Our original business was to develop, market, publish and distribute social games and software applications that consumers could use on a variety of platforms, including social networks, wireless devices and stand-alone websites. We were unsuccessful in operating our business and on October 7, 2013 we entered into a Membership Interest Purchase Agreement with FAL Minerals LLC and we changed our name to FAL Exploration Corp. The agreement with FAL Minerals LLC has since been terminated and we have now entered into the Exchange Agreement with Vapir, Inc. and its shareholders.

In anticipation of closing the Exchange Agreement, on September 17, 2014, we changed our name to Vapir Enterprises, Inc. to better represent our new business operations.

Our Industry

“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. Electronic cigarettes look like traditional cigarettes and, regardless of their construction are comprised of three functional components:

	●	a mouthpiece, which is a small plastic cartridge that contains a liquid nicotine solution;
	●	the heating element that vaporizes the liquid nicotine so that it can be inhaled; and
	●	the electronics, which include: a lithium-ion battery, an airflow sensor, a microchip controller and an LED, which illuminates to indicate use.

When a user draws air through the electronic cigarette and or vaporizer, the air flow is detected by a sensor, which activates a heating element that vaporizes the solution stored in the mouthpiece/cartridge, the solution is then vaporized and it is this vapor that is inhaled by the user. The cartridge contains either a nicotine solution or a nicotine free solution, either of which may be flavored.

Our Products

Vaporizers

We offer 4 vaporizers, the VapirRise, VAPIR NO2 Portable Digital Vaporzier, VAPIR ONE, and VAPIR Oxygen Mini Corded Vaporizer.

VapirRise

VapirRise Vaporizer body

The VapirRise is designed for loose-leaf herbs and essential oils. It supports both balloon inflation and direct inhalation. It can serve up to 4 users simultaneously. It has touch pad controls, an LCD temperature display and medical grade stainless steel vapir path and a ceramic heating element.

As the ceramic heating element of the device reaches the pre-set temperature, a fan blows air through the heating element. A sensor, which is located in the chamber of the unit, will constantly monitor the air temperature and maintain pre-set heat levels by turning the heating element on and off as needed. Once the optimal temperature is reached, a green light on the casing will indicate that the device is now ready. This relatively simple technology enables the vaporizers to maintain heat levels.

This convection vaporizer is a stationary desktop model – which means it isn’t intended for on-the-go consumption. The VapirRise offers an exceptional approach to the at-home vaporization experience.

Users can control the temperature (in both degrees Celsius & Fahrenheit); control the Fan Speed (ten options including a fanless setting!); pick between a balloon or hose inhalation methods; and choose to serve up to four people at once with the exclusive hookah adapter.

VAPIR NO2 Portable Digital Vaporizer

NO2- Vaporizer

The VAPIR NO2 is designed for loose-leaf herbs and direct inhalation. It is compact, portable and rechargeable. It has a medical grade pure brass element, an LCD temperature display and a silent operation. The VAPIR NO2 will be your number one portable vaporizer.

This compact portable vaporizer features touch-to-heat digital controls, an LCD thermostat, an internal rechargeable battery, and 100% silent operation. The NO2 vaporizer is designed for use with raw herbs and heats up in less than a minute. You can even vaporize while it’s charging.

The NO2 requires little to no maintenance for optimal operation and it even remembers your favorite temperature settings for quick and consistent vapor at the touch of a button.

VAPIR ONE

one

The VAPIR ONE is designed for loose-leaf herbs. It supports both balloon inflation and direct inhalation. It has a medical grade ceramic heating element and an LCD temperature display.

The vaporizers include removable disks that hold the source material and need to be inserted into device prior to pre heating the vaporizers. Temperatures and safety times can be set individually according to the manufacturer’s recommendations. This process prevents the waste of source material, titrates dosages, and ensures that the vaporizers work at optimum conditions.

The Vapir One has digital temperature controls, swift heat up time, and mind-blowing vapor flavor with every puff. We designed this desktop vaporizer to require little to no maintenance for consistent vapor clouds and premium sessions.

Once the user starts using the device, the fan will blow hot air through the disk filled with the source material. This aerosol now contains hot air that is enriched with the active elements, flavor, aroma, and pure essence of the source material. The aerosol will then reach an internal cooling chamber where the vapors are cooled to a level that is safe for the consumer to inhale. The consumer will then inhale the warm and rich vapors through a tube, which also serves as the final cooling process before the vapors reach the human lungs.

VAPIR OXYGEN MINI CORDED

The VAPIR Oxygen Mini Corded is designed for loose-leaf herbs and direct inhalation. It is small and lightweight and is a corded vaporizer. It has an LCD temperature display and silent operation. Every portable vaporizer needs to produce clouds – not a mere mist! The Vapir Oxygen lets you live and breathe premium vapor. This herbal vaporizer harnesses premium materials and innovative design to deliver everything you’d expect from a premium vaporizer.

Our Oxygen Vaporizer features digital controls, portable design, and consistent vapor sessions with little maintenance.

Our Vaporizers and Accessories

Our vaporizers are sold with all the essentials that are needed to begin the vaporizing experience. In addition or vaporizers, we sell approximately 100 accessories that range from replacement batteries, replacement mouthpieces, recharging pieces, cleaning utensils and all other essentials.

Additionally, we offer an assortment of our own aromatherapy oils and herbs for our vaporizer users to enjoy.

Seasonality of our Business

We do not consider our business to be seasonal.

Marketing

We offer our vaporizers and related products through our online stores, to retail channels through our direct sales force, and through third party wholesalers, retailers and value-added resellers. Retailers of our products include small-box discount retailers, big-box retailers, gas stations, drug stores, convenience stores, tobacco shops and kiosk locations in shopping malls throughout the United States.

Competition

Competition in the vaporizer industry is intense. We compete with other sellers of vaporizers that are similar to our products and our competitors use the same sales practices and marketing strategies as we use.

The nature of our competitors is varied as the market is highly fragmented and the barriers to entry into the business are low. Our direct competitors sell products that are substantially similar to ours and through the same channels through which we sell our vaporizers. We compete with these direct competitors for sales through distributors, wholesalers and retailers, including but not limited to national chain stores, gas stations, travel stores, shopping mall kiosks, in addition to direct to public sales through the internet, mail order and telesales.

As a general matter, we have access to and market and sell the similar products as our competitors and since we sell our products at substantially similar prices as our competitors; accordingly, the key competitive factors for our success is the quality of service we offer our customers, the scope and effectiveness of our marketing efforts, including media advertising campaigns and, increasingly, the ability to identify and develop new sources of customers.

Regulatory Matters/Compliance

The United States Food and Drug Administration (the “FDA”) regulates electronic cigarettes as “tobacco products” under the Family Smoking Prevention and Tobacco Control Act of 2009 (the “Tobacco Control Act”). The FDA is not permitted to regulate electronic cigarettes as “drugs” or “devices” or a “combination product” under the Federal Food, Drug and Cosmetic Act unless they are marketed for therapeutic purposes.

Our vaporizers are classified as “tobacco products” under the Tobacco Control Act. The Tobacco Control Act grants the FDA broad authority over the manufacture, sale, marketing and packaging of tobacco products, although the FDA is prohibited from issuing regulations banning all cigarettes or all smokeless tobacco products, or requiring the reduction of nicotine yields of a tobacco product to zero.

The Tobacco Control Act imposes significant new restrictions on the advertising and promotion of tobacco products. The law also requires the FDA to issue future regulations regarding the promotion and marketing of tobacco products sold or distributed over the internet, by mail order or through other non-face-to-face transactions in order to prevent the sale of tobacco products to minors.

It is likely that the Tobacco Control Act could result in a decrease in tobacco product sales in the United States, including sales of our electronic cigarettes and vaporizers.

The Tobacco industry expects significant regulatory developments to take place over the next few years, driven principally by the World Health Organization’s Framework Convention on Tobacco Control (“FCTC”). The FCTC is the first international public health treaty on tobacco, and its objective is to establish a global agenda for tobacco regulation with the purpose of reducing initiation of tobacco use and encouraging cessation. Regulatory initiatives that have been proposed, introduced or enacted include:

	●	the levying of substantial and increasing tax and duty charges;
	●	restrictions or bans on advertising, marketing and sponsorship;
	●	the display of larger health warnings, graphic health warnings and other labeling requirements;
	●	restrictions on packaging design, including the use of colors and generic packaging;
	●	restrictions or bans on the display of tobacco product packaging at the point of sale, and restrictions or bans on cigarette vending machines;
	●	requirements regarding testing, disclosure and performance standards for tar, nicotine, carbon monoxide and other smoke constituents levels;
	●	requirements regarding testing, disclosure and use of tobacco product ingredients;
	●	increased restrictions on smoking in public and work places and, in some instances, in private places and outdoors;
	●	elimination of duty free allowances for travelers; and
	●	encouraging litigation against tobacco companies.

If electronic cigarettes or vaporizers are subject to one or more significant regulatory initiatives, our business, results of operations and financial condition could be materially and adversely affected.

Intellectual Property

Patents

We currently own three domestic utility patents and two design patents relating to vaporizers, as well as two utility patent applications and one design application pending in the United States as described below. There is no assurance that we will be awarded patents for of any of these pending patent applications.

U.S. Patent # 6,095,153 - Vaporization of volatile materials

We have a patent for the vaporization of volatile materials while avoiding combustion and denaturation of such material provide an alternative to combustion as means of volatilizing bioactive and flavor compounds to make such compounds available for inhalation without generating toxic or carcinogenic substances that are by-products of combustion and pyrolysis.

U.S. Patent # 6,772,756 - Method and System for Vaporization of a Substance

We have a patent for an apparatus for the vaporization of materials that releases active constituents for inhalation without the creation of harmful byproducts such as carcinogens associated with combustion and inhalation of substances.

U.S. Patent # 6,990,978 - Method and System for Vaporization of a Substance

U.S. Design Patent # 489,448 - Vaporization Apparatus

We have a patent for the ornamental design for the vaporization apparatus.

U.S. Design Patent # 508,119 – Mesh Filter with Glass Insert

We have a patent for the ornamental design for a component for a vaporizer.

U.S. Patent Application # 11/872,040 - Method and System for Vaporization of a Substance

We have a patent pending for an apparatus for the vaporization of materials that releases active constituents for inhalation without the creation of harmful byproducts such as carcinogens associated with combustion and inhalation of substances.

U.S. Patent # 14/254,723 - Multi-User Inhalation Adaptor

We have a patent pending for a component of a vaporizer that allows multiple users to inhale the vapors of materials.

U.S. Design Patent # 29/473,910 - Vaporizer

We have a patent for the ornamental design for the vaporization apparatus.

Trademarks

We own trademarks on certain of our products, including: Vapormed^®, Digital Air^®, Nicohale^®, and Vapir^®.

Employees

As of December 30, 2014, we have seven (7) full-time employees. None of these employees are represented by collective bargaining agreements and the Company considers it relations with its employees to be good.

Properties

The Company’s corporate headquarters is located in California. The Company currently leases space located at 2365 Paragon Dr., Suite B, San Jose, Ca, 95131.

This is our only location. We have a lease for the property that commenced on May 1, 2013 and has a term of two years and six months and will expire on October 31, 2015. The lease is for 5,050 square feet of office space. We pay $3,787.50 per month for the leased premises.

Corporation Information

Our principal executive offices are located at 2365 Paragon Dr., Suite B San Jose, Ca, 95131. Our telephone number is (800) 841-1022. Our website is www.vapir.com.

LEGAL PROCEEDINGS

From time to time, the Company is involved in litigation matters relating to claims arising from the ordinary course of business. While the results of such claims and legal actions cannot be predicted with certainty, the Company’s management does not believe that there are claims or actions, pending or threatened against the Company, the ultimate disposition of which would have a material adverse effect on our business, results of operations, financial condition or cash flows.

Notwithstanding the foregoing, on November 3, 2014, Vapir was served with a lawsuit from Storz & Bickel, a German competitor of Vapir. The lawsuit claims patent infringement of Storz & Bickel’s German patent no DE 198 03 376 C1. The lawsuit was filed in Germany with the regional court of Mannheim. The lawsuit alleges estimated damages in the amount of €750,000 euros. Vapir has filed a notice of its intent to defend the lawsuit and has filed an answer to the complaint requesting additional time. The lawsuit is still ongoing and Vapir is working to settle the matter.

Additionally, on October 15, 2014, Storz & Bickel have filed a lawsuit with the United States District Court, Central District of California against Vapir alleging patent infringement of Storz & Bickel’s US patent no. 6,513,524, which is the US counterpart to the German patent. The US District lawsuit seeks injunction against distribution of Vapir’s VapiRise product, damages, interest, costs, treble damages, and attorney’s fees.

Storz & Bickel have not yet served the US District lawsuit; Storz & Bickel’s US counsel have contacted Vapir to initiate settlement discussion, but it is anticipated that Storz & Bickel will serve the US District complaint if settlement discussions are not productive.

The Company may be subject to legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business. While the outcome of these claims cannot be predicted with certainty, we do not believe that any of the outcomes will have a material effect on our operations.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the results of operations and financial condition of Vapir for the fiscal years ended December 31, 2013 and 2012, should be read in conjunction with the Selected Financial Data, Vapir’s financial statements, and the notes to those financial statements that are included elsewhere in this Current Report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Cautionary Notice Regarding Forward-Looking Statements and Business sections in this Current Report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

Overview

We were originally incorporated under the laws of the State of Nevada on December 17, 2009 under the name Apps Genius Corp. Our original business was to develop, market, publish and distribute social games and software applications that consumers could use on a variety of platforms, including social networks, wireless devices and stand alone websites. We were unsuccessful in operating our business and on October 7, 2013 we entered into a Membership Interest Purchase Agreement with FAL Minerals LLC and we changed our name to FAL Exploration Corp. The agreement with FAL Minerals LLC has since been terminated and we have now entered into the Exchange Agreement with Vapir, Inc. and its shareholders. In addition, we changed our name to Vapir, Inc. to better represent our new business operations.

Vapir, Inc. was incorporated on October 26, 2006 in the State of California.

Vapir, Inc. specializes in the revolutionary technology of digital aromatherapy which is the art and science of utilizing naturally extracted aromatic essences from plants to balance and harmonize while freshening the environment with pleasant and distinctive fragrances. We invent, develop and produce revolutionary and easy to use digital aromatherapy devices by utilizing heat and convection air.

Nine Months Ended September 30, 2014 Compared to the Nine Months Ended September 30, 2013

	For the Nine Months Ended
	September 30, 2014			September 30, 2013
	(Unaudited)			(Unaudited)

Net Sales	$	1,136,886		$	1,962,883

Cost of sales		564,124			1,001,497

Gross profit		572,762			961,386

OPERATING EXPENSES:
Depreciation and amortization		73,435			55,613
Marketing and selling expenses		41,467			63,346
Compensation		516,587			392,430
Professional fees		47,573			12,486
Research and development		54,039			80,766
Rent		57,894			55,016
General and administrative		189,854			206,810

Total Operating Expenses		980,849			866,467

(LOSS) INCOME FROM OPERATIONS		(408,087	)		94,919

OTHER INCOME (EXPENSE):
Interest expense		(11,458	)		(23,359	)

Total Other Expense		(11,458	)		(23,359	)

(LOSS) INCOME BEFORE INCOME TAXES		(419,545	)		71,560

PROVISION FOR INCOME TAXES		-			-

NET (LOSS) INCOME	$	(419,545	)	$	71,560

Net Sales

Sales, net for the nine months ended September 30, 2014 and 2013 were $1,136,886 and $1,962,883, respectively, a decrease of $825,997 or approximately 42%. The decrease in sales is primarily attributable to a delay in our new product release.

Cost of Sales

Cost of goods sold for the nine months ended September 30, 2014 and 2013 were $564,124 and $1,001,497, respectively, a decrease of $437,373, or approximately 44%. The decrease is primarily due to the decrease in our revenue and a higher margin from our website sales.

Operating Expenses

Total operating expenses for the nine months ended September 30, 2014 and 2013 were $980,849 and $866,467, respectively, an increase of $114,382, or approximately 13%. The increase is primarily due to higher expenses for salaries for qualified people to work on our new product and increased legal fees due to patent litigation.

Net (loss) Income

Net (loss) income for the nine months ended September 30, 2014 and 2013 was ($419,545) and $71,560, respectively, as a result of the items discussed above.

Year Ended December 31, 2013 Compared to the Year Ended December 31, 2012

	For the Year Ended
	December 31, 2013			December 31, 2012

Net Sales	$	3,053,752		$	4,070,025

Cost of sales		1,546,821			2,242,393

Gross profit		1,506,931			1,827,632

OPERATING EXPENSES:
Depreciation and amortization		74,151			73,940
Marketing and selling expenses		76,075			50,975
Compensation		533,702			588,463
Professional fees		15,828			57,294
Research and development		88,847			13,658
Rent		72,966			77,017
General and administrative		303,677			275,467

Total Operating Expenses		1,165,246			1,136,814

INCOME FROM OPERATIONS		341,685			690,818

OTHER INCOME (EXPENSE):
Interest expense		(33,167	)		(39,892	)
Interest income		1			195

Total Other Income (Expense)		(33,166	)		(39,697	)

INCOME BEFORE INCOME TAXES		308,519			651,121

PROVISION FOR INCOME TAXES		-			-

NET INCOME	$	308,519		$	651,121

Net Sales

Sales, net for the years December 31, 2013 and 2012 were $3,053,752 and $4,070,025, respectively, a decrease of $1,016,273 or approximately 25%. The decrease in sales is primarily attributable to a delay in the release of our new product.

Cost of Sales

Cost of sales for the years ended December 31, 2013 and 2012 was $1,546,821 and $2,242,393, respectively, a decrease of $695,572, or 31%. The decrease is primarily due to a decrease in our revenue and a higher margin from our website sales.

Operating Expenses

Total operating expenses for the years ended December 31, 2013 and 2012 were $1,165,246 and $1,136,814, respectively, an increase of $27,432, or approximately 3%. The increase is primarily due to higher expenses for salaries for qualified people to work on our new product and increased legal fees due to patent litigation.

Net Income

Net income for the years ended December 31, 2013 and 2012 were $308,519 and $651,121, respectively, a decrease of $342,602 as a result of the items discussed above.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis.

We are not aware of any known trends or any known demands, commitments or events that will result in our liquidity increasing or decreasing in any material way. We are not aware of any matters that would have an impact on future operations.

Our net revenues are not sufficient to fund our operating expenses. At September 30, 2014 we had a cash balance of $0 and working capital deficit of $418,122. During the nine months ended September 30, 2014, we borrowed an additional $21,000 of loans to fund our operating expenses, pay our obligations, and grow our company. We currently have no material commitments for capital expenditures. We may be required to raise additional funds, particularly if we are unable to generate positive cash flow as a result of our operations. We estimate that based on current plans and assumptions, that our cash will not be sufficient to satisfy our cash requirements under our present operating expectations, without further financing, for up to 12 months. We presently have no other alternative source of working capital. We may not have sufficient working capital and net revenues to fund the expansion of our operations and to provide working capital necessary for our ongoing operations and obligations. We will need to raise significant additional capital to fund our operating expenses, pay our obligations, and grow our company. Therefore our future operations will be dependent on our ability to secure additional financing. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital will restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we will likely be required to curtail our marketing and development plans and possibly cease our operations.

We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern.

Our liquidity may be negatively impacted by the significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly.

Inflation and Changing Prices

Neither inflation nor changing prices for the nine months ended September 30, 2014 had a material impact on our operations.

Off-Balance Sheet Arrangements

None.

Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires our management to make assumptions, estimates, and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. Significant matters requiring the use of estimates and assumptions include, but may not be limited to, accounts receivable allowances and evaluation of impairment of long lived assets. Management believes that its estimates and assumptions are reasonable, based on information that is available at the time they are made.

Revenue recognition

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

RISK FACTORS

Risks Related to Our Business

The recent development of vaporizers has not allowed the medical profession to study the long-term health effects of vaporizer use.

Because vaporizers were recently developed the medical profession has not had a sufficient period of time to study the long-term health effects of vaporizer use. Currently, therefore, there is no way of knowing whether or not vaporizers are safe for their intended use. If the medical profession were to determine conclusively that vaporizer usage poses long-term health risks, vaporizer usage could decline, which could have a material adverse effect on our business, results of operations and financial condition.

The market for vaporizers is a niche market, subject to a great deal of uncertainty and is still evolving.

Vaporizers, having recently been introduced to market, are at an early stage of development, represent a niche market and are evolving rapidly and are characterized by an increasing number of market entrants. Our future sales and any future profits are substantially dependent upon the widespread acceptance and use of vaporizers. Rapid growth in the use of, and interest in, vaporizers is recent, and may not continue on a lasting basis. The demand and market acceptance for these products is subject to a high level of uncertainty.

Therefore, we are subject to all of the business risks associated with a new enterprise in a niche market, including risks of unforeseen capital requirements, failure of widespread market acceptance of vaporizers, in general or, specifically our products, failure to establish business relationships and competitive disadvantages as against larger and more established competitors.

Vaporizers face intense media attention and public pressure.

Vaporizers are new to the marketplace and since their introduction certain members of the media, politicians, government regulators and advocate groups, including independent medical physicians have called for an outright ban of all vaporizers, pending regulatory review and a demonstration of safety. A partial or outright ban would have a material adverse effect on our business, results of operations and financial condition.

We may experience product liability claims in our business, which could adversely affect our business.

We may experience product liability claims from the marketing and sale of vaporizers. Any product liability claim brought against us, with or without merit, could result in:

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liabilities that substantially exceed our product liability insurance, which we would then be required to pay from other sources, if available;

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an increase of our product liability insurance rates or the inability to maintain insurance coverage in the future on acceptable terms, or at all;

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damage to our reputation and the reputation of our products, resulting in lower sales;

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regulatory investigations that could require costly recalls or product modifications;

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litigation costs; and

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the diversion of management’s attention from managing our business.

Any one or more of the foregoing could have a material adverse effect on our business, results of operations and financial condition.

If we experience product recalls, we may incur significant and unexpected costs and our business reputation could be adversely affected.

We may be exposed to product recalls and adverse public relations if our products are alleged to cause illness or injury, or if we are alleged to have violated governmental regulations. A product recall could result in substantial and unexpected expenditures that could exceed our product recall insurance coverage limits and harm to our reputation, which could have a material adverse effect on our business, results of operations and financial condition. In addition, a product recall may require significant management time and attention and may adversely impact on the value of our brands. Product recalls may lead to greater scrutiny by federal or state regulatory agencies and increased litigation, which could have a material adverse effect on our business, results of operations and financial condition.

Product exchanges, returns and warranty claims may adversely affect our business.

If we are unable to maintain an acceptable degree of quality control of our products we will incur costs associated with the exchange and return of our products as well as servicing our customers for warranty claims. Any of the foregoing on a significant scale may have a material adverse effect on our business, results of operations and financial condition.

We may be unable to promote and maintain our brands.

We believe that establishing and maintaining the brand identities of our products is a critical aspect of attracting and expanding a large customer base. Promotion and enhancement of our brands will depend largely on our success in continuing to provide high quality products. If our customers and end users do not perceive our products to be of high quality, or if we introduce new products or enter into new business ventures that are not favorably received by our customers and end users, we will risk diluting our brand identities and decreasing their attractiveness to existing and potential customers.

Moreover, in order to attract and retain customers and to promote and maintain our brand equity in response to competitive pressures, we may have to increase substantially our financial commitment to creating and maintaining a distinct brand loyalty among our customers. If we incur significant expenses in an attempt to promote and maintain our brands, our business, results of operations and financial condition could be adversely affected.

Key employees are essential to expanding our business.

Hamid Emarlou, our Chief Executive Officer, is essential to our ability to continue to grow and expand our business. They have established relationships within the industry in which we operate. If either were to leave us, our growth strategy might be hindered, which could materially affect our business and limit our ability to increase revenue.

The Company may lose its top management without employment agreements.

Our operations depend substantially on the skills, knowledge and experience of the present management. The Company has no other full or part-time individuals devoted to the development of our Company. Furthermore, the Company does not maintain key man life insurance. Without an employment contract, we may lose the present management of the Company to other pursuits without a sufficient warning and, consequently, we may be forced to terminate our operations.

We do not have a majority of independent directors serving on our board of directors, which could present the potential for conflicts of interest.

After the Closing of the Exchange Agreement, Hamid Emarlou, Masoud Shahidi and Adam Kotkin are our directors. As a result, we do not have a majority of independent directors serving on our Board. In the absence of a majority of independent directors, our executive officers could establish policies and enter into transactions without independent review and approval thereof. This could present the potential for a conflict of interest between us and our stockholders, generally, and the controlling officers, stockholders or directors.

If we are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, cause investors to lose confidence in our reported financial information and have a negative effect on the market price for shares of our Common Stock.

Effective internal controls are necessary for us to provide reliable financial reports and to effectively prevent fraud. We maintain a system of internal control over financial reporting, which is defined as a process designed by, or under the supervision of, our principal executive officer and principal financial officer, or persons performing similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

As a public company, we will have significant requirements for enhanced financial reporting and internal controls. We will be required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which requires annual management assessments of the effectiveness of our internal controls over financial reporting. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company.

We cannot assure you that we will not, in the future, identify areas requiring improvement in our internal control over financial reporting. We cannot assure you that the measures we will take to remediate any areas in need of improvement will be successful or that we will implement and maintain adequate controls over our financial processes and reporting in the future as we continue our growth. If we are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, cause investors to lose confidence in our reported financial information and have a negative effect on the market price for shares of our Common Stock.

Lack of experience as officers of publicly-traded companies of our management team may hinder our ability to comply with Sarbanes-Oxley Act.

Following the Closing of the Exchange Agreement, it may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal controls and other finance staff or consultants in order to develop and implement appropriate internal controls and reporting procedures.

We may have additional tax liabilities that exceed our estimates.

We are subject to federal taxes and a multitude of state and local taxes in the United States and taxes in foreign jurisdictions. In the ordinary course of our business, there are transactions and calculations where the ultimate tax determination is uncertain. We are regularly subject to audit by tax authorities. And, we currently have tax liens related to unpaid payroll taxes on our business. The final determination of tax audits and any related litigation and the current tax liens could be materially different from our historical tax provisions and accruals. The results of an audit or litigation could materially harm our business.

Risks Related to Government Regulation

Changes in laws, regulations and other requirements could adversely affect our business, results of operations or financial condition.

In addition to the anticipated regulation of our business by the FDA, our business, results of operations or financial condition could be adversely affected by new or future legal requirements imposed by legislative or regulatory initiatives, including, but not limited to, those relating to health care, public health and welfare and environmental matters. For example, in recent years, states and many local and municipal governments and agencies, as well as private businesses, have adopted legislation, regulations or policies which prohibit, restrict, or discourage smoking; smoking in public buildings and facilities, stores, restaurants and bars; and smoking on airline flights and in the workplace. New legislation or regulations may result in increased costs directly for our compliance or indirectly to the extent such requirements increase the prices of goods and services because of increased costs or reduced availability. We cannot predict whether such legislative or regulatory initiatives will result in significant changes to existing laws and regulations and/or whether any changes in such laws or regulations will have a material adverse effect on our business, results of operations or financial condition.

Restrictions on the public use of vaporizers may reduce the attractiveness and demand for our products.

Should city, state or federal regulators, municipalities, local governments and private industry likewise restrict the use of vaporizers in those same places where cigarettes cannot be smoked, our customers may reduce or otherwise cease using our products, which would have a material adverse effect on our business, results of operations and financial condition.

Risks Related to Our Securities

There is currently a limited market for our common stock.

There is currently a limited market for our common stock. An active trading market for our common stock may never develop or, if developed, it may not be maintained. Our shareholders may be unable to sell their securities unless an active market can be established or maintained.

The market price of our common stock may be volatile.

The market price of our common stock has been and will likely continue to be highly volatile, as is the stock market in general, and the market for OTC Bulletin Board quoted stocks in particular. Some of the factors that may materially affect the market price of our common stock are beyond our control, such as changes in financial estimates by industry and securities analysts, conditions or trends in the industry in which we operate or sales of our common stock. These factors may materially adversely affect the market price of our common stock, regardless of our performance. In addition, the public stock markets have experienced extreme price and trading volume volatility. This volatility has significantly affected the market prices of securities of many companies for reasons frequently unrelated to the operating performance of the specific companies. These broad market fluctuations may adversely affect the market price of our common stock.

Because we were engaged in a reverse merger, it may not be able to attract the attention of major brokerage firms.

Additional risks may exist since we were engaged in a “reverse merger.” Securities analysts of major brokerage firms may not provide coverage of the Company since there is little incentive to brokerage firms to recommend the purchase of the common stock. No assurance can be given that brokerage firms will want to conduct any secondary offerings on behalf of the Company in the future.

Our common stock will be considered a “penny stock.”

The SEC has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock is currently less than $5.00 per share and therefore may be a “penny stock.” Brokers and dealers effecting transactions in “penny stock” must disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell our common stock and may affect your ability to sell shares.

The market for penny stocks has experienced numerous frauds and abuses which could adversely impact investors in our stock.

OTCBB securities are frequent targets of fraud or market manipulation, both because of their generally low prices and because OTCBB reporting requirements are less stringent than those of the stock exchanges or NASDAQ.

Patterns of fraud and abuse include:

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Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;

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Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;

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“Boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;

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Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and

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Wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

Our management is aware of the abuses that have occurred historically in the penny stock market.

We have not paid dividends in the past and do not expect to pay dividends in the future, and any return on investment may be limited to the value of our stock.

We have never paid any cash dividends on our common stock and do not anticipate paying any cash dividends on our common stock in the foreseeable future and any return on investment may be limited to the value of our common stock. We plan to retain any future earning to finance growth.

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the names and ages of officers and director as of December 30, 2014. Our executive officers are elected annually by our Board of Directors. Our executive officers hold their offices until they resign, are removed by the Board, or his successor is elected and qualified.

Name	Age	Position
Hamid Emarlou	54	Chief Executive Officer & President
Adam Kotkin	34	Director
Masoud Shahidi	72	Director
Dr Shadi Shayegan, DMD	44	Corporate Secretary

Set forth below is a brief description of the background and business experience of our executive officers for the past five years.

Hamid Emarlou, age 54, CEO & President

Hamid Emarlou, an accomplished Senior Level Executive, with over 25 years of driving process improvement, increasing revenues, and building top performing management infrastructures is currently the CEO and president at Vapir Inc. Prior to forming and managing Vapir Inc, from 2005 until 2007, Mr. Emarlou forged a successful career as Vice President of Global operations with Wyse Technology, a leading developer of Thin Client computers. From 1982 until 2003, Mr. Emarlou worked as Vice President of Operations at Solectron Corporation, a leading electronics service provider and manufacturer.

Mr. Emarlou was a sitting board member of the Associated Industries of Massachusetts and Center for Quality management at Cambridge Massachusetts.

Dr Shadi Shayegan, age 44, Corporate Secretary

Prior to joining Vapir Inc., Dr. Shayegan practiced dentistry in Worcester Massachusetts. Dr. Shayegan is an officer at Vapir Inc. She advises CEO, Hamid Emarlou, on health aspects of vaporization and aromatherapy product development. She formed the "Health and Safety" committee that oversees and approves materials used in the development of Vapir Inc. products.

Dr. Shayegan studied Microbiology as her undergraduate major and furthered her education at Boston University and earned her doctorate in dentistry.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information regarding beneficial ownership of our common stock as of the date of closing (assuming the closing of the Exchange Agreement has been consummated) by (i) each person (or group of affiliated persons) who is known by us to own more than five percent of the outstanding shares of our common stock, (ii) each director, executive officer and director nominee, and (iii) all of our directors, executive officers and director nominees as a group. Immediately following the closing of the Exchange Agreement, we have 48,280,960 shares of common stock issued and outstanding.

Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. All share ownership figures include shares of our Common Stock issuable upon securities convertible or exchangeable into shares of our Common Stock within sixty (60) days of the Merger, which are deemed outstanding and beneficially owned by such person for purposes of computing his or her percentage ownership, but not for purposes of computing the percentage ownership of any other person.

Name and Address	Beneficial Ownership		Percentage of Class (1)
Hamid Emarlou 18188 Wagner Road, Los Gatos, CA 95032		38,624,768		80	%
Shadi Shayegan 18188 Wagner Road, Los Gatos, CA 95032		0		*
Adam Kotkin		1,200,000		2.49	%
All officers/directors as a group (2 persons)		39,077,408
Whalehaven Capital Fund Ltd.		5,751,230		11.91	%

	*	Represents less than 1% ownership.
	(1)	Based on 48,280,960 shares of common stock outstanding.

We are not aware of any arrangement, including any pledge by any person of securities of the registrant or any of its parents, the operation of which may at a subsequent date result in a change in control of the registrant.

EXECUTIVE COMPENSATION

The following table sets forth information regarding each element of compensation that was paid or awarded to the named executive officers of Vapir for its fiscal year ended December 31, 2013 and 2012:

Name and Principal Position	Year	Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		All Other Compensation ($)		Total ($)
Hamid Ermalou	2013	$	150,000		-		-		-		-		-	$	150,000
President and Chief Executive Officer	2012	$	150,000		-		-		-		-		-	$	150,000

Employment Agreements

We have not entered into employment agreements with our officers and directors. Additionally, we have not approved any retirement benefit plan, termination or severance provisions for any of our named executive officers.

Outstanding Equity Awards at Fiscal Year-End

There were no outstanding equity awards held by any of our officers as of December 31, 2013.

On September 23, 2010, the Company’s board of directors adopted, and the Company’s stockholders approved the Apps Genius Corp Equity Incentive Plan (the “Plan”), which covers 5,000,000 shares of common stock. The purpose of the Plan is to advance the interests of the Company by enhancing the ability of the Company to (i) attract and retain employees and other persons or entities who are in a position to make significant contributions to the success of the Company and its subsidiaries; (ii) reward such persons for such contributions; and (iii) encourage such persons or entities to take into account the long-term interest of the Company through ownership of shares of the Company’s common stock, par value $0.0001 per share. The Plan became effective on September 23, 2010 and will terminate on September 23, 2020.

Subject to adjustment as provided in the Plan, the aggregate number of shares of common stock reserved for issuance pursuant to awards granted under the Plan shall be five million (5,000,000) shares; provided, however, that within sixty (60) days of the end of each fiscal year following the adoption of the Plan, the Board, in its discretion, may increase the aggregate number of shares of Common Stock available for issuance under the Plan by an amount not greater than the difference between (i) the number of shares of Common Stock available for issuance under the Plan on the last day of the immediately preceding fiscal year, and (ii) the number of shares of Common Stock equal to 15% of the shares of Common Stock outstanding on the last day of the immediately preceding fiscal year.

As of the date of this Current Report, no instruments have been granted or issued under the Plan.

Board of Directors

All directors hold office until the next annual meeting of shareholders and until their successors have been duly elected and qualified, or until their earlier death, resignation or removal. Officers are elected by and serve at the discretion of the board.

Our directors are reimbursed for expenses incurred by them in connection with attending board meetings, but they do not receive any other compensation for serving on the board.

Related Party Transactions

During fiscal 2012, the Company’s sole shareholder who is the President of the Company distributed dividends in excess of earnings and therefore the Company accounted such excess dividend distribution as due from related party of $189,956 as of December 31, 2012. The due from related party was due on demand and bear no interest. During fiscal 2013, the Company had adequate and sufficient earnings to cover the 2012 excess dividend distribution which therefore satisfied the balance of the due from related party of $189,956. As of December 31, 2013, due from related party was $0.

From time to time, the Company’s President, provided advances to the Company for payment of the Company’s loans. During fiscal 2013, the Company fully repaid the balance of such advances. At December 31, 2013 and 2012, the Company had a payable to the President of the Company of $0 and $135,982. The advances were due on demand and bear no interest.

Between August 2014 and September 2014, the Company’s President provided advances to the Company for working capital purposes for a total of $70,000. The advance was due on demand and interest free. This advance was paid by the end of September 2014.

Amounts outstanding under the loan and note payable are personally guaranteed by the President of the Company.

Director Independence

Currently, we have no independent directors. Because our common stock is not currently listed on a national securities exchange, we have used the definition of “independence” of The NASDAQ Stock Market to make this determination. NASDAQ Listing Rule 5605(a)(2) provides that an “independent director” is a person other than an officer or employee of the company or any other individual having a relationship which, in the opinion of the company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The NASDAQ listing rules provide that a director cannot be considered independent if:

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the director is, or at any time during the past three years was, an employee of the Company;

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the director or a family member of the director accepted any compensation from the Company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including, among other things, compensation for board or board committee service);

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a family member of the director is, or at any time during the past three years was, an executive officer of the Company;

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the director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity to which the Company made, or from which the Company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exclusions);

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the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of the Company served on the compensation committee of such other entity; or

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the director or a family member of the director is a current partner of the Company’s outside auditor, or at any time during the past three years was a partner or employee of the Company’s outside auditor, and who worked on the company’s audit.

Involvement in Certain Legal Proceedings

To our knowledge, during the past ten years, none of our directors, executive officers, promoters, control persons, or nominees has:

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been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

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had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;

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been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;

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been found by a court of competent jurisdiction in a civil action or by the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

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been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

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been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Code of Ethics

We have not adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer, or persons performing similar functions, because of the small number of persons involved in the management of the Company.

DESCRIPTION OF SECURITIES

Authorized Capital Stock

Our authorized capital stock consists of 100,000,000 shares of common stock, par value $0.001 per share. Immediately after giving effect to the shares issued in the Closing of the reverse merger, there were 48,280,960 shares of our common stock issued and outstanding. We have 20,000,000 shares of blank check preferred stock authorized. However, as of this date, we have not designated any classes of preferred stock nor have we issued any preferred shares.

Common Stock

The following is a summary of the material rights and restrictions associated with our common stock.

The holders of our common stock currently have (i) equal ratable rights to dividends from funds legally available therefore, when, as and if declared by the Board of Directors of the Company; (ii) are entitled to share ratably in all of the assets of the Company available for distribution to holders of common stock upon liquidation, dissolution or winding up of the affairs of the Company (iii) do not have preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights applicable thereto; and (iv) are entitled to one non-cumulative vote per share on all matters on which stock holders may vote. Please refer to the Company’s Articles of Incorporation, Bylaws and the applicable statutes of the State of Nevada for a more complete description of the rights and liabilities of holders of the Company’s securities.

Dividend Policy

We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future.

Indemnification of Directors and Officers

Under our Articles of Incorporation, no director or officer will be held personally liable to us or our stockholders for damages of breach of fiduciary duty as a director or officer unless such breach involves intentional misconduct, fraud, a knowing violation of law, or a payment of dividends in violation of the law. Under our bylaws, directors and officers will be indemnified to the fullest extent allowed by the law against all damages and expenses suffered by a director or officer being party to any action, suit, or proceeding, whether civil, criminal, administrative or investigative. This same indemnification is provided pursuant to Nevada Revised Statutes, Chapter 78.

The general effect of the foregoing is to indemnify a control person, officer or director from liability, thereby making us responsible for any expenses or damages incurred by such control person, officer or director in any action brought against them based on their conduct in such capacity, provided they did not engage in fraud or criminal activity.

Any repeal or modification of these provisions approved by our shareholders shall be prospective only, and shall not adversely affect any limitation on the liability of a director or officer of ours existing as of the time of such repeal or modification.

Anti-Takeover Effect of Nevada Law, Certain By-Law Provisions

The Nevada Business Corporation Law contains a provision governing “acquisition of controlling interest” (Nevada Revised Statutes 78.378 -78.3793). This law provides generally that any person or entity that acquires 20% or more of the outstanding voting shares of a publicly-held Nevada corporation in the secondary public or private market may be denied voting rights with respect to the acquired shares, unless a majority of the disinterested shareholders of the corporation elects to restore such voting rights in whole or in part. The control share acquisition act provides that a person or entity acquires “control shares” whenever it acquires shares that, but for the operation of the control share acquisition act, would bring its voting power within any of the following three ranges:

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20 to 331/3%;

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331/3 to 50%; or

●

more than 50%.

A “control share acquisition” is generally defined as the direct or indirect acquisition of either ownership or voting power associated with issued and outstanding control shares. The shareholders or board of directors of a corporation may elect to exempt the stock of the corporation from the provisions of the control share acquisition act through adoption of a provision to that effect in the articles of incorporation or bylaws of the corporation. Our articles of incorporation and bylaws do not exempt our common stock from the control share acquisition act.

The control share acquisition act is applicable only to shares of “Issuing Corporations” as defined by the Nevada law. An Issuing Corporation is a Nevada corporation, which:

●

has 200 or more shareholders, with at least 100 of such shareholders being both shareholders of record and residents of Nevada; and

●

does business in Nevada directly or through an affiliated corporation.

At this time, we do not have 100 shareholders of record resident of Nevada. Therefore, the provisions of the control share acquisition act do not apply to acquisitions of our shares and will not until such time as these requirements have been met. At such time as they may apply, the provisions of the control share acquisition act may discourage companies or persons interested in acquiring a significant interest in or control of us, regardless of whether such acquisition may be in the interest of our shareholders.

The Nevada “Combination with Interested Shareholders Statute” (Nevada Revised Statutes 78.411 -78.444) may also have an effect of delaying or making it more difficult to effect a change in control of us. This statute prevents an “interested shareholder” and a resident domestic Nevada corporation from entering into a “combination,” unless certain conditions are met. The statute defines “combination” to include any merger or consolidation with an “interested shareholder,” or any sale, lease, exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions with an “interested shareholder” having:

●

an aggregate market value equal to 5 percent or more of the aggregate market value of the assets of the corporation;

●

an aggregate market value equal to 5 percent or more of the aggregate market value of all outstanding shares of the corporation; or

●

representing 10 percent or more of the earning power or net income of the corporation.

An “interested shareholder” means the beneficial owner of 10 percent or more of the voting shares of a resident domestic corporation, or an affiliate or associate thereof. A corporation affected by the statute may not engage in a “combination” within three years after the interested shareholder acquires its shares unless the combination or purchase is approved by the board of directors before the interested shareholder acquired such shares. If approval is not obtained, then after the expiration of the three-year period, the business combination may be consummated with the approval of the board of directors or a majority of the voting power held by disinterested shareholders, or if the consideration to be paid by the interested shareholder is at least equal to the highest of:

●

the highest price per share paid by the interested shareholder within the three years immediately preceding the date of the announcement of the combination or in the transaction in which he became an interested shareholder, whichever is higher;

●

the market value per common share on the date of announcement of the combination or the date the interested shareholder acquired the shares, whichever is higher; or

●

if higher for the holders of preferred stock, the highest liquidation value of the preferred stock.

Trading Information

Our common stock is currently approved for quotation on the OTC Bulletin Board maintained by the Financial Industry Regulatory Authority, Inc. under the symbol “VAPI.OB” and there is a limited trading market for our stock.

Transfer Agent

The transfer agent for our common stock is Action Stock Transfer at 2469 E. Fort Union Blvd., Suite 214, Salt Lake City, Utah 84121, and its telephone number is (801) 274-1088.

Item 3.02

Unregistered Sales of Equity Securities

On December 30, 2014, we issued 38,624,768 shares of our common stock to the former stockholders of Vapir, pursuant to the terms of the Exchange Agreement. The securities issued in this transaction were not registered under the Securities Act, or the securities laws of any state, and were offered and sold pursuant to the exemption from registration under the Securities Act provided by Section 4(2) and Regulation D (Rule 506) under the Securities Act.

On December 30, 2014, in connection with the Exchange Agreement and as a settlement to an outstanding liability, we issued 3,000,000 shares of our common stock to two noteholders in satisfaction of the outstanding promissory notes. The securities issued in this transaction were not registered under the Securities Act, or the securities laws of any state, and were offered and sold pursuant to the exemption from registration under the Securities Act provided by Section 4(2) and Regulation D (Rule 506) under the Securities Act.

Information set forth in Items 1.01 and 2.01 of this Current Report on Form 8-K with respect to the issuance of unregistered equity securities in connection with the Exchange Agreement is incorporated by reference into this Item 3.02.

Item 4.01

Changes in Registrant’s Certifying Accountant

(1)	Previous Independent Registered Public Accounting Firm

	(i)	On December 30, 2014, we dismissed our independent registered public accounting firm, Salberg & Company, P.A (“Salberg”).

	(ii)	The report of Salberg dated April 11, 2014 on the financial statements of the Company as of December 31, 2013 and 2012, and the related statements of operations, comprehensive loss, changes in stockholders’ deficiency, and cash flows for each of the two years in the period ended December 31, 2013 did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles other than an explanatory paragraph as to a going concern.

	(iii)	The decision to change independent registered public accounting firm was recommended and approved by the Board of Directors of the Company.

	(iv)	During the Company’s two most recent fiscal years ended December 31, 2013 and 2012 and any subsequent interim periods through December 30, 2014, the date of dismissal, (a) there were no disagreements with Salberg on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Salberg, would have caused it to make reference thereto in its reports on the financial statements for such years and (b) there were no “reportable events” as described in Item 304(a)(1)(v) of Regulation S-K.

	(v)	On December 30, 2014 the Company provided Salberg with a copy of this Current Report and has requested that it furnish the Company with a letter addressed to the U.S. Securities and Exchange Commission stating whether it agrees with the above statements. A copy of such letter is attached as Exhibit 16.1 to this Current Report on Form 8-K.

(2)	New Independent Registered Public Accounting Firm

	On December 30, 2014, the Board of Directors of the Company engaged Li and Company, PC (“LICO”) as its new independent registered public accounting firm to audit and review the Company’s financial statements. During the two most recent fiscal years ended December 31, 2013 and 2012 and any subsequent interim periods through the date hereof prior to the engagement of LICO, neither the Company, nor someone on its behalf, has consulted LICO regarding:

	(i)	either: the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and either a written report was provided to the Company or oral advice was provided that the new independent registered public accounting firm concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or

	(ii)	any matter that was either the subject of a disagreement as defined in paragraph 304(a)(1)(iv) of Regulation S-K or a reportable event as described in paragraph 304(a)(1)(v) of Regulation S-K.

Item 5.01

Changes in Control of Registrant.

Reference is made to the disclosure set forth under Items 1.01 and 5.02 of this Report, which disclosure is incorporated herein by reference.

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers.

(b)

Resignation of Officers

Effective December 30, 2014, Adam Kotkin resigned as our Chief Executive Officer and Adam Wasserman resigned as our Chief Financial Officer. Their resignations were not the result of any disagreements with us on any matters relating to our operations, policies and practices but were the result of the Exchange Agreement and change of control transaction referred to in Items 1.01 and 5.01 of this Report.

Adam Kotkin is a member of the Board of Directors and, notwithstanding his resignation as the Chief Executive Officer, Mr. Kotkin shall remain as a member of the Board of Directors.

(c)

Appointment of Directors

Effective December 30, 2014, the following persons were appointed as members of the Board of Directors:

Name	Age	Principal Positions With Us
Hamid Emarlou	54	Chairman and Chief Executive Officer
Masoud Shahidi	72	Director

For certain biographical and other information regarding Mr. Hamid Emarlou and Mr. Masoud Shahidi, see the disclosure under “Item 2.01—Directors and Executive Officers” of this Report, which disclosure is incorporated herein by reference.

Family Relationships

There are no relationships between any of the officers or directors of the Company.

(d)

Appointment of Officers

Effective December 30, 2014, the directors appointed the following persons as our executive officers, with the respective titles as set forth opposite his or her name below:

Name		Age		Principal Positions With Us
Hamid Emarlou		54		Chief Executive Officer

For certain biographical and other information regarding Mr. Hamid Emarlou, see the disclosure under “Item 2.01—Directors and Executive Officers” of this Report, which disclosure is incorporated herein by reference.

(e)

Employment Agreements of the Executive Officers

The Company has not entered into formal employment agreements with any of its executive officers, however, intends to enter into written employment agreements with each of them subsequent to the Closing.

Item 5.03

Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On September 17, 2014, a Certificate of Amendment to our Articles of Incorporation was filed with the State of Nevada to: (i) change our name to Vapir Enterprises, Inc. (the "Name Change"); and (ii) effectuate a 5-to-1 reverse split (the “Reverse Split”). A copy of the Certificate of Amendment is being filed hereto as Exhibit 3.1.

Item 5.06

Change in Shell Company Status.

Following the closing of the Exchange Agreement described in Item 2.01 of this Current Report on Form 8-K, we believe that we are not a shell corporation as that term is defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act.

Item 8.01

Other Events.

FINRA announced the Name Change and the Reverse Stock Split on October 2, 2014 and it took effect on October 3, 2014. FINRA also assigned us the new trading symbol “VAPI”.

Item 9.01

Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired. In accordance with Item 9.01(a), Vapir’s audited financial statements for the years ended December 31, 2013 and 2012 are filed in this Current Report on Form 8-K as Exhibit 99.1 and Vapir’s unaudited financial statements for the nine months ended September 30, 2014 are filed with this Current Report on Form 8-K as Exhibit 99.2.

(b) Pro Forma Financial Information. In accordance with Item 9.01(b), our pro forma financial statements are filed in this Current Report on Form 8-K as Exhibit 99.3.

The exhibits listed in the following Exhibit Index are filed as part of this Current Report on Form 8-K.

Exhibit No.		Description

2.1		Share Exchange Agreement dated December 30, 2014

3.1		Certificate of Amendment for Name Change dated September 17, 2014

16.1		Letter from Salberg and Company addressed to the U.S. Securities and Exchange Commission

99.1		Audited Balance Sheets of the Company as of December 31, 2013 and 2012, and the Related Audited Statements of Operations, Shareholders’ Equity, and Cash Flows for the years ended December 31, 2013 and 2012

99.2		Unaudited (reviewed) Balance Sheets of the Company as of September 30, 2014 and December 31, 2013, and the Related Unaudited Statements of Operations and Cash Flows for the nine months ended September 30, 2014 and 2013

99.3		Pro forma unaudited combined financial statements as of the period ended September 30, 2014

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: December 30, 2014

	Vapir Enterprises, Inc.

	By:	/s/ Hamid Emarlou
		Hamid Emarlou
		Chief Executive Officer and President

Exhibit 2.1

SHARE EXCHANGE AGREEMENT

BY AND AMONG

VAPIR ENTERPRISES INC.

AND

THE PRINCIPAL SHAREHOLDERS OF VAPIR ENTERPRISES INC.

AND

VAPIR, INC.

AND

THE SHAREHOLDERS OF VAPIR, INC.

Dated as of: December 30, 2014

TABLE OF CONTENTS

ARTICLE I DEFINITIONS		1
Section 1.1	Definitions	1

ARTICLE II SHARE EXCHANGE; CLOSING		6
Section 2.1	Share Exchange	6
Section 2.2	Closing	6
Section 2.3	Closing Deliveries by Acquiror and Acquiror Principal Shareholder	6
Section 2.4	Closing Deliveries by Acquiree, and Acquiree Shareholders	6
Section 2.5	Section 368 Reorganization	6

ARTICLE III REPRESENTATIONS OF ACQUIREE SHAREHOLDERS		7
Section 3.1	Authority	7
Section 3.2	Binding Obligations	7
Section 3.3	No Conflicts	7
Section 3.4	Certain Proceedings	8
Section 3.5	No Brokers or Finders	8
Section 3.6	Investment Representations	8
Section 3.7	Stock Legends	10
Section 3.8	Disclosure	11

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE ACQUIREE		12
Section 4.1	Organization and Qualification	12
Section 4.2	Authority	12
Section 4.3	Binding Obligations	12
Section 4.4	No Conflicts	13
Section 4.5	Subsidiaries	13
Section 4.6	Organizational Documents	13
Section 4.7	Capitalization	14
Section 4.8	No Brokers or Finders	14
Section 4.9	Disclosure	14

ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR AND THE ACQUIROR PRINCIPAL SHAREHOLDER		14
Section 5.1	Organization and Qualification	15
Section 5.2	Authority	15
Section 5.3	Binding Obligations	15
Section 5.4	No Conflicts	16
Section 5.5	Subsidiaries	16
Section 5.6	Organizational Documents	17
Section 5.7	Compliance with Laws	17
Section 5.8	Certain Proceedings	18
Section 5.9	No Brokers or Finders	18
Section 5.10	Contracts	18
Section 5.11	Tax Matters	18

Section 5.12	Labor Matters	19
Section 5.13	Employee Benefits	20
Section 5.14	Title to Assets	20
Section 5.15	Intellectual Property	20
Section 5.16	SEC Reports	20
Section 5.17	Internal Accounting Controls	21
Section 5.18	Application of Takeover Protections	21
Section 5.19	Transactions With Affiliates and Employees	21
Section 5.20	Liabilities	21
Section 5.21	Bank Accounts and Safe Deposit Boxes	22
Section 5.22	Investment Company	22
Section 5.23	Bank Holding Company Act	22
Section 5.24	Public Utility Holding Act	22
Section 5.25	Federal Power Act	22
Section 5.26	Money Laundering Laws	22
Section 5.27	Foreign Corrupt Practices	22
Section 5.28	Absence of Certain Changes or Events	23
Section 5.29	Disclosure	23
Section 5.30	Undisclosed Events	23
Section 5.31	Non-Public Information	23

ARTICLE VI CONDUCT PRIOR TO CLOSING		23
Section 6.1	Conduct of Business	23
Section 6.2	Restrictions on Conduct of Business	24

ARTICLE VII ADDITIONAL AGREEMENTS		26
Section 7.1	Access to Information	26
Section 7.2	Legal Requirements	26
Section 7.3	Notification of Certain Matters	26

Article VIII POST CLOSING COVENANTS		27
Section 8.1	General	27
Section 8.2	Litigation Support	27
Section 8.3	Assistance with Post-Closing SEC Reports and Inquiries	27
Section 8.4	Public Announcements	27

ARTICLE IX CONDITIONS TO CLOSING		28
Section 9.1	Conditions to Obligation of the Parties Generally	28
Section 9.2	Conditions to Obligation of the Acquiree Parties	28
Section 9.3	Conditions to Obligation of the Acquiror Parties	30

ARTICLE X TERMINATION		31
Section 10.1	Grounds for Termination	31
Section 10.2	Procedure and Effect of Termination	33
Section 10.3	Effect of Termination	33

ARTICLE XI SURVIVAL		33
Section 11.1	Survival	33

ARTICLE XII MISCELLANEOUS PROVISIONS		33
Section 12.1	Expenses	33
Section 12.2	Confidentiality	34
Section 12.3	Notices	35
Section 12.4	Further Assurances	35
Section 12.5	Waiver	35
Section 12.6	Entire Agreement and Modification	35
Section 12.7	Assignments, Successors, and No Third-Party Rights	36
Section 12.8	Severability	36
Section 12.9	Section Headings	36
Section 12.10	Construction	36
Section 12.11	Counterparts	36
Section 12.12	Specific Performance	36
Section 12.13	Governing Law; Submission to Jurisdiction	37
Section 12.14	Waiver of Jury Trial	37

iii

SHARE EXCHANGE AGREEMENT

This SHARE EXCHANGE AGREEMENT (“Agreement”), dated as of December 30, 2014, is made by and among VAPIR ENTERPRISES INC., a corporation organized under the laws of Nevada (the “Acquiror”), ADAM KOTKIN (the “Acquiror Principal Shareholder”), VAPIR, INC., a corporation organized under the laws of California (the “Acquiree”), and each of the Persons listed on Schedule I hereto who are shareholders of the Acquiree (collectively, the “Acquiree Shareholders,” and individually an “Acquiree Shareholder”). Each of the Acquiror, Acquiree and Acquiree Shareholders are referred to herein individually as a “Party” and collectively as the “Parties.”

RECITALS:

WHEREAS, the Acquiree Shareholders are the holders of all of the issued and outstanding shares of common stock of the Acquiree (the “Acquiree Interests”);

WHEREAS, the Acquiree Shareholders have agreed to transfer to the Acquiror, and the Acquiror has agreed to acquire from the Acquiree Shareholders, all of the Acquiree Interests, in exchange for the issuance of 38,624,768 Acquiror Shares (as defined below) to the Acquiree Shareholders, which Acquiror Shares shall constitute approximately 80.00% of the issued and outstanding shares of Acquiror Common Stock (as defined below) immediately after the closing of the transactions contemplated herein, in each case, on the terms and conditions as set forth herein;

NOW, THEREFORE, in consideration of the foregoing premises, and the covenants, representations and warranties set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged and accepted, the Parties, intending to be legally bound, hereby agree as follows:

Article I
DEFINITIONS

Section 1.1 Definitions.

For all purposes of and under this Agreement, the following terms shall have the following respective meanings:

“Accredited Investor” has the meaning set forth in Rule 501 under the Securities Act.

“Acquiree” has the meaning set forth in the preamble.

“Acquiree Disclosure Schedule” has the meaning set forth in Article IV.

“Acquiree Interests” has the meaning set forth in the recitals.

“Acquiree Indemnified Parties” means the Acquiree and the Acquiree Shareholders and their respective Affiliates and the officers, directors and representatives of such Persons; provided that (i) the Acquiror shall be a member of the Acquiree Indemnified Parties after the Closing and (ii) none of the Acquiror Principal Shareholder nor the Acquiror Principal Shareholder’ Affiliates shall be members of the Acquiree Indemnified Parties at any time.

“Acquiree Organizational Documents” has the meaning set forth in Section 4.6.

“Acquiree Shareholder” and “Acquiree Shareholders” have the respective meanings set forth in the preamble.

“Acquiror” has the meaning set forth in the recitals.

“Acquiror Common Stock” means the common stock, par value $0.001 per share, of the Acquiror.

“Acquiror Disclosure Schedule” has the meaning set forth in Article V.

“Acquiror Most Recent Fiscal Year End” means December 31, 2013.

“Acquiror Principal Shareholder” has the meaning set forth in the preamble.

“Acquiror Shares” has the meaning set forth in the recitals.

“Acquiror Sharesholders” means entities holding Acquiror Shares.

“Acquisition Transaction” means any transaction or series of transactions involving: (a) any merger, consolidation, share exchange, business combination, issuance of securities, acquisition of securities, tender offer, exchange offer or other similar transaction; or (b) any sale (other than sales of inventory in the Ordinary Course of Business), lease (other than in the Ordinary Course of Business), exchange, transfer (other than sales of inventory in the Ordinary Course of Business), license (other than nonexclusive licenses in the Ordinary Course of Business), acquisition or disposition of assets.

“Action” means any action, suit, inquiry, notice of violation, proceeding (including any partial proceeding such as a deposition) or investigation pending or threatened before or by any court, arbitrator, governmental or administrative agency, regulatory authority (federal, state, county, local or foreign), stock market, stock exchange or trading facility.

“Affiliate” has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Exchange Act.

“Agreement” has the meaning set forth in the preamble.

“BHCA” has the meaning set forth in Section 5.23.

“Business Day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in New York, New York are required or authorized to be closed.

“Closing” has the meaning set forth in Section 2.2.

“Closing Date” has the meaning set forth in Section 2.2.

“Code” means the Internal Revenue Code of 1986, as amended.

“Competing Transaction Proposal” means any inquiry, proposal, indication of interest or offer from any Person contemplating or otherwise relating to any Acquisition Transaction directly or indirectly involving the Acquiror, its business or any assets of the Acquiror (including, without limitation, any Acquisition Transaction involving Acquiror Principal Shareholder that would include the Acquiror, its business or any assets of the Acquiror).

“Contract” means any written or oral contract, lease, license, indenture, note, bond, agreement, arrangement, understanding, permit, concession, franchise or other instrument.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations of the SEC thereunder, all as the same will then be in effect.

“Federal Reserve” has the meaning set forth in Section 5.23.

“GAAP” means, with respect to any Person, generally accepted accounting principles in the U.S. applied on a consistent basis with such Person’s past practices.

“Governmental Authority” means any domestic or foreign, federal or national, state or provincial, municipal or local government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, political subdivision, commission, court, tribunal, official, arbitrator or arbitral body.

“Indebtedness” means without duplication, (a) all indebtedness or other obligation of the Person for borrowed money, whether current, short-term, or long-term, secured or unsecured, (b) all indebtedness of the Person for the deferred purchase price for purchases of property outside the Ordinary Course of Business, (c) all lease obligations of the Person under leases which are capital leases in accordance with GAAP, (d) any off-balance sheet financing of the Person including synthetic leases and project financing, (e) any payment obligations of the Person in respect of banker’s acceptances or letters of credit (other than stand-by letters of credit in support of ordinary course trade payables), (f) any liability of the Person with respect to interest rate swaps, collars, caps and similar hedging obligations, (g) any liability of the Person under deferred compensation plans, phantom stock plans, severance or bonus plans, or similar arrangements made payable as a result of the transactions contemplated herein, (h) any indebtedness referred to in clauses (a) through (g) above of any other Person which is either guaranteed by, or secured by a security interest upon any property owned by, the Person and (i) accrued and unpaid interest of, and prepayment premiums, penalties or similar contractual charges arising as result of the discharge at Closing of, any such foregoing obligation.

“Intellectual Property” means all industrial and intellectual property, including, without limitation, all U.S. and non-U.S. patents, patent applications, patent rights, trademarks, trademark applications, common law trademarks, Internet domain names, trade names, service marks, service mark applications, common law service marks, and the goodwill associated therewith, copyrights, in both published and unpublished works, whether registered or unregistered, copyright applications, franchises, licenses, know-how, trade secrets, technical data, designs, customer lists, confidential and proprietary information, processes and formulae, all computer software programs or applications, layouts, inventions, development tools and all documentation and media constituting, describing or relating to the above, including manuals, memoranda, and records, whether such intellectual property has been created, applied for or obtained anywhere throughout the world.

“Knowledge” shall mean, except as otherwise explicitly provided herein, actual knowledge after reasonable investigation. The Acquiror shall be deemed to have “Knowledge” of a matter if any of its officers, directors, stockholders, or employees has Knowledge of such matter. Phrases such as “to the Knowledge of the Acquiror” or the “Acquiror’s Knowledge” shall be construed accordingly.

“Laws” means, with respect to any Person, any U.S. or non-U.S., federal, national, state, provincial, local, municipal, international, multinational or other Law (including common law), constitution, statute, code, ordinance, rule, regulation or treaty applicable to such Person.

“Liability” means any liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes.

“License” means any security clearance, permit, license, variance, franchise, Order, approval, consent, certificate, registration or other authorization of any Governmental Authority or regulatory body, and other similar rights.

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind, including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction and including any lien or charge arising by Law.

“Material Adverse Effect” means, with respect to any Person, a material adverse effect on the business, financial condition, operations, results of operations, assets, customer, supplier or employee relations or future prospects of such Person.

“Money Laundering Laws” has the meaning set forth in Section 5.26.

“Order” means any order, judgment, ruling, injunction, assessment, award, decree or writ of any Governmental Authority or regulatory body.

“Ordinary Course of Business” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).

“Party” and “Parties” have the respective meanings set forth in the preamble.

“Person” means all natural persons, corporations, business trusts, associations, companies, partnerships, limited liability companies, joint ventures and other entities, governments, agencies and political subdivisions.

“Principal Market” means the OTC Bulletin Board.

“Registration Statements” has the meaning set forth in Section 5.16(b).

“Regulation S” means Regulation S under the Securities Act, as the same may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission.

“SEC” means the U.S. Securities and Exchange Commission, or any successor agency thereto.

“SEC Reports” has the meaning set forth in Section 5.16(a).

“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same will be in effect at the time.

“Share Exchange” has the meaning set forth in Section 2.1.

“Tax Return” means all returns, declarations, reports, estimates, statements, forms and other documents filed with or supplied to or required to be provided to a Governmental Authority with respect to Taxes, including any schedule or attachment thereto and any amendment thereof.

“Tax” or “Taxes” means all taxes, assessments, duties, levies or other charge imposed by any Governmental Authority of any kind whatsoever together with any interest, penalties, fines or additions thereto and any liability for payment of taxes whether as a result of (i) being a member of an affiliated, consolidated, combined, unitary or similar group for any period, (ii) any tax sharing, tax indemnity or tax allocation agreement or any other express or implied agreement to indemnify any Person, (iii) being liable for another Person’s taxes as a transferee or successor otherwise for any period, or (iv) operation of Law.

“Transaction Documents” means, collectively, this Agreement and all agreements, certificates, instruments and other documents to be executed and delivered in connection with the transactions contemplated by this Agreement.

“Treasury Regulations” means the income tax regulations, including temporary regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

“U.S.” means the United States of America.

“U.S. Person” has the meaning set forth in Regulation S under the Securities Act.

Article II
SHARE EXCHANGE; CLOSING

Section 2.1 Share Exchange. At the Closing, the Acquiree shall sell, transfer, convey, assign and deliver shares of Acquiree Interests, representing 100% of the issued and outstanding shares of common stock of the Acquiree, to the Acquiror, and in consideration therefor the Acquiror shall issue a total of 38,624,768 fully paid and nonassessable share of Acquiror Common Stock, par value $0.001, (the “Acquiror Shares”) to the Acquiree Shareholders, as set forth beside the name of each such Acquiree Shareholder on Schedule I hereto (the “Share Exchange”).

Section 2.2 Closing. Upon the terms and subject to the conditions of this Agreement, the transactions contemplated by this Agreement shall take place at a closing (the “Closing”) to be held at the offices of Szaferman Lakind Blumstein & Blader, PC located at 101 Grovers Mill Road, Lawrenceville, New Jersey 08648, at a time and date to be specified by the Parties, which shall be no later than the second (2nd) Business Day following the satisfaction or, if permitted pursuant hereto, waiver of the conditions set forth in Article X, or at such other location, date and time as Acquiree and Acquiror Principal Shareholder shall mutually agree. The date and time of the Closing is referred to herein as the “Closing Date.”

Section 2.3 Closing Deliveries by Acquiror and Acquiror Principal Shareholder. At the Closing: (a) the Acquiror shall deliver, or cause to be delivered, a certificate evidencing the number of Acquiror Shares, set forth beside each Acquiree Shareholder’s name on Schedule I hereto; and (b) the Acquiror and the Acquiror Principal Shareholder, as applicable, shall deliver, or cause to be delivered, to the Acquiree and the Acquiree Shareholders, as applicable, the various documents required to be delivered as a condition to the Closing pursuant to Section 9.2 hereof.

Section 2.4 Closing Deliveries by Acquiree, and Acquiree Shareholders. At the Closing: (a) Acquiree shall deliver, or cause to be delivered, certificate(s) representing its Acquiree Shares, accompanied by an executed instrument of transfer for transfer by Acquiree of its Acquiree Shares to the Acquiror; and (b) the Acquiree, and the Acquiree Shareholders, as applicable, shall deliver, or cause to be delivered, to the Acquiror and the Acquiror Principal Shareholder, as applicable, the various documents required to be delivered as a condition to the Closing pursuant to Section 9.3 hereof.

Section 2.5 Section 368 Reorganization. For U.S. federal income Tax purposes, the Share Exchange is intended to constitute a “reorganization” within the meaning of Section 368(a)(1)(B) of the Code. The Parties hereby adopt this Agreement as a “plan of reorganization” within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the Treasury Regulations. Notwithstanding the foregoing or anything else to the contrary contained in this Agreement, the Parties acknowledge and agree that no Party is making any representation or warranty as to the qualification of the Share Exchange as a reorganization under Section 368 of the Code or as to the effect, if any, that any transaction consummated prior to or after the Closing Date has or may have on any such reorganization status. The Parties acknowledge and agree that each (i) has had the opportunity to obtain independent legal and tax advice with respect to the transaction contemplated by this Agreement, and (ii) is responsible for paying its own Taxes, including without limitation, any adverse Tax consequences that may result if the transaction contemplated by this Agreement is not determined to qualify as a reorganization under Section 368 of the Code.

Article III
REPRESENTATIONS OF ACQUIREE SHAREHOLDERS

The Acquiree Shareholders severally, and not jointly, hereby represent and warrant to the Acquiror that the statements contained in this Article III are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as thought the Closing Date were substituted for the date of this Agreement throughout this Article III) (except where another date or period of time is specifically stated herein for a representation or warranty).

Section 3.1 Authority. Such Acquiree Shareholder has all requisite authority and power to enter into and deliver this Agreement and any of the other Transaction Documents to which such Acquiree Shareholder is a party, and any other certificate, agreement, document or instrument to be executed and delivered by such Acquiree Shareholder in connection with the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each of the Transaction Documents to which such Acquiree Shareholder is a party will be, duly and validly authorized and approved, executed and delivered by such Acquiree Shareholder.

Section 3.2 Binding Obligations. Assuming this Agreement and the Transaction Documents have been duly and validly authorized, executed and delivered by the parties hereto and thereto other than such Acquiree Shareholder, this Agreement and each of the Transaction Documents to which such Acquiree Shareholder is a party are duly authorized, executed and delivered by such Acquiree Shareholder, and constitutes the legal, valid and binding obligations of such Acquiree Shareholder, enforceable against such Acquiree Shareholder in accordance with their respective terms, except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar Laws affecting the enforcement of creditors rights generally.

Section 3.3 No Conflicts. Neither the execution or delivery by such Acquiree Shareholder of this Agreement or any Transaction Document to which such Acquiree Shareholder is a party, nor the consummation or performance by such Acquiree Shareholder of the transactions contemplated hereby or thereby will, directly or indirectly, (a) contravene, conflict with, or result in a violation of any provision of the organizational documents of such Acquiree Shareholder (if such Acquiree Shareholder is not a natural Person); (b) contravene, conflict with, constitute a default (or an event or condition which, with notice or lapse of time or both, would constitute a default) under, or result in the termination or acceleration of, any agreement or instrument to which such Acquiree Shareholder is a party or by which the properties or assets of such Acquiree Shareholder are bound; or (c) contravene, conflict with, result in any breach of, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, impair the rights of such Acquiree Shareholder under, or alter the obligations of any Person under, or create in any Person the right to terminate, amend, accelerate or cancel, or require any notice, report or other filing (whether with a Governmental Authority or any other Person) pursuant to, or result in the creation of a Lien on any of the assets or properties of the Acquiror under, any note, bond, mortgage, indenture, Contract, License, permit, franchise or other instrument or obligation to which such Acquiree Shareholder is a party or any of such Acquiree Shareholder’s assets and properties are bound or affected, except, in the case of clauses (b) or (c) for any such contraventions, conflicts, violations, or other occurrences as would not have a Material Adverse Effect on such Acquiree Shareholder.

Section 3.4 Certain Proceedings. There is no Action pending against, or to the Knowledge of such Acquiree Shareholder, threatened against or affecting, such Acquiree Shareholder by any Governmental Authority or other Person with respect to such Acquiree Shareholder that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the transactions contemplated by this Agreement.

Section 3.5 No Brokers or Finders. No Person has, or as a result of the transactions contemplated herein will have, any right or valid claim against such Acquiree Shareholder for any commission, fee or other compensation as a finder or broker, or in any similar capacity, based upon arrangements made by or on behalf of such Acquiree Shareholder and such Acquiree Shareholder will indemnify and hold the Acquiror and the Acquiror Principal Shareholder harmless against any liability or expense arising out of, or in connection with, any such claim.

Section 3.6 Investment Representations. Each Acquiree Shareholder severally, and not jointly, hereby represents and warrants, solely with respect to itself and not any other Acquiree Shareholder, to the Acquiror as follows:

(a) Purchase Entirely for Own Account. Such Acquiree Shareholder is acquiring such Acquiree Shareholder’s portion of the Acquiror Shares proposed to be acquired hereunder for investment for its own account and not with a view to the resale or distribution of any part thereof, and such Acquiror Shareholder has no present intention of selling or otherwise distributing such Acquiror Shares, except in compliance with applicable securities Laws.

(b) Restricted Securities. Such Acquiree Shareholder understands that the Acquiror Shares are characterized as “restricted securities” under the Securities Act inasmuch as this Agreement contemplates that, if acquired by the Shareholder pursuant hereto, the Acquiror Shares would be acquired in a transaction not involving a public offering. The issuance of the Acquiror Shares hereunder is being effected in reliance upon an exemption from registration afforded under Section 4(2) of the Securities Act. Such Acquiree Shareholder further acknowledges that if the Acquiror Shares are issued to such Acquiree Shareholder in accordance with the provisions of this Agreement, such Acquiror Shares may not be resold without registration under the Securities Act or the existence of an exemption therefrom. Such Acquiree Shareholder represents that he is familiar with Rule 144 promulgated under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act

(c) Acknowledgment of Non-Registration. Such Acquiree Shareholder understands and agrees that the Acquiror Shares to be issued pursuant to this Agreement have not been registered under the Securities Act or the securities Laws of any state of the U.S.

(d) Status. By its execution of this Agreement, each Acquiree Shareholder represents and warrants to the Acquiror as indicated on its signature page to this Agreement, either that: (i) such Acquiree Shareholder is an Accredited Investor; or (ii) such Acquiree Shareholder is not a U.S. Person. Each Acquiree Shareholder understands that the Acquiror Shares are being offered and sold to such Acquiree Shareholder in reliance upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of such Acquiree Shareholder set forth in this Agreement, in order that the Acquiror may determine the applicability and availability of the exemptions from registration of the Acquiror Shares on which the Acquiror is relying.

(e) Additional Representations and Warranties. Such Acquiree Shareholder, severally and not jointly, further represents and warrants to the Acquiror as follows: (i) such Person qualifies as an Accredited Investor; (ii) such Person consents to the placement of a legend on any certificate or other document evidencing the Acquiror Shares substantially in the form set forth in Section 3.7(a); (iii) such Person has sufficient knowledge and experience in finance, securities, investments and other business matters to be able to protect such Person’s or entity’s interests in connection with the transactions contemplated by this Agreement; (iv) such Person has consulted, to the extent that it has deemed necessary, with its tax, legal, accounting and financial advisors concerning its investment in the Acquiror Shares and can afford to bear such risks for an indefinite period of time, including, without limitation, the risk of losing its entire investment in the Acquiror Shares; (v) such Person has had access to the SEC Reports; (vi) such Person has been furnished during the course of the transactions contemplated by this Agreement with all other public information regarding the Acquiror that such Person has requested and all such public information is sufficient for such Person to evaluate the risks of investing in the Acquiror Shares; (vii) such Person has been afforded the opportunity to ask questions of and receive answers concerning the Acquiror and the terms and conditions of the issuance of the Acquiror Shares; (viii) such Person is not relying on any representations and warranties concerning the Acquiror made by the Acquiror or any officer, employee or agent of the Acquiror, other than those contained in this Agreement or the SEC Reports; (ix) such Person will not sell or otherwise transfer the Acquiror Shares, unless either (A) the transfer of such securities is registered under the Securities Act or (B) an exemption from registration of such securities is available; (x) such Person understands and acknowledges that the Acquiror is under no obligation to register the Acquiror Shares for sale under the Securities Act; (xi) such Person represents that the address furnished in Schedule I is the principal residence if he is an individual or its principal business address if it is a corporation or other entity; (xii) such Person understands and acknowledges that the Acquiror Shares have not been recommended by any federal or state securities commission or regulatory authority, that the foregoing authorities have not confirmed the accuracy or determined the adequacy of any information concerning the Acquiror that has been supplied to such Person and that any representation to the contrary is a criminal offense; and (xiii) such Person acknowledges that the representations, warranties and agreements made by such Person herein shall survive the execution and delivery of this Agreement and the purchase of the Acquiror Shares.

(f) Additional Representations and Warranties of Non-U.S. Persons. Each Acquiree Shareholder that is not a U.S. Person, severally and not jointly, further represents and warrants to the Acquiror as follows: (i) at the time of (A) the offer by the Acquiror and (B) the acceptance of the offer by such Person, of the Acquiror Shares, such Person was outside the U.S; (ii) no offer to acquire the Acquiror Shares or otherwise to participate in the transactions contemplated by this Agreement was made to such Person or its representatives inside the U.S.; (iii) such Person is not purchasing the Acquiror Shares for the account or benefit of any U.S. Person, or with a view towards distribution to any U.S. Person, in violation of the registration requirements of the Securities Act; (iv) such Person will make all subsequent offers and sales of the Acquiror Shares either (A) outside of the U.S. in compliance with Regulation S; (B) pursuant to a registration under the Securities Act; or (C) pursuant to an available exemption from registration under the Securities Act; (v) such Person is acquiring the Acquiror Shares for such Person’s own account, for investment and not for distribution or resale to others; (vi) such Person has no present plan or intention to sell the Acquiror Shares in the U.S. or to a U.S. Person at any predetermined time, has made no predetermined arrangements to sell the Acquiror Shares and is not acting as an underwriter or dealer with respect to such securities or otherwise participating in the distribution of such securities; (vii) neither such Person, its Affiliates nor any Person acting on behalf of such Person, has entered into, has the intention of entering into, or will enter into any put option, short position or other similar instrument or position in the U.S. with respect to the Acquiror Shares at any time after the Closing Date through the one year anniversary of the Closing Date except in compliance with the Securities Act; (viii) such Person consents to the placement of a legend on any certificate or other document evidencing the Acquiror Shares substantially in the form set forth in Section 3.7(b) and (ix) such Person is not acquiring the Acquiror Shares in a transaction (or an element of a series of transactions) that is part of any plan or scheme to evade the registration provisions of the Securities Act.

Section 3.7 Stock Legends. Such Acquiree Shareholder hereby agrees with the Acquiror as follows:

(a) The certificates evidencing the Acquiror Shares issued to those Acquiree Shareholders who are Accredited Investors, and each certificate issued in transfer thereof, will bear the following or similar legend:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.

(b) The certificates evidencing the Acquiror Shares issued to those Acquiree Shareholders who are not U.S. Persons, and each certificate issued in transfer thereof, will bear the following legend:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT, AND BASED ON AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT THE PROVISIONS OF REGULATION S HAVE BEEN SATISFIED, (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.

(c) Other Legends. The certificates representing such Acquiror Shares, and each certificate issued in transfer thereof, will also bear any other legend required under any applicable Law, including, without limitation, any state corporate and state securities law, or Contract.

Section 3.8 Disclosure. No representation or warranty of such Acquiree Shareholder contained in this Agreement or any other Transaction Document and no statement or disclosure made by or on behalf of such Acquiree Shareholder to the Acquiror or the Acquiror Principal Shareholder pursuant to this Agreement or any other agreement contemplated herein contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading.

Article iV
REPRESENTATIONS AND WARRANTIES OF THE ACQUIREE

The Acquiree hereby represents and warrants to the Acquiror, subject to the exceptions and qualifications specifically set forth or disclosed in writing in the disclosure schedule delivered by the Acquiree to the Acquiror (the “Acquiree Disclosure Schedule”), that the statements contained in this Article IV are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as thought the Closing Date were substituted for the date of this Agreement throughout this Article IV) (except where another date or period of time is specifically stated herein for a representation or warranty). The Acquiree Disclosure Schedule shall be arranged according to the numbered and lettered paragraphs of this Article IV and any disclosure in the Acquiree Disclosure Schedule shall qualify the corresponding paragraph in this Article IV. The Acquiror and, after the Closing, the Acquiree, shall be entitled to rely on the representations and warranties set forth in this Article IV regardless of any investigation or review conducted by the Acquiror prior to the Closing.

Section 4.1 Organization and Qualification. The Acquiree is a corporation duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, has all requisite corporate authority and power, Licenses, authorizations, consents and approvals to carry on its business as presently conducted and to own, hold and operate its properties and assets as now owned, held and operated by it, and is duly qualified to do business and in good standing in each jurisdiction in which the failure to be so qualified would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on the Acquiree.

Section 4.2 Authority. The Acquiree has all requisite authority and power (corporate and other), Licenses, authorizations, consents and approvals to enter into and deliver this Agreement and any of the other Transaction Documents to which the Acquiree is a party and any other certificate, agreement, document or instrument to be executed and delivered by the Acquiree in connection with the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the other Transaction Documents by the Acquiree and the performance by the Acquiree of its obligations hereunder and thereunder and the consummation by the Acquiree of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Acquiree. The Acquiree does not need to give any notice to, make any filing with, or obtain any authorization, consent or approval of any Person or Governmental Authority in order for the Parties to execute, deliver or perform this Agreement or the transactions contemplated hereby. This Agreement has been, and each of the Transaction Documents to which the Acquiree is a party will be, duly and validly authorized and approved, executed and delivered by the Acquiree.

Section 4.3 Binding Obligations. Assuming this Agreement and the Transaction Documents have been duly and validly authorized, executed and delivered by the parties hereto and thereto other than the Acquiree, this Agreement and each of the Transaction Documents to which the Acquiree is a party are duly authorized, executed and delivered by the Acquiree and constitutes the legal, valid and binding obligations of the Acquiree enforceable against the Acquiree in accordance with their respective terms, except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar Laws affecting the enforcement of creditors rights generally.

Section 4.4 No Conflicts. Neither the execution nor the delivery by the Acquiree of this Agreement or any Transaction Document to which the Acquiree is a party, nor the consummation or performance by the Acquiree of the transactions contemplated hereby or thereby will, directly or indirectly, (a) contravene, conflict with, or result in a violation of any provision of the Acquiree Organizational Documents, (b) contravene, conflict with or result in a violation of any Law, Order, charge or other restriction or decree applicable to the Acquiree, or by which the Acquiree or any of its respective assets and properties are bound or affected, (c) contravene, conflict with, result in any breach of, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, impair the rights of the Acquiree under, or alter the obligations of any Person under, or create in any Person the right to terminate, amend, accelerate or cancel, or require any notice, report or other filing (whether with a Governmental Authority or any other Person) pursuant to, or result in the creation of a Lien on any of the assets or properties of the Acquiree under, any note, bond, mortgage, indenture, Contract, License, permit, franchise or other instrument or obligation to which the Acquiree is a party or by which the Acquiree or any of its respective assets and properties are bound or affected; or (d) contravene, conflict with, or result in a violation of, the terms or requirements of, or give any Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate or modify, any licenses, permits, authorizations, approvals, franchises or other rights held by the Acquiree or that otherwise relate to the business of, or any of the properties or assets owned or used by, the Acquiree, except, in the case of clauses (b), (c), or (d), for any such contraventions, conflicts, violations, or other occurrences as would not have a Material Adverse Effect on the Acquiree.

Section 4.5 Subsidiaries. The Acquiree does not own, directly or indirectly, any equity or other ownership interest in any corporation, partnership, joint venture or other entity or enterprise. There are no Contracts or other obligations (contingent or otherwise) of the Acquiree to retire, repurchase, redeem or otherwise acquire any outstanding shares of capital stock of, or other ownership interests in, any other Person or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other Person.

Section 4.6 Organizational Documents. The Acquiree has delivered or made available to the Acquiror a true and correct copy of the Certificate of Organization of the Acquiree and any other organizational documents of the Acquiree, each as amended, and each such instrument is in full force and effect (the “Acquiree Organizational Documents”). The Acquiree is not in violation of any of the provisions of the Acquiree Organizational Documents.

Section 4.7 Capitalization.

(a) The authorized capital stock of the Acquiree consists of 100,000 shares of common stock. Except as set forth above, no units or other voting securities of the Acquiree were issued, reserved for issuance or outstanding. All outstanding shares of the Acquiree are, and all such units that may be issued prior to the Closing Date will be when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to or issued in violation of any right of first refusal, preemptive right, subscription right or any similar right under any provision of the Laws of the jurisdiction of the Acquiree’s formation, the Acquiree Organizational Documents or any Contract to which the Acquiree is a party or otherwise bound. There are not any bonds, debentures, notes or other Indebtedness of the Acquiree having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which holders of Acquiree Interests may vote. Except pursuant provided otherwise, there are no options, warrants, rights, convertible or exchangeable securities, “phantom” stock rights, stock appreciation rights, stock-based performance units, commitments, Contracts, arrangements or undertakings of any kind to which the Acquiree is a party or by which it is bound (x) obligating the Acquiree to issue, deliver or sell, or cause to be issued, delivered or sold, additional units or other equity interests in, or any security convertible or exercisable for or exchangeable into any unit of or other equity interest in, the Acquiree, or (y) that give any Person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights occurring to unit holders of the Acquiree. There are no outstanding Contracts or obligations of the Acquiree to repurchase, redeem or otherwise acquire any units of the Acquiree. There are no registration rights, proxies, voting trust agreements or other agreements or understandings with respect to any units of the Acquiree.

Section 4.8 No Brokers or Finders. No Person has, or as a result of the transactions contemplated herein will have, any right or valid claim against the Acquiree for any commission, fee or other compensation as a finder or broker, or in any similar capacity, based upon arrangements made by or on behalf of the Acquiree, and the Acquiree will indemnify and hold the Acquiror and the Acquiror Principal Shareholder and harmless against any liability or expense arising out of, or in connection with, any such claim.

Section 4.9 Disclosure. No representation or warranty of the Acquiree contained in this Agreement and no statement or disclosure made by or on behalf of the Acquiree to the Acquiror or the Acquiror Principal Shareholder pursuant to this Agreement or any other agreement contemplated herein contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading.

Article v
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR AND
THE ACQUIROR PRINCIPAL SHAREHOLDER

The Acquiror and the Acquiror Principal Shareholder, jointly and severally, hereby represent and warrant to the Acquiree, and each of the Acquiree Shareholders, subject to the exceptions and qualifications specifically set forth or disclosed in writing in the disclosure schedule delivered by the Acquiror Principal Shareholder to the Acquiree, and the Acquiree Shareholders simultaneously herewith (the “Acquiror Disclosure Schedule”), that the statements contained in this Article V are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as thought the Closing Date were substituted for the date of this Agreement throughout this Article V) (except where another date or period of time is specifically stated herein for a representation or warranty). The Acquiror Disclosure Schedule shall be arranged according to the numbered and lettered paragraphs of this Article V and any disclosure in the Acquiror Disclosure Schedule shall qualify the corresponding paragraph in this Article V. The Acquiree, the Acquiree Shareholders and, after the Closing, the Acquiror, shall be entitled to rely on the representations and warranties set forth in this Article V regardless of any investigation or review conducted by the Acquiree, or the Acquiree Shareholders prior to the Closing.

Section 5.1 Organization and Qualification. The Acquiror is a corporation duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, has all requisite corporate authority and power, Licenses, authorizations, consents and approvals to carry on its business as presently conducted and to own, hold and operate its properties and assets as now owned, held and operated by it, and is duly qualified to do business and in good standing in each jurisdiction in which the failure to be so qualified would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on the Acquiror.

Section 5.2 Authority. The Acquiror and the Acquiror Principal Shareholder have all requisite authority and power, Licenses, authorizations, consents and approvals to enter into and deliver this Agreement and any of the other Transaction Documents to which the Acquiror, the Acquiror Principal Shareholder or any of them is a party and any other certificate, agreement, document or instrument to be executed and delivered by the Acquiror, the Acquiror Principal Shareholder or any of them in connection with the transactions contemplated hereby and thereby and to perform their respective obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the other Transaction Documents by the Acquiror and the Acquiror Principal Shareholder and the performance by the Acquiror and the Acquiror Principal Shareholder of their respective obligations hereunder and thereunder and the consummation by the Acquiror and the Acquiror Principal Shareholder of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Acquiror and the Acquiror Principal Shareholder. The Acquiror does not need to give any notice to, make any filing with, or obtain any authorization, consent or approval of any Governmental Authority in order for the Parties to execute, deliver or perform this Agreement or the transactions contemplated hereby. This Agreement has been, and each of the Transaction Documents to which the Acquiror, the Acquiror Principal Shareholder or any of them, as applicable, are a party will be, duly and validly authorized and approved, executed and delivered by the Acquiror and the Acquiror Principal Shareholder.

Section 5.3 Binding Obligations. Assuming this Agreement and the Transaction Documents have been duly and validly authorized, executed and delivered by the parties hereto and thereto other than the Acquiror and the Acquiror Principal Shareholder, this Agreement and each of the Transaction Documents to which the Acquiror, the Acquiror Principal Shareholder or any of them, as applicable, are a party are duly authorized, executed and delivered by the Acquiror and such Acquiror Principal Shareholder, as applicable, and constitutes the legal, valid and binding obligations of the Acquiror and such Acquiror Principal Shareholder, as applicable, enforceable against the Acquiror and such Acquiror Principal Shareholder, as applicable, in accordance with their respective terms, except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar Laws affecting the enforcement of creditors rights generally.

Section 5.4 No Conflicts. Neither the execution nor the delivery by the Acquiror or the Acquiror Principal Shareholder of this Agreement or any Transaction Document to which the Acquiror, the Acquiror Principal Shareholder or any of them is a party, nor the consummation or performance by the Acquiror and the Acquiror Principal Shareholder of the transactions contemplated hereby or thereby will, directly or indirectly, (a) contravene, conflict with, or result in a violation of any provision of the Acquiror Organizational Documents, (b) contravene, conflict with or result in a violation of any Law, Order, charge or other restriction or decree of any Governmental Authority or any rule or regulation of the Principal Market applicable to the Acquiror or the Acquiror Principal Shareholder, or by which the Acquiror or the Acquiror Principal Shareholder or any of their respective assets and properties are bound or affected, (c) contravene, conflict with, result in any breach of, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, impair the rights of the Acquiror under, or alter the obligations of any Person under, or create in any Person the right to terminate, amend, accelerate or cancel, or require any notice, report or other filing (whether with a Governmental Authority or any other Person) pursuant to, or result in the creation of a Lien on any of the assets or properties of the Acquiror under, any note, bond, mortgage, indenture, Contract, License, permit, franchise or other instrument or obligation to which the Acquiror or the Acquiror Principal Shareholder is a party or by which the Acquiror or the Acquiror Principal Shareholder or any of their respective assets and properties are bound or affected; or (d) contravene, conflict with, or result in a violation of, the terms or requirements of, or give any Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate or modify, any Licenses, permits, authorizations, approvals, franchises or other rights held by the Acquiror or that otherwise relate to the business of, or any of the properties or assets owned or used by, the Acquiror, except, in the case of clauses (b), (c), or (d), for any such contraventions, conflicts, violations, or other occurrences as would not have a Material Adverse Effect on the Acquiror.

Section 5.5 Subsidiaries. Except as set forth on Schedule 5.5, the Acquiror does not own, directly or indirectly, any equity or other ownership interest in any corporation, partnership, joint venture or other entity or enterprise. There are no Contracts or other obligations (contingent or otherwise) of the Acquiror to retire, repurchase, redeem or otherwise acquire any outstanding shares of capital stock of, or other ownership interests in, any other Person or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other Person.

Section 5.6 Organizational Documents. The Acquiror has delivered or made available to Acquiree a true and correct copy of the Certificate of Incorporation and Bylaws of the Acquiror and any other organizational documents of the Acquiror, each as amended, and each such instrument is in full force and effect (the “Acquiror Organizational Documents”). The Acquiror is not in violation of any of the provisions of its Acquiror Organizational Documents. The authorized capital stock of the Acquiror consists of (i) 100,000,000 shares of Acquiror Common Stock, $0.001 par value per share, of which 9,656,194 shares of Acquiror Common Stock are issued and outstanding; (ii) 20,000,000 shares of preferred stock, $0.001 par value per share, of which none are issued and outstanding. Except as set forth above, no shares of capital stock or other voting securities of the Acquiror were issued, reserved for issuance or outstanding. All outstanding shares of the capital stock of the Acquiror are, and all such shares that may be issued prior to the Closing Date will be when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the Laws of the jurisdiction of the Acquiror’s organization, the Acquiror Organizational Documents or any Contract to which the Acquiror is a party or otherwise bound. Except as set forth on Schedule 5.6(a), there are not any bonds, debentures, notes or other Indebtedness of the Acquiror having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which holders of Acquiror Common Stock may vote. Except as set forth on Schedule 5.6(a), there are no options, warrants, rights, convertible or exchangeable securities, “phantom” stock rights, stock appreciation rights, stock-based performance units, commitments, Contracts, arrangements or undertakings of any kind to which the Acquiror is a party or by which it is bound (x) obligating the Acquiror to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in, the Acquiror, (y) obligating the Acquiror to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, Contract, arrangement or undertaking or (z) that give any Person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights occurring to holders of the capital stock of the Acquiror. There are no outstanding Contracts or obligations of the Acquiror to repurchase, redeem or otherwise acquire any shares of capital stock of the Acquiror. There are no registration rights, proxies, voting trust agreements or other agreements or understandings with respect to any class or series of any capital stock or other security of the Acquiror. The stockholder list provided to the Acquiree and the Acquiree Shareholders is a current stockholder list generated by its stock transfer agent, and such list accurately reflects all of the issued and outstanding shares of the Acquiror Common Stock.

(b) The issuance of the Acquiror Shares to the Acquiree Shareholders has been duly authorized and, upon delivery to the Acquiree Shareholders of certificates therefor, respectively, in accordance with the terms of this Agreement, the Acquiror Shares, will have been validly issued and fully paid, and will be nonassessable, have the rights, preferences and privileges specified, will be free of preemptive rights and will be free and clear of all Liens and restrictions, other than Liens created by the Acquiree Shareholders, and restrictions on transfer imposed by this Agreement and the Securities Act.

Section 5.7 Compliance with Laws. The business and operations of the Acquiror have been and are being conducted in accordance with all applicable Laws and Orders. Except as set forth in Schedule 5.7, the Acquiror is not in conflict with, or in default or violation of and, to the Knowledge of the Acquiror or the Acquiror Principal Shareholder, is not under investigation with respect to and has not been threatened to be charged with or given notice of any violation of or default under, any (i) Law, rule, regulation, judgment or Order, or (ii) note, bond, mortgage, indenture, Contract, License, permit, franchise or other instrument or obligation to which the Acquiror or the Acquiror Principal Shareholder is a party or by which the Acquiror or the Acquiror Principal Shareholder or any of their respective assets and properties are bound or affected. There is no agreement, judgment or Order binding upon the Acquiror or the Acquiror Principal Shareholder which has, or could reasonably be expected to have, the effect of prohibiting or materially impairing any business practice of the Acquiror or the conduct of business by the Acquiror as currently conducted. The Acquiror has filed all forms, reports and documents required to be filed with any Governmental Authority and the Acquiror has made available such forms, reports and documents to Acquiree and the Acquiree Shareholders. As of their respective dates, such forms, reports and documents complied in all material respects with the applicable requirements pertaining thereto and none of such forms, reports and documents contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

Section 5.8 Certain Proceedings. There is no Action pending against, or to the Knowledge of the Acquiror or the Acquiror Principal Shareholder, threatened against or affecting, the Acquiror or the Acquiror Principal Shareholder by any Governmental Authority or other Person with respect to the Acquiror or its respective businesses or that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the transactions contemplated by this Agreement. The Acquiror is not in violation of and, to the Knowledge of Acquiror or the Acquiror Principal Shareholder, is not under investigation with respect to and has not been threatened to be charged with or given notice of any violation of, any applicable Law, rule, regulation, judgment or Order. The Acquiror or any director or officer (in his or her capacity as such) of the Acquiror, is or has not been the subject of any Action involving a claim or violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.

Section 5.9 No Brokers or Finders. No Person has, or as a result of the transactions contemplated herein will have, any right or valid claim against the Acquiror, or the Acquiror Principal Shareholder for any commission, fee or other compensation as a finder or broker, or in any similar capacity, based upon arrangements made by or on behalf of the Acquiror, or the Acquiror Principal Shareholder, and the Acquiror Principal Shareholder will indemnify and hold the Acquiror, the Acquiree and the Acquiree Shareholders and harmless against any liability or expense arising out of, or in connection with, any such claim.

Section 5.10 Contracts. Except as disclosed in the SEC Reports, there are no Contracts that are material to the business, properties, assets, condition (financial or otherwise), results of operations or prospects of the Acquiror. The Acquiror is not in violation of or in default under (nor does there exist any condition which upon the passage of time or the giving of notice would cause such a violation of or default under) any Contract to which it is a party or to which it or any of its properties or assets is subject, except for violations or defaults that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect of the Acquiror.

Section 5.11 Tax Matters.Tax Returns. The Acquiror has filed all Tax Returns required to be filed (if any) by or on behalf of the Acquiror, as applicable, and has paid all Taxes of the Acquiror, as applicable, required to have been paid (whether or not reflected on any Tax Return). No Governmental Authority in any jurisdiction has made a claim, assertion or threat to the Acquiror that the Acquiror is or may be subject to taxation by such jurisdiction; there are no Liens with respect to Taxes on the Acquiror’s property or assets; and there are no Tax rulings, requests for rulings, or closing agreements relating to the Acquiror for any period (or portion of a period) that would affect any period after the date hereof.

(b) No Adjustments, Changes. Neither the Acquiror nor any other Person on behalf of the Acquiror (a) has executed or entered into a closing agreement pursuant to Section 7121 of the Code or any predecessor provision thereof or any similar provision of state, local or foreign law; or (b) has agreed to or is required to make any adjustments pursuant to Section 481(a) of the Code or any similar provision of state, local or foreign law.

(c) No Disputes. There is no pending audit, examination, investigation, dispute, proceeding or claim with respect to any Taxes of the Acquiror, nor is any such claim or dispute pending or contemplated. The Acquiror has delivered to the Acquiree true, correct and complete copies of all Tax Returns and examination reports and statements of deficiencies assessed or asserted against or agreed to by the Acquiror, if any, since its inception and any and all correspondence with respect to the foregoing.

(d) Not a U.S. Real Property Holding Corporation. The Acquiror is not and has never been a U.S. real property holding corporation within the meaning of Section 897(c)(2) of the Code at any time during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

(e) No Tax Allocation, Sharing. The Acquiror is not and has never been a party to any Tax allocation or sharing agreement.

(f) No Other Arrangements. The Acquiror is not a party to any Contract or arrangement for services that would result, individually or in the aggregate, in the payment of any amount that would not be deductible by reason of Section 162(m), 280G or 404 of the Code. The Acquiror is not a “consenting corporation” within the meaning of Section 341(f) of the Code. The Acquiror does not have any “tax-exempt bond financed property” or “tax-exempt use property” within the meaning of Section 168(g) or (h), respectively of the Code. The Acquiror does not have any outstanding closing agreement, ruling request, request for consent to change a method of accounting, subpoena or request for information to or from a Governmental Authority in connection with any Tax matter. During the last two years, the Acquiror has not engaged in any exchange with a related party (within the meaning of Section 1031(f) of the Code) under which gain realized was not recognized by reason of Section 1031 of the Code. The Acquiror is not a party to any reportable transaction within the meaning of Treasury Regulation Section 1.6011-4.

Section 5.12 Labor Matters. There are no collective bargaining or other labor union agreements to which the Acquiror is a party or by which it is bound. No material labor dispute exists or, to the Knowledge of the Acquiror, is imminent with respect to any of the employees of the Acquiror.

(b) Except as set forth in Section 5.13 of the Acquiror Disclosure Schedule, the Acquiror does not have any employees, independent contractors or other Persons providing services to them. The Acquiror is in full compliance with all Laws regarding employment, wages, hours, benefits, equal opportunity, collective bargaining, the payment of Social Security and other taxes, and occupational safety and health. The Acquiror is not liable for the payment of any compensation, damages, taxes, fines, penalties or other amounts, however designated, for failure to comply with any of the foregoing Laws.

(c) No director, officer or employee of the Acquiror is a party to, or is otherwise bound by, any Contract (including any confidentiality, non-competition or proprietary rights agreement) with any other Person that in any way adversely affects or will materially affect (a) the performance of his or her duties as a director, officer or employee of the Acquiror or (b) the ability of the Acquiror to conduct its business. Each employee of the Acquiror is employed on an at-will basis and the Acquiror does not have any Contract with any of its employees which would interfere with its ability to discharge its employees.

Section 5.13 Employee Benefits. Except as set forth on Schedule 5.13, the Acquiror has not maintained or contributed to any bonus, pension, profit sharing, deferred compensation, incentive compensation, stock ownership, stock purchase, stock option, phantom stock, retirement, vacation, severance, disability, death benefit, hospitalization, medical or other plan, arrangement or understanding (whether or not legally binding) providing benefits to any current or former employee, officer or director of the Acquiror. There are no employment, consulting, indemnification, severance or termination agreements or arrangements between the Acquiror and any current or former employee, officer or director of the Acquiror, nor does the Acquiror have any general severance plan or policy.

(b) The Acquiror has not maintained or contributed to any “employee pension benefit plans” (as defined in Section 3(2) of ERISA), “employee welfare benefit plans” (as defined in Section 3(1) of ERISA) or any other benefit plan for the benefit of any current or former employees, consultants, officers or directors of the Acquiror.

Section 5.14 Title to Assets. Except as set forth on Schedule 5.14, the Acquiror does not own any real property. The Acquiror has sufficient title to, or valid leasehold interests in, all of its properties and assets used in the conduct of its businesses. All such assets and properties, other than assets and properties in which the Acquiror has leasehold interests, are free and clear of all Liens, except for Liens that, in the aggregate, do not and will not materially interfere with the ability of the Acquiror to conduct business as currently conducted.

Section 5.15 Intellectual Property. The Acquiror does not own, use or license any Intellectual Property in its business as presently conducted.

Section 5.16 SEC Reports. The Acquiror has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC since November 19, 2010, pursuant to the Exchange Act (the “SEC Reports”).

(b) As of their respective dates, the SEC Reports and any registration statements filed by the Acquiror under the Securities Act (the “Registration Statements”) complied in all material respects with the requirements of the Exchange Act and the Securities Act, as applicable, and the rules and regulations of the SEC promulgated thereunder, and none of the SEC Reports or Registration Statements, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Acquiror included in the SEC Reports and the Registration Statements comply in all respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing, were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto, or, in the case of unaudited statements as permitted by Form 10-Q), and fairly present in all material respects (subject in the case of unaudited statements, to normal, recurring audit adjustments) the financial position of the Acquiror as at the dates thereof and the results of its operations and cash flows for the periods then ended. The disclosure set forth in the SEC Reports and Registration Statements regarding the Acquiror’s business is current and complete and accurately reflects operations of the Acquiror as it exists as of the date hereof.

Section 5.17 Internal Accounting Controls. As set forth in the SEC Reports, the Acquiror maintains a system of internal accounting controls sufficient to provide reasonable assurance that (a) transactions are executed in accordance with management’s general or specific authorizations, (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (c) access to assets is permitted only in accordance with management’s general or specific authorization, and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. As set forth in the SEC Reports, the Acquiror has established disclosure controls and procedures for the Acquiror and designed such disclosure controls and procedures to ensure that material information relating to the Acquiror is made known to the officers by others within the Acquiror. As set forth in the SEC Reports, the Acquiror’s officers have evaluated the effectiveness of the Acquiror’s controls and procedures. Since the Acquiror Most Recent Fiscal Year End, there have been no significant changes in the Acquiror’s internal controls or, to the Knowledge of the Acquiror or the Acquiror Principal Shareholder, in other factors that could significantly affect the Acquiror’s internal controls.

Section 5.18 Application of Takeover Protections. The Acquiror has taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Acquiror Organizational Documents or the Laws of its state of incorporation that is or could become applicable to the transactions contemplated hereby.

Section 5.19 Transactions With Affiliates and Employees. Except as disclosed in the SEC Reports, no officer, director, employee or stockholder of the Acquiror or any Affiliate of any such Person, has or has had, either directly or indirectly, an interest in any transaction with the Acquiror (other than for services as employees, officers and directors), including any Contract or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any such Person or, to the Knowledge of the Acquiror or the Acquiror Principal Shareholder, any entity in which any such Person has an interest or is an officer, director, trustee or partner.

Section 5.20 Liabilities. Except as set forth in the SEC Reports and on Schedule 5.20, the Acquiror does not have any Liability (and there is no Action pending, or to the Knowledge of the Acquiror or the Acquiror Principal Shareholder, threatened against the Acquiror that would reasonably be expected to give rise to any Liability). The Acquiror is not a guarantor nor is it otherwise liable for any Liability or obligation (including Indebtedness) of any other Person. There are no financial or contractual obligations of the Acquiror (including any obligations to issue capital stock or other securities) executory after the Closing Date. Except for the liabilities listed on Schedule 5.20, all Liabilities of the Acquiror shall have been paid off at or prior to the Closing and shall in no event remain Liabilities of the Acquiror, the Acquiree or the Acquiree Shareholders following the Closing.

Section 5.21 Bank Accounts and Safe Deposit Boxes. The Acquiror has several bank accounts which will be closed on or prior to the Closing.

Section 5.22 Investment Company. Neither the Acquiror nor its affiliate, immediately following the Closing, will become, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

Section 5.23 Bank Holding Company Act. The Acquiror is not subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Neither the Acquiror nor any of its Affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any equity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Acquiror nor any of its Affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.

Section 5.24 Public Utility Holding Act. The Acquiror is not a “holding company,” or an “affiliate” of a “holding company,” as such terms are defined in the Public Utility Holding Act of 2005.

Section 5.25 Federal Power Act. The Acquiror is not subject to regulation as a “public utility” under the Federal Power Act, as amended.

Section 5.26 Money Laundering Laws. The operations of the Acquiror is and has been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all U.S. and non-U.S. jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority (collectively, the “Money Laundering Laws”) and no Proceeding involving the Acquiror with respect to the Money Laundering Laws is pending or, to the knowledge of the Acquiror, threatened.

Section 5.27 Foreign Corrupt Practices. The Acquiror, nor, to the Knowledge of the Acquiror or the Acquiror Principal Shareholder, any director, officer, agent, employee or other Person acting on behalf of the Acquiror has, in the course of its actions for, or on behalf of, the Acquiror (a) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (b) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (c) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (d) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

Section 5.28 Absence of Certain Changes or Events. Except as set forth in the SEC Reports, from the Acquiror Most Recent Fiscal Year End (a) the Acquiror has conducted its business only in Ordinary Course of Business; (b) there has not been any change in the assets, Liabilities, financial condition or operating results of the Acquiror, except changes in the Ordinary Course of Business that have not caused, in the aggregate, a Material Adverse Effect on the Acquiror; and (c) the Acquiror has not completed or undertaken any of the actions set forth in Section 5.2. The Acquiror has not taken any steps to seek protection pursuant to any Law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does the Acquiror have any Knowledge or reason to believe that any of its respective creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so.

Section 5.29 Disclosure. All documents and other papers delivered or made available by or on behalf of the Acquiror or the Acquiror Principal Shareholder in connection with this Agreement are true, complete, correct and authentic in all material respects. No representation or warranty of the Acquiror or the Acquiror Principal Shareholder contained in this Agreement and no statement or disclosure made by or on behalf of the Acquiror or the Acquiror Principal Shareholder to the Acquiree or any Acquiree Shareholder pursuant to this Agreement or any other agreement contemplated herein contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading.

Section 5.30 Undisclosed Events. No event, Liability, development or circumstance has occurred or exists, or is contemplated to occur with respect to the Acquiror, or its businesses, properties, prospects, operations or financial condition, that would be required to be disclosed by the Acquiror under applicable securities laws on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Acquiror of its common stock and which has not been publicly announced or will not be publicly announced in a current report on Form 8-K filed by the Acquiror filed within four (4) Business Days after the Closing.

Section 5.31 Non-Public Information. Neither the Acquiror nor any Person acting on its behalf has provided the Acquiree or Acquiree Shareholders or their respective agents or counsel with any information that the Acquiror or the believes constitutes material, non-public information except insofar as the existence and terms of the proposed transactions hereunder may constitute such information and except for information that will be disclosed by the Acquiror in a current report on Form 8-K filed by the Acquiror within four (4) Business Days after the Closing.

Article vI
CONDUCT PRIOR TO CLOSING

Section 6.1 Conduct of Business. At all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to the terms hereof or the Closing, the Acquiror Principal Shareholder shall, and shall cause the Acquiror to, (a) carry on its business diligently and in the usual, regular and Ordinary Course of Business, in substantially the same manner as heretofore conducted and in compliance with all applicable Laws, (b) pay or perform its material obligations when due, (c) use its commercially reasonable efforts, consistent with past practices and policies, to preserve intact its present business organization, keep available the services of its present officers and employees and preserve its relationships with customers, suppliers, distributors, licensors, licensees and others with which it has business dealings, and (d) keep its business and properties substantially intact, including its present operations, physical facilities and working conditions. In furtherance of the foregoing and subject to applicable Law, the Acquiror shall confer with Acquiree, as promptly as practicable, prior to taking any material actions or making any material management decisions with respect to the conduct of the business of the Acquiror.

Section 6.2 Restrictions on Conduct of Business. Without limiting the generality of the terms of Section 6.1 hereof, except (i) as required by the terms hereof, or (ii) to the extent that Acquiree shall otherwise consent in writing, at all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to the terms hereof or the Closing, neither the Acquiror, nor the Acquiror Principal Shareholder shall do any of the following, or permit the Acquiror to do any of the following:

(a) except as required by applicable Law, waive any stock repurchase rights, accelerate, amend or change the period of exercisability of options or restricted stock, or reprice options granted under any employee, consultant or director stock plans or authorize cash payments in exchange for any options granted under any of such plans;

(b) enter into any partnership arrangements, joint development agreements or strategic alliances, other than in the Ordinary Course of Business;

(c) (i) increase the compensation or fringe benefits of, or pay any bonuses or special awards to, any present or former director, officer, stockholder or employee of the Acquiror (except for increases in salary or wages in the Ordinary Course of Business) or increase any fees to any independent contractors, (ii) grant any severance or termination pay to any present or former director, officer or employee of the Acquiror, (iii) enter into, amend or terminate any employment Contract, independent contractor agreement or collective bargaining agreement, written or oral, or (iv) establish, adopt, enter into, amend or terminate any bonus, profit sharing, incentive, severance, or other plan, agreement, program, policy, trust, fund or other arrangement that would be an employee benefit plan if it were in existence as of the date of this Agreement, except as required by applicable Law;

(d) issue, deliver, sell, authorize, pledge or otherwise encumber, or propose any of the foregoing with respect to, any shares of capital stock or any securities convertible into, or exercisable or exchangeable for, shares of capital stock of the Acquiror, or subscriptions, rights, warrants or options to acquire any shares of capital stock or any securities convertible into, or exercisable or exchangeable for, shares of capital stock of the Acquiror or enter into other Contracts or commitments of any character obligating it to issue any such shares of capital stock of the Acquiror, or securities convertible into, or exercisable or exchangeable for, shares of capital stock of the Acquiror;

(e) cause, permit or propose any amendments to any Acquiror Organizational Documents;

(f) acquire or agree to acquire by merging or consolidating with, or by purchasing any equity interest in or a portion of the assets of, or by any other manner, any business or any corporation, limited liability company, general or limited partnership, joint venture, association, business trust or other business enterprise or entity, or otherwise acquire or agree to acquire any assets other than in the Ordinary Course of Business;

(g) adopt a plan of merger, complete or partial liquidation, dissolution, consolidation, restructuring, recapitalization or other reorganization;

(h) except as required by applicable Law, adopt or amend any employee benefit plan or employee stock purchase or employee stock option plan, or enter into any employment Contract or collective bargaining agreement (other than offer letters and letter agreements entered into in the Ordinary Course of Business with employees who are terminable “at will”), pay any special bonus or special remuneration to any director or employee other than in the Ordinary Course of Business, or increase the salaries or wage rates or fringe benefits (including rights to severance or indemnification) of its officers;

(i) except in the Ordinary Course of Business, modify, amend or terminate any Contract to which the Acquiror is a party, or waive, delay the exercise of, release or assign any rights or claims thereunder;

(j) sell, lease, license, mortgage or otherwise encumber or subject to any Lien or otherwise dispose of any of its properties or assets, except in the Ordinary Course of Business;

(k) (i) incur any Indebtedness or guarantee any such Indebtedness of another Person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Acquiror, guarantee any debt securities of another Person, enter into any “keep well” or other agreement to maintain any financial statement condition of another Person or enter into any arrangement having the economic effect of any of the foregoing, except for endorsements and guarantees for collection, short-term borrowings and lease obligations, in each case incurred in the Ordinary Course of Business, or (ii) make any loans, advances or capital contributions to, or investment in, any other Person, other than to the Acquiror;

(l) pay, discharge or satisfy any claims (including claims of stockholders), Liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), except for the payment, discharge or satisfaction of liabilities or obligations in the Ordinary Course of Business or in accordance with their terms as in effect on the date hereof, or waive, release, grant, or transfer any rights of material value or modify or change in any material respect any existing License, Contract or other document, other than in the Ordinary Course of Business;

(m) change any financial reporting or accounting principle, methods or practices used by it unless otherwise required by applicable Law or GAAP;

(n) settle or compromise any litigation (whether or not commenced prior to the date of this Agreement);

(o) (i) declare, set aside or pay any dividends on, or make any other distributions in respect of, any of its capital stock, (ii) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, or (iii) purchase, redeem or otherwise acquire any shares of capital stock of the Acquiror or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities;

(p) enter into any transaction with any of its directors, officers, stockholders, or other Affiliates;

(q) make any capital expenditure in excess of $50,000;

(r) (i) grant any license or sublicense of any rights under or with respect to any Intellectual Property; (ii) dispose of or let lapse and Intellectual Property, or any application for the foregoing, or any license, permit or authorization to use any Intellectual Property or (iii) amend, terminate any other Contract, license or permit to which the Acquiror is a party;

(s) make, or permit to be made, without the prior written consent of Acquiree any material Tax election which would affect the Acquiror; or

(t) commit to or otherwise to take any of the actions described in this Section 6.2.

Article vii
ADDITIONAL AGREEMENTS

Section 7.1 Access to Information. The Acquiror shall afford Acquiree its accountants, counsel and other representatives (including the Acquiree Shareholders), reasonable access, during normal business hours, to the properties, books, records and personnel of the Acquiror at any time prior to the Closing in order to enable Acquiree obtain all information concerning the business, assets and properties, results of operations and personnel of the Acquiror as Acquiree may reasonably request. No information obtained in the foregoing investigation by Acquiree pursuant to this Section 7.1 shall affect or be deemed to modify any representation or warranty contained herein or the conditions to the obligations of the Acquiror or the Acquiror Principal Shareholder to consummate the transactions contemplated hereby.

Section 7.2 Legal Requirements. The Parties shall take all reasonable actions necessary or desirable to comply promptly with all legal requirements which may be imposed on them with respect to the consummation of the transactions contemplated by this Agreement (including, without limitation, furnishing all information required in connection with approvals of or filings with any Governmental Authority, and prompt resolution of any litigation prompted hereby), and shall promptly cooperate with, and furnish information to, the other Parties to the extent necessary in connection with any such requirements imposed upon any of them in connection with the consummation of the transactions contemplated by this Agreement.

Section 7.3 Notification of Certain Matters. Acquiree shall give prompt notice to the Acquiror Principal Shareholder, and the Acquiror Principal Shareholder shall give prompt notice to the Acquiree, of the occurrence, or failure to occur, of any event, which occurrence or failure to occur would be reasonably likely to cause (i) any representation or warranty contained in this Agreement to be untrue or inaccurate at the Closing, such that the conditions set forth in Article X hereof, as the case may be, would not be satisfied or fulfilled as a result thereof, or (ii) any material failure of any Acquiree, Acquiree Shareholder, the Acquiror or the Acquiror Principal Shareholder, as the case may be, or of any officer, director, employee or agent thereof, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it under this Agreement. Notwithstanding the foregoing, the delivery of any notice pursuant to this Section 7.3 shall not limit or otherwise affect the rights and remedies available hereunder to the Party receiving such notice.

Article Viii
POST CLOSING COVENANTS

Section 8.1 General. In case at any time after the Closing any further action is necessary to carry out the purposes of this Agreement, each of the Parties will take such further action (including the execution and delivery of such further instruments and documents) as any other Party reasonably may request.

Section 8.2 Litigation Support. In the event and for so long as any Party actively is contesting or defending against any action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand in connection with (i) any transaction contemplated under this Agreement or (ii) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction that existed on or prior to the Closing Date involving the Acquiror or Acquiree, each of the other Parties will cooperate with such Party and such Party’s counsel in the contest or defense, make available any personnel under their control, and provide such testimony and access to their books and records as shall be reasonably necessary in connection with the contest or defense, all at the sole cost and expense of the contesting or defending Party.

Section 8.3 Assistance with Post-Closing SEC Reports and Inquiries. After the Closing Date, the Acquiror Principal Shareholder shall use its reasonable best efforts to provide such information available to them, including information, filings, reports, financial statements or other circumstances of the Acquiror occurring, reported or filed prior to the Closing, as may be necessary or required for the preparation of the post-Closing Date reports that the Acquiror is required to file with the SEC, or filings required to address and resolve matters as may relate to the period prior to the Closing and any SEC comments relating thereto or any SEC inquiry thereof.

Section 8.4 Public Announcements. The Acquiror shall file with the SEC a Form 8-K describing the material terms of the transactions contemplated hereby as soon as practicable following the Closing Date but in no event more than four (4) business days following the Closing Date. Prior to the Closing Date, the Parties shall consult with each other in issuing the Form 8-K, press releases or otherwise making public statements or filings and other communications with the SEC or any regulatory agency or stock market or trading facility with respect to the transactions contemplated hereby and no Party shall issue any such press release or otherwise make any such public statement, filings or other communications without the prior written consent of the other Parties, which consent shall not be unreasonably withheld or delayed, except that no prior consent shall be required if such disclosure is required by Law, in which case the disclosing Party shall provide the other Parties with prior notice of no less than three (3) calendar days, of such public statement, filing or other communication and shall incorporate into such public statement, filing or other communication the reasonable comments of the other Parties.

Article iX
CONDITIONS TO CLOSING

Section 9.1 Conditions to Obligation of the Parties Generally. The Parties shall not be obligated to consummate the transactions to be performed by each of them in connection with the Closing if, on the Closing Date, (i) any Action shall be pending or threatened before any Governmental Authority wherein an Order or charge would (A) prevent consummation of any of the transactions contemplated by this Agreement or (B) cause any of the transactions contemplated by this Agreement to be rescinded following consummation, (ii) any Law or Order which would have any of the foregoing effects shall have been enacted or promulgated by any Governmental Authority; or (iii) the Acquiree shall not have received an audit report with respect to its two most recently completed fiscal years from an independent accounting firm that is registered with the Public Company Accounting Oversight Board.

Section 9.2 Conditions to Obligation of the Acquiree Parties. The obligations of the Acquiree, and the Acquiree Shareholders to enter into and perform their respective obligations under this Agreement are subject, at the option of the Acquiree and the Acquiree Shareholders, to the fulfillment on or prior to the Closing Date of the following conditions, any one or more of which may be waived by the Acquiree and the Acquiree Shareholders in writing:

(a) The representations and warranties of the Acquiror and the Acquiror Principal Shareholder set forth in this Agreement shall be true and correct in all material respects as of the Closing Date (except to the extent such representations and warranties are specifically made as of a particular date, in which case such representations and warranties shall be true and correct as of such date);

(b) The Acquiror shall have performed and complied with all of their covenants hereunder in all material respects through the Closing, except to the extent that such covenants are qualified by terms such as “material” and “Material Adverse Effect,” in which case the Acquiror shall have performed and complied with all of such covenants in all respects through the Closing;

(c) No action, suit, or proceeding shall be pending or, to the Knowledge of the Acquiror, threatened before any Governmental Authority wherein an Order or charge would (A) affect adversely the right of the Acquiree Shareholders to own the Acquiror Shares or to control the Acquiror, or (B) affect adversely the right of the Acquiror to own its assets or to operate its business (and no such Order or charge shall be in effect), nor shall any Law or Order which would have any of the foregoing effects have been enacted or promulgated by any Governmental Authority;

(d) No event, change or development shall exist or shall have occurred since the Acquiror Most Recent Fiscal Year End that has had or is reasonably likely to have a Material Adverse Effect on the Acquiror;

(e) All consents, waivers, approvals, authorizations or Orders required to be obtained, and all filings required to be made, by the Acquiror for the authorization, execution and delivery of this Agreement and the consummation by it of the transactions contemplated by this Agreement, shall have been obtained and made by the Acquiror and Acquiror shall have delivered proof of same to the Acquiree, the Parent and Acquiree Shareholders;

(f) Acquiror shall have filed all reports and other documents required to be filed by it under the U.S. federal securities laws through the Closing Date;

(g) There shall not be any outstanding obligation or Liability (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to become due), except as set forth on Schedule 5.20 of Acquiror’s Disclosure Schedule, of the Acquiror, whether or not known to the Acquiror, as of the Closing;

(h) Acquiror shall have delivered to the Acquiree, and Acquiree Shareholders a certificate, dated the Closing Date, executed by an officer of the Acquiror, certifying the satisfaction of the conditions specified in Sections 9.2(a) through 9.2(l), inclusive, relating to the Acquiror;

(i) The Acquiror Principal Shareholder shall have delivered to the Acquiree, and Acquiree Shareholders a certificate, dated the Closing Date, executed by such Acquiror Principal Shareholder, certifying the satisfaction of the conditions specified in Section 9.2(a) inclusive, relating to such Acquiror Principal Shareholder;

(j) Acquiror shall have delivered to the Acquiree and the Acquiree Shareholders (i) a certificate evidencing the formation and good standing of the Acquiror in its jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction of formation as of a date within fifteen (15) days of the Closing Date; and (ii) a certificate evidencing the Acquiror’s qualification as a foreign corporation and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Acquiror conducts business and is required to so qualify, as of a date within five (5) days of the Closing Date;

(k) Acquiror shall have delivered to the Acquiree and the Acquiree Shareholders a certificate duly executed by the Secretary of the Acquiror and dated as of the Closing Date, as to (i) the resolutions as adopted by the Acquiror’s board of directors, in a form reasonably acceptable to the Acquiree, approving this Agreement and the Transaction Documents to which it is a party and the transactions contemplated hereby and thereby; (ii) the Acquiror Organizational Documents, each as in effect at the Closing; and (iv) the incumbency of each authorized officer of the Acquiror signing this Agreement and any other agreement or instrument contemplated hereby to which the Acquiror is a party;

(l) Acquiror shall have delivered to the Acquiree and the Acquiree Shareholders a statement from the Acquiror’s transfer agent regarding the number of issued and outstanding shares of Acquiror Common Stock immediately before the Closing;

(m) Acquiror shall have delivered to the Acquiree and the Acquiree Shareholders such pay-off letters and releases relating to any Liabilities of the Acquiror, provided, however, that no pay-off letters and releases shall be delivered for the Liabilities set forth on Schedule 5.20 of Acquiror’s Disclosure Schedule;

(n) Acquiror shall have delivered to the Acquiree and the Acquiree Shareholders duly executed letters of resignation from all of the directors and officers of the Acquiror, effective as of the Closing;

(o) Acquiror shall have delivered to the Acquiree and the Acquiree Shareholders a duly executed release by the current directors, officers and 10% or greater stockholders of the Acquiror and from such former directors, officers and 10% or greater stockholders of the Acquiror as the Acquiree and the Acquiree Shareholders shall reasonably request, in favor of the Acquiror, the Acquiree and the Acquiree Shareholders;

(p) Acquiror shall have delivered to the Acquiree and the Acquiree Shareholders resolutions of the Acquiror’s board of directors (i) appointing Hamid Emarlou to serve as Chief Executive Officer; (ii) appointing Hamid Emarlou to serve as Chief Financial Officer; (iii) nominating Hamid Emarlou to serve as Chairman of the Acquiror’s board of directors; and (iv) nominating Masoud Shahidi and an individual nominated by Eric Weissblum to serve as members of the Acquiror’s board of directors, effective as of the Closing;

(q) Acquiree and the Acquiree Shareholders shall have completed their legal, accounting and business due diligence of the Acquiror and the results thereof shall be satisfactory to the Acquiree and the Acquiree Shareholders in their sole and absolute discretion; and

(r) All actions to be taken by the Acquiror and the Acquiror Principal Shareholder in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby shall be reasonably satisfactory in form and substance to the Acquiree and the Acquiree Shareholders.

(s) certificates representing the new shares of Acquiror Stock issued to the Shareholders set forth on Exhibit A.

(t) Acquiror shall have delivered to the Acquiree and the Acquiree Shareholders Lock-Up and Resale Restriction Agreements executed by Acquiror Shareholders.

Section 9.3 Conditions to Obligation of the Acquiror Parties.The obligations of the Acquiror and the Acquiror Principal Shareholder to enter into and perform their respective obligations under this Agreement are subject, at the option of the Acquiror and the Acquiror Principal Shareholder, to the fulfillment on or prior to the Closing Date of the following conditions, any one or more of which may be waived by the Acquiror and the Acquiror Principal Shareholder in writing:

(a) The representations and warranties of the Acquiree and the Acquire Shareholders set forth in this Agreement shall be true and correct in all material respects as of the Closing Date (except to the extent such representations and warranties are specifically made as of a particular date, in which case such representations and warranties shall be true and correct as of such date);

(b) The Acquiree and the Acquirer Members shall have performed and complied with all of their covenants hereunder in all material respects through the Closing, except to the extent that such covenants are qualified by terms such as “material” and “Material Adverse Effect,” in which case the Acquiree and the Acquire Shareholders shall have performed and complied with all of such covenants in all respects through the Closing;

(c) All consents, waivers, approvals, authorizations or Orders required to be obtained, and all filings required to be made, by the Acquiror for the authorization, execution and delivery of this Agreement and the consummation by it of the transactions contemplated by this Agreement, shall have been obtained and made by the Acquiree and Acquiree shall have delivered proof of same to the Acquiror and Acquiror Principal Shareholder;

(d) Acquiree shall have delivered to the Acquiror and Acquiror Principal Shareholder a certificate, dated the Closing Date, executed by an officer of the Acquiree, certifying the satisfaction of the conditions specified in Sections 9.3(a) through 9.3(c), inclusive, relating to the Acquiree;

(e) Acquiree shall have delivered to the Acquiror and the Acquiror Principal Shareholder a certificate duly executed by the Secretary of the Acquiror and dated as of the Closing Date, as to (i) the resolutions as adopted by the Acquiror’s board of directors, in a form reasonably acceptable to the Acquiree, approving this Agreement and the Transaction Documents to which it is a party and the transactions contemplated hereby and thereby; (ii) the Acquiree Organizational Documents, each as in effect at the Closing; and (iii) the incumbency of each authorized officer of the Acquiree signing this Agreement and any other agreement or instrument contemplated hereby to which the Acquiree is a party;

(f) Acquiror and the Acquiror Principal Shareholder shall have completed their legal, accounting and business due diligence of the Acquiree and the results thereof shall be satisfactory to the Acquiror and the Acquiror Principal Shareholder in their sole and absolute discretion; and

(g) All actions to be taken by the Acquiree and the Acquiree Shareholders in connection with consummation of the transactions contemplated hereby and all payments, certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby shall be reasonably satisfactory in form and substance to the Acquiror and the Acquiror Principal Shareholder.

Article X
TERMINATION

Section 10.1 Grounds for Termination. Anything herein or elsewhere to the contrary notwithstanding, this Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing Date:

(a) by the mutual written agreement of the Parties;

(b) by the Acquiror or the Acquiree (by written notice of termination from such Party to the other Parties) if a Governmental Authority of competent jurisdiction shall have issued a final non-appealable Order, or shall have taken any other action having the effect of, permanently restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby; provided, however, that the right to terminate this Agreement under this Section 10.1(b) shall not be available to a Party if such Order was primarily due to the failure of such Party to perform any of its obligations under this Agreement;

(c) by the Acquiror, Acquiree or the Acquiree Shareholders (by written notice of termination from such Party to the other Parties) if any event shall occur after the date hereof that shall have made it impossible to satisfy a condition precedent to the terminating Party’s obligations to perform its obligations hereunder, unless the occurrence of such event shall be due to the failure of the terminating Party to perform or comply with any of the agreements, covenants or conditions hereof to be performed or complied with by such Party at or prior to the Closing;

(d) by Acquiree or the Acquiree Shareholders (by written notice of termination from Acquiree to the Acquiror Principal Shareholder, in which reference is made to this subsection) if, since the date of this Agreement, there shall have occurred any Material Adverse Effect on the Acquiror, or there shall have occurred any event or circumstance that, in combination with any other events or circumstances, could reasonably be expected to have, a Material Adverse Effect with respect to the Acquiror;

(e) by the Acquiree (by written notice of termination from the Acquiree to the Acquiror and the Acquiror Principal Shareholder, in which reference is made to the specific provision(s) of this subsection giving rise to the right of termination) if (i) any of Acquiror’s or the Acquiror Shareholder’s representations and warranties shall have been inaccurate as of the date of this Agreement or as of a date subsequent to the date of this Agreement (as if made on such subsequent date), such that the condition set forth in Section 9.3(a) would not be satisfied and such inaccuracy has not been cured by Acquiror or the Acquiror Principal Shareholder within five (5) Business Days after its receipt of written notice thereof and remains uncured at the time notice of termination is given, (ii) any of the Acquiror’s or Acquiror Principal Shareholder’s covenants contained in this Agreement shall have been breached, such that the condition set forth in Section 9.3(b) would not be satisfied, or (iii) any Action shall be initiated, threatened or pending which could reasonably be expected to materially and adversely affect the Acquiror or Acquiree (including, without limitation, any such Action relating to any alleged violation of, or non-compliance with, any applicable Law or any allegation of fraud or intentional misrepresentation); or

(f) by the Acquiror and the Acquiror Principal Shareholder (by written notice of termination from the Acquiror to the Acquiree, the Parent and the Acquiree Shareholders, in which reference is made to the specific provision(s) of this subsection giving rise to the right of termination) if (i) any of Acquiree’s or the Acquiree Shareholder’s representations and warranties shall have been inaccurate as of the date of this Agreement or as of a date subsequent to the date of this Agreement (as if made on such subsequent date) and such inaccuracy has not been cured by Acquiree or the Acquiree Shareholders within five (5) Business Days after its receipt of written notice thereof and remains uncured at the time notice of termination is given, or (ii) any of the Acquiree’s or Acquiree Shareholder’s covenants contained in this Agreement shall have been breached.

Section 10.2 Procedure and Effect of Termination. In the event of the termination of this Agreement by the Acquiror Principal Shareholder or Acquiree pursuant to Section 10.1 hereof, written notice thereof shall forthwith be given to the other Party. If this Agreement is terminated as provided herein (a) each Party will redeliver all documents, work papers and other material of any other Party relating to the transactions contemplated hereby, whether so obtained before or after the execution hereof, to the Party furnishing the same; provided, that each Party may retain one copy of all such documents for archival purposes in the custody of its outside counsel and (b) all filings, applications and other submission made by any Party to any Person, including any Governmental Authority, in connection with the transactions contemplated hereby shall, to the extent practicable, be withdrawn by such Party from such Person.

Section 10.3 Effect of Termination. If this Agreement is terminated pursuant to Section 10.1 hereof, this Agreement shall become void and of no further force and effect.

Article XI
SURVIVAL

Section 11.1 Survival. All representations, warranties, covenants, and obligations in this Agreement shall survive one year after the Closing. The right to indemnification, payment of damages or other remedy based on such representations, warranties, covenants, and obligations will not be affected by any investigation conducted with respect to, or any knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant, or obligation. The waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or obligation, will not affect the right to indemnification, payment of damages, or other remedy based on such representations, warranties, covenants, and obligations.

Article XiI
MISCELLANEOUS PROVISIONS

Section 12.1 Expenses. Except as otherwise expressly provided in this Agreement, each Party will bear its respective expenses incurred in connection with the preparation, execution, and performance of this Agreement and the transactions contemplated by this Agreement, including all fees and expenses of agents, representatives, counsel, and accountants. In the event of termination of this Agreement, the obligation of each Party to pay its own expenses will be subject to any rights of such Party arising from a breach of this Agreement by another Party.

Section 12.2 Confidentiality. The Parties will maintain in confidence, and will cause their respective directors, officers, employees, agents, and advisors to maintain in confidence, any written, oral, or other information obtained in confidence from another Person in connection with this Agreement or the transactions contemplated by this Agreement, unless (a) such information is already known to such Party or to others not bound by a duty of confidentiality or such information becomes publicly available through no fault of such Party, (b) the use of such information is necessary or appropriate in making any required filing with the SEC, or obtaining any consent or approval required for the consummation of the transactions contemplated by this Agreement, or (c) the furnishing or use of such information is required by or necessary or appropriate in connection with legal proceedings.

(b) In the event that any Party is required to disclose any information of another Person pursuant to clause (b) or (c) of Section 12.2(a) above, the Party requested or required to make the disclosure (the “Disclosing Party”) shall provide the Person that provided such information (the “Providing Party”) with prompt notice of any such requirement so that the providing party may seek a protective Order or other appropriate remedy and/or waive compliance with the provisions of this Section 12.2. If, in the absence of a protective Order or other remedy or the receipt of a waiver by the providing party, the disclosing party is nonetheless, in the opinion of counsel, legally compelled to disclose the information of the providing party, the disclosing party may, without liability hereunder, disclose only that portion of the providing party’s information which such counsel advises is legally required to be disclosed, provided that the disclosing party exercises its reasonable efforts to preserve the confidentiality of the providing party’s information, including, without limitation, by cooperating with the providing party to obtain an appropriate protective Order or other relief assurance that confidential treatment will be accorded the providing party’s information.

(c) If the transactions contemplated by this Agreement are not consummated, each Party will return or destroy all of such written information each party has regarding the other Parties.

Section 12.3 Notices. All notices, demands, consents, requests, instructions and other communications to be given or delivered or permitted under or by reason of the provisions of this Agreement or in connection with the transactions contemplated hereby shall be in writing and shall be deemed to be delivered and received by the intended recipient as follows: (i) if personally delivered, on the Business Day of such delivery (as evidenced by the receipt of the personal delivery service), (ii) if mailed certified or registered mail return receipt requested, two (2) Business Days after being mailed, (iii) if delivered by overnight courier (with all charges having been prepaid), on the Business Day of such delivery (as evidenced by the receipt of the overnight courier service of recognized standing), or (iv) if delivered by facsimile transmission or other electronic means, including email, on the Business Day of such delivery if sent by 6:00 p.m. in the time zone of the recipient, or if sent after that time, on the next succeeding Business Day. If any notice, demand, consent, request, instruction or other communication cannot be delivered because of a changed address of which no notice was given (in accordance with this Section 12.3), or the refusal to accept same, the notice, demand, consent, request, instruction or other communication shall be deemed received on the second business day the notice is sent (as evidenced by a sworn affidavit of the sender). All such notices, demands, consents, requests, instructions and other communications will be sent to the following addresses or facsimile numbers as applicable:

If to Acquiror or the Acquiror Principal Shareholder, to:		Vapir Enterprises Inc. 431 Fairway Drive, Suite 260 Deerfield Beach, Florida 33441 Attn: Chief Executive Officer Telephone No.: (732) 530-1267

If to the Acquiree, to:		Vapir, Inc. 2365 Paragon Dr., Suite B San Jose, CA 95131 Attn: Chief Executive Officer Telephone No.: 408-649-2786

If to the Acquiree Shareholders, to:		The applicable address set forth on Schedule I hereto.

or such other addresses as shall be furnished in writing by any Party in the manner for giving notices hereunder.

Section 12.4 Further Assurances. The Parties agree (a) to furnish upon request to each other such further information, (b) to execute and deliver to each other such other documents, and (c) to do such other acts and things, all as the other Parties may reasonably request for the purpose of carrying out the intent of this Agreement and the documents referred to in this Agreement.

Section 12.5 Waiver. The rights and remedies of the Parties are cumulative and not alternative. Neither the failure nor any delay by any Party in exercising any right, power, or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable Law, (a) no claim or right arising out of this Agreement or the documents referred to in this Agreement can be discharged by one Party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other Parties; (b) no waiver that may be given by a Party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one Party will be deemed to be a waiver of any obligation of such Party or of the right of the Party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement.

Section 12.6 Entire Agreement and Modification. This Agreement supersedes all prior agreements between the Parties with respect to its subject matter and constitutes (along with the documents referred to in this Agreement) a complete and exclusive statement of the terms of the agreement between the Parties with respect to its subject matter. This Agreement may not be amended except by a written agreement executed by the Party against whom the enforcement of such amendment is sought.

Section 12.7 Assignments, Successors, and No Third-Party Rights. No Party may assign any of its rights under this Agreement without the prior consent of the other Parties. Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon, and inure to the benefit of and be enforceable by the respective successors and permitted assigns of the Parties. Except as set forth in Article XIII hereof, nothing expressed or referred to in this Agreement will be construed to give any Person other than the Parties any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement.

Section 12.8 Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

Section 12.9 Section Headings. The headings of Articles and Sections in this Agreement are provided for convenience only and will not affect its construction or interpretation. All references to “Article” or “Articles” or “Section” or “Sections” refer to the corresponding Article or Articles or Section or Sections of this Agreement, unless the context indicates otherwise.

Section 12.10 Construction. The Parties have participated jointly in the negotiation and construction of this Agreement. Each Party has retained independent legal counsel to advise on this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign statute or Law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. Unless otherwise expressly provided, the word “including” shall mean including without limitation. The Parties intend that each representation, warranty, and covenant contained herein shall have independent significance. If any Party has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty, or covenant relating to the same subject matter (regardless of the relative levels of specificity) which the Party has not breached shall not detract from or mitigate the fact that the Party is in breach of such representation, warranty, or covenant. All words used in this Agreement will be construed to be of such gender or number as the circumstances require.

Section 12.11 Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the Party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

Section 12.12 Specific Performance. Each of the Parties acknowledges and agrees that the other Parties would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached. Accordingly, each of the Parties agrees that the other Parties shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any action instituted in any court of the U.S. or any state thereof having jurisdiction over the Parties and the matter (subject to the provisions set forth in Section 14.13 below), in addition to any other remedy to which they may be entitled, at Law or in equity.

Section 12.13 Governing Law; Submission to Jurisdiction. This Agreement shall be governed by and construed in accordance with the Laws of the State of California without regard to conflicts of Laws principles. Each of the Parties submits to the jurisdiction of any state or federal court sitting in the State of California, in any action or proceeding arising out of or relating to this Agreement and agrees that all claims in respect of the action or proceeding may be heard and determined in any such court. Each of the Parties waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety, or other security that might be required of any other Party with respect thereto. Any Party may make service on any other Party by sending or delivering a copy of the process to the Party to be served at the address and in the manner provided for the giving of notices in Section 12.3 above. Nothing in this Section 12.13, however, shall affect the right of any Party to serve legal process in any other manner permitted by Law or at equity. Each Party agrees that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by Law or at equity.

Section 12.14 Waiver of Jury Trial. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

[Signatures follow on next page]

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date first above written.

	ACQUIROR:

	VAPIR ENTERPRISES INC.

	By:
	Name:	Adam Kotkin
	Title:	Chief Executive Officer

	ACQUIROR PRINCIPAL SHAREHOLDER:


	Name: Adam Kotkin

[Signatures continue on next page]

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date first above written.

	ACQUIREE:

	VAPIR, INC.

	By:
	Name:	Hamid Emarlou
	Title:	Chief Executive Officer

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date first above written.

	ACQUIREE SHAREHOLDERS:

	By:
	Name:	Hamid Emarlou

SCHEDULE I

Acquiree Shareholders	Acquiree Shares Held Prior to the Closing		Acquiror Common Shares to be Issued at the Closing
Hamid Emarlou		100,000		38,624,768
Total		100,000		38,624,768

Exhibit A

Form of Certificate

ACQUIROR Disclosure Schedule

ACQUIREE Disclosure Schedule

Exhibit 3.1

Exhibit 16.1

December 30, 2014

Office of the Chief Accountant

Securities and Exchange Commission
100 F Street, NE

Washington, DC 20549

Re:	Vapir Enterprises, Inc.
	File Reference No. 333-170715

We were previously the independent registered public accounting firm for Vapir Enterprises, Inc. and under the date of April 11, 2014, we reported on the financial statements of FAL Exploration Corp. (now known as Vapir Enterprises, Inc.), as of December 31, 2013 and 2012, and for each of the two years in the period ended December 31, 2013.

Effective December 30, 2014 we were dismissed as the independent registered public accounting firm. We have read Vapir Enterprises, Inc's disclosures included in Item 4.01 "Changes in Registrant's Certifying Accountant" on Vapir Enterprises, Inc 's Form 8-K dated December 30, 2014 be filed with the Securities and Exchange Commission and we agree with such statements as they pertain to Salberg & Company, P.A.

Very truly yours,

SALBERG & COMPANY, P.A.

2295 NW Corporate Blvd., Suite 240 ● Boca Raton, FL 33431-7328
Phone: (561) 995-8270 ● Toll Free: (866) CPA-8500 ● Fax: (561) 995-1920
www.salbergco.com ● info@salbergco.com
Member National Association of Certified Valuation Analysts ● Registered with the PCAOB
Member CPAConnect with Affiliated Offices Worldwide ● Member AICPA Center for Audit Quality

Exhibit 99.1

VAPIR INC.

FINANCIAL STATEMENTS

DECEMBER 31, 2013

VAPIR, INC.

DECEMBER 31, 2013 and 2012

INDEX TO THE FINANCIAL STATEMENTS

CONTENTS

Financial Statements:

Report of Independent Registered Public Accounting Firm		F-2

Balance Sheets at December 31, 2013 and 2012		F-3

Statements of Operations -
For the Year Ended December 31, 2013, and 2012		F-4

Statements of Stockholder’s Equity -
For the Year Ended December 31, 2013 and 2012		F-5

Statements of Cash Flows –
For the Year Ended December 31, 2013 and 2012		F-6

Notes to the Financial Statements		F-7 to F-19

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholder

Vapir, Inc.

We have audited the balance sheets of Vapir, Inc. (the “Company”) as of December 31, 2013 and 2012 and the related statements of operations, stockholder’s equity and cash flows for the reporting periods then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2013 and 2012 and the results of its operations and its cash flows for the reporting periods then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has incurred negative results in the interim reporting period ended September 30, 2014 and at that time has an accumulated deficit, and incurred a net loss and net cash used in operating activities for the interim reporting period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/Li and Company, PC
Li and Company, PC

Skillman, New Jersey

December 30, 2014

F-2

VAPIR, INC.
BALANCE SHEETS

	December 31, 2013		December 31, 2012

ASSETS

CURRENT ASSETS:
Cash	$	24,803	$	108,872
Accounts receivable		122,729		125
Inventory		46,352		96,649
Other receivable		-		5,000
Due from related party		-		189,956

Total Current Assets		193,884		400,602

OTHER ASSETS:
Property and equipment, net		27,175		29,782
Intangible assets, net		509,528		572,532

Total Other Assets		536,703		602,314

Total Assets	$	730,587	$	1,002,916

LIABILITIES AND STOCKHOLDER'S EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	41,317	$	152,427
Loan payable		176,000		66,000
Note payable - current maturities		19,800		19,800
Customer deposits		13,929		164,057
Due to related party		-		135,982

Total Current Liabilities		251,046		538,266

LONG-TERM LIABILITIES:
Note payable, net of current maturities		44,850		64,650

Total Long-term Liabilities		44,850		64,650

Total Liabilities		295,896		602,916

COMMITMENTS AND CONTINGENCIES

STOCKHOLDER'S EQUITY:
Common stock no par value: 100,000 shares authorized; 100,000 shares issued and outstanding		-		-
Additional paid in capital		400,000		400,000
Retained earnings		34,691		-

Total Stockholder's Equity		434,691		400,000

Total Liabilities and Stockholder's Equity	$	730,587	$	1,002,916

See accompanying notes to the financial statements

F-3

VAPIR, INC.
STATEMENTS OF OPERATIONS

	For the Year Ended
	December 31, 2013			December 31, 2012


Net Sales	$	3,053,752		$	4,070,025

Cost of sales		1,546,821			2,242,393

Gross profit		1,506,931			1,827,632

OPERATING EXPENSES:
Depreciation and amortization		74,151			73,940
Marketing and selling expenses		76,075			50,975
Compensation		533,702			588,463
Professional fees		15,828			57,294
Research and development		88,847			13,658
Rent		72,966			77,017
General and administrative		303,677			275,467

Total Operating Expenses		1,165,246			1,136,814

INCOME FROM OPERATIONS		341,685			690,818

OTHER INCOME (EXPENSE):
Interest expense		(33,167	)		(39,892	)
Interest income		1			195

Other Income (Expense), net		(33,166	)		(39,697	)

NET INCOME	$	308,519		$	651,121

PRO FORMA FINANCIAL INFORMATION (UNAUDITED):

INCOME BEFORE INCOME TAX PROVISION		308,519			651,121

INCOME TAX PROVISION		104,896			221,381

NET INCOME	$	203,623		$	429,740

NET INCOME PER COMMON SHARE:
Basic and diluted	$	3.09		$	6.51

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and diluted		100,000			100,000

See accompanying notes to the financial statements

F-4

VAPIR, INC.

STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY

For the Year Ended December 31, 2012 and 2013

	Common Stock No Par Value				Additional					Total
	Number of				Paid-in		Retained			Stockholder's
	Shares		Amount		Capital		Earnings			Equity


Balance, December 31, 2011		100,000	$	-	$	400,000	$	77,945		$	477,945

Stockholder's Distribution								(729,066	)		(729,066	)

Net income								651,121			651,121

Balance, December 31, 2012		100,000		-		400,000		-			400,000

Stockholder's Distribution								(273,828	)		(273,828	)

Net income								308,519			308,519

Balance, December 31, 2013		100,000	$	-	$	400,000	$	34,691		$	434,691

See accompanying notes to the financial statements

F-5

VAPIR, INC.

STATEMENTS OF CASH FLOWS

	For the Year Ended
	December 31, 2013			December 31, 2012


CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	308,519		$	651,121
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		74,151			73,940
Changes in assets and liabilities:
Accounts receivable		(122,604	)		-
Inventory		50,297			(12,124	)
Other receivable		5,000			(4,216	)
Accounts payable and accrued expenses		(111,110	)		70,954
Customer deposits		(150,128	)		(61,108	)

NET CASH PROVIDED BY OPERATING ACTIVITIES		54,125			718,567

CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalized cost of trademark		(3,900	)		-
Purchase of property and equipment		(4,640	)		-

NET CASH USED IN INVESTING ACTIVITIES		(8,540	)		-

CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from (repayments to) to related party		53,974			(299,656	)
Proceeds received from loan		110,000			100,000
Payments on loan		-			(34,000	)
Proceeds received from note payable		-			100,000
Payments on notes payable		(19,800	)		(120,586	)
Stockholder's distribution		(273,828	)		(729,066	)

NET CASH USED IN FINANCING ACTIVITIES		(129,654	)		(983,308	)

NET CHANGE IN CASH		(84,069	)		(264,741	)

CASH - beginning of year		108,872			373,613

CASH - end of year	$	24,803		$	108,872

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid	$	33,166		$	39,892
Income taxes paid	$	-		$	-

See accompanying notes to the financial statements

F-6

Vapir, Inc.

December 31, 2013 and 2012

Notes to the Financial Statements

NOTE 1 – ORGANIZATION AND OPERATIONS

Organization

Vapir, Inc. (the “Company”) was incorporated in the State of California in October 2006. The Company’s principal business is focused on inventing, developing and producing aromatherapy devices and vaporizers. The Company’s aromatherapy device utilizes heat and convection air and thereby extract natural essences and produce fresh fragrances.

In October 2006, the Company acquired 100% of the outstanding stock including all assets of Advanced Inhalation Revolution Inc. which was dissolved after it was acquired by the Company. The Company accounted for the acquisition utilizing the purchase method of accounting in accordance with ASC 805 “Business Combinations”.

NOTE 2 – SIGNFICIANT AND CRITICAL ACCOUNTING POLICIES AND PRACTICES

The Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.

Basis of Presentation

The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date(s) of the financial statements and the reported amounts of revenues and expenses during the reporting period(s).

Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. The Company’s critical accounting estimates and assumptions affecting the financial statements were:

(i)

Assumption as a going concern: Management assumes that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

(ii)

Allowance for doubtful accounts: Management’s estimate of the allowance for doubtful accounts is based on historical sales, historical loss levels, and an analysis of the collectability of individual accounts; and general economic conditions that may affect a client’s ability to pay. The Company evaluated the key factors and assumptions used to develop the allowance in determining that it is reasonable in relation to the financial statements taken as a whole.

(iii)

Inventory Obsolescence and Markdowns: The Company’s estimate of potentially excess and slow-moving inventories is based on evaluation of inventory levels and aging, review of inventory turns and historical sales experiences. The Company’s estimate of reserve for inventory shrinkage is based on the historical results of physical inventory cycle counts.

(iv)

Fair value of long-lived assets: Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company’s stock price for a sustained period of time; and (vi) regulatory changes. The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.

F-7

These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.

Actual results could differ from those estimates.

Fair Value of Financial Instruments

The Company follows paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments and paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level 1		Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2		Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3		Pricing inputs that are generally observable inputs and not corroborated by market data.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, accounts payable and accrued liabilities, and customer deposits approximate their fair values because of the short maturity of these instruments. The carrying amount of the note and loan payable at December 31, 2013 approximate their respective fair value based on the Company’s incremental borrowing rate.

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

Fair Value of Non-Financial Assets or Liabilities Measured on a Recurring Basis

The Company’s non-financial assets include inventories. The Company identifies potentially excess and slow-moving inventories by evaluating turn rates, inventory levels and other factors. Excess quantities are identified through evaluation of inventory aging, review of inventory turns and historical sales experiences. The Company provides lower of cost or market reserves for such identified excess and slow-moving inventories. The Company establishes a reserve for inventory shrinkage, if any, based on the historical results of physical inventory cycle counts.

F-8

Carrying Value, Recoverability and Impairment of Long-Lived Assets

The Company has adopted Section 360-10-35 of the FASB Accounting Standards Codification for its long-lived assets. Pursuant to ASC Paragraph 360-10-35-17 an impairment loss shall be recognized only if the carrying amount of a long-lived asset (asset group) is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset (asset group) is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset (asset group). That assessment shall be based on the carrying amount of the asset (asset group) at the date it is tested for recoverability. An impairment loss shall be measured as the amount by which the carrying amount of a long-lived asset (asset group) exceeds its fair value. Pursuant to ASC Paragraph 360-10-35-20 if an impairment loss is recognized, the adjusted carrying amount of a long-lived asset shall be its new cost basis. For a depreciable long-lived asset, the new cost basis shall be depreciated (amortized) over the remaining useful life of that asset. Restoration of a previously recognized impairment loss is prohibited.

Pursuant to ASC Paragraph 360-10-35-21 the Company’s long-lived asset (asset group) is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The Company considers the following to be some examples of such events or changes in circumstances that may trigger an impairment review: (a) significant decrease in the market price of a long-lived asset (asset group); (b) A significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in its physical condition; (c) A significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse action or assessment by a regulator; (d) An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group); (e) A current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (asset group); and (f) A current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The Company tests its long-lived assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.

Pursuant to ASC Paragraphs 360-10-45-4 and 360-10-45-5 an impairment loss recognized for a long-lived asset (asset group) to be held and used shall be included in income from continuing operations before income taxes in the income statement of a business entity. If a subtotal such as income from operations is presented, it shall include the amount of that loss. A gain or loss recognized on the sale of a long-lived asset (disposal group) that is not a component of an entity shall be included in income from continuing operations before income taxes in the income statement of a business entity. If a subtotal such as income from operations is presented, it shall include the amounts of those gains or losses.

Cash equivalents

The Company considers all highly liquid debt instruments and other short-term investments with maturity of three months or less, when purchased, to be cash equivalents.

Accounts receivable and allowance for doubtful accounts

Pursuant to FASB ASC paragraph 310-10-35-47 trade receivables that management has the intent and ability to hold for the foreseeable future shall be reported in the balance sheet at outstanding principal adjusted for any charge-offs and the allowance for doubtful accounts.. The Company follows FASB ASC paragraphs 310-10-35-7 through 310-10-35-10 to estimate the allowance for doubtful accounts. Pursuant to FASB ASC paragraph 310-10-35-9 Losses from uncollectible receivables shall be accrued when both of the following conditions are met: (a) Information available before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25) indicates that it is probable that an asset has been impaired at the date of the financial statements, and (b) The amount of the loss can be reasonably estimated. Those conditions may be considered in relation to individual receivables or in relation to groups of similar types of receivables. If the conditions are met, accrual shall be made even though the particular receivables that are uncollectible may not be identifiable. The Company reviews individually each trade receivable for collectability and performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information; and determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and general economic conditions that may affect a client’s ability to pay. Bad debt expense is included in general and administrative expenses, if any.

Pursuant to FASB ASC paragraph 310-10-35-41 Credit losses for trade receivables (uncollectible trade receivables), which may be for all or part of a particular trade receivable, shall be deducted from the allowance. The related trade receivable balance shall be charged off in the period in which the trade receivables are deemed uncollectible. Recoveries of trade receivables previously charged off shall be recorded when received. The Company charges off its trade account receivables against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

As of December 31, 2013 and 2012, there is no allowance for doubtful accounts. The Company did not consider it necessary to record any bad debt expense during the year ended December 31, 2013 and 2012.

F-9

Inventory

Inventory Valuation

The Company values inventory, consisting of finished goods, at the lower of cost or market. Cost is determined on the first-in and first-out (“FIFO”) method. The Company reduces inventory for the diminution of value, resulting from product obsolescence, damage or other issues affecting marketability, equal to the difference between the cost of the inventory and its estimated market value. Factors utilized in the determination of estimated market value include (i) estimates of future demand, and (ii) competitive pricing pressures.

Inventory Obsolescence and Markdowns

The Company evaluates its current level of inventory considering historical sales and other factors and, based on this evaluation, classify inventory markdowns in the income statement as a component of cost of goods sold pursuant to Paragraph 420-10-S99 of the FASB Accounting Standards Codification to adjust inventory to net realizable value. These markdowns are estimates, which could vary significantly from actual requirements if future economic conditions, customer demand or competition differ from expectations.

There was no inventory obsolescence for the reporting period ended December 31, 2013 or 2012.

There was no lower of cost or market adjustments for the reporting period ended December 31, 2013 or 2012.

Property and Equipment

Property and equipment is recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives of the respective assets as follows:

	Estimated Useful Life (Years)

Auto		3

Furniture and fixture		5

Leasehold improvement		*

(*) Amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever is shorter.

Upon sale or retirement, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the statements of operations.

Intangible assets

The Company records the purchase of intangible assets not purchased in a business combination in accordance with ASC 350-30-65 “Goodwill and Other Intangible Assets” and records intangible assets acquired in a business combination or pushed-down pursuant to acquisition by its parent in accordance with SFAS 141 “Business Combinations”.

Customer Relationships are based upon the estimated percentage of annual or period projected cash flows generated by such relationships, to the total cash flows generated over the estimated life of the customer relationships.

In accordance with ASC 350-30-65, “Intangibles - Goodwill and Others”, the Company assesses the impairment of identifiable intangibles whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors the Company considers to be important which could trigger an impairment review include the following:

	1.	Significant underperformance relative to expected historical or projected future operating results;
	2.	Significant changes in the manner of use of the acquired assets or the strategy for the overall business; and
	3.	Significant negative industry or economic trends.

F-10

When the Company determines that the carrying value of intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge. The Company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows.

Leases

Lease agreements are evaluated to determine whether they are capital leases or operating leases in accordance with paragraph 840-10-25-1 of the FASB Accounting Standards Codification (“Paragraph 840-10-25-1”). Pursuant to Paragraph 840-10-25-1 a lessee and a lessor shall consider whether a lease meets any of the following four criteria as part of classifying the lease at its inception under the guidance in the Lessees Subsection of this Section (for the lessee) and the Lessors Subsection of this Section (for the lessor): a. Transfer of ownership. The lease transfers ownership of the property to the lessee by the end of the lease term. This criterion is met in situations in which the lease agreement provides for the transfer of title at or shortly after the end of the lease term in exchange for the payment of a nominal fee, for example, the minimum required by statutory regulation to transfer title. b. Bargain purchase option. The lease contains a bargain purchase option. c. Lease term. The lease term is equal to 75 percent or more of the estimated economic life of the leased property. d. Minimum lease payments. The present value at the beginning of the lease term of the minimum lease payments, excluding that portion of the payments representing executory costs such as insurance, maintenance, and taxes to be paid by the lessor, including any profit thereon, equals or exceeds 90 percent of the excess of the fair value of the leased property to the lessor at lease inception over any related investment tax credit retained by the lessor and expected to be realized by the lessor. In accordance with paragraphs 840-10-25-29 and 840-10-25-30, if at its inception a lease meets any of the four lease classification criteria in Paragraph 840-10-25-1, the lease shall be classified by the lessee as a capital lease; and if none of the four criteria in Paragraph 840-10-25-1 are met, the lease shall be classified by the lessee as an operating lease. Pursuant to Paragraph 840-10-25-31 a lessee shall compute the present value of the minimum lease payments using the lessee's incremental borrowing rate unless both of the following conditions are met, in which circumstance the lessee shall use the implicit rate: a. It is practicable for the lessee to learn the implicit rate computed by the lessor. b. The implicit rate computed by the lessor is less than the lessee's incremental borrowing rate. Capital lease assets are depreciated on a straight line method, over the capital lease assets estimated useful lives consistent with the Company’s normal depreciation policy for tangible fixed assets. Interest charges are expensed over the period of the lease in relation to the carrying value of the capital lease obligation.

Operating leases primarily relate to the Company’s leases of office spaces. When the terms of an operating lease include tenant improvement allowances, periods of free rent, rent concessions, and/or rent escalation amounts, the Company establishes a deferred rent liability for the difference between the scheduled rent payment and the straight-line rent expense recognized, which is amortized over the underlying lease term on a straight-line basis as a reduction of rent expense.

Customer Deposit

Customer deposits at December 31, 2013 and 2012 were $13,929 and $164,057, respectively, which consist of prepayments from customers to the Company. The Company will recognize the prepayments as revenue upon delivery of the products, in compliance with its revenue recognition policy.

Related Parties

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.

Pursuant to Section 850-10-20 the Related parties include a. affiliates (“Affiliate” means, with respect to any specified Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person, as such terms are used in and construed under Rule 405 under the Securities Act) of the Company; b. entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

F-11

Commitment and Contingencies

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

Revenue recognition

Shipping and Handling Costs

The Company accounts for shipping and handling fees in accordance with paragraph 605-45-45-19 of the FASB Accounting Standards Codification. While amounts charged to customers for shipping products are included in revenues, the related costs are classified in cost of goods sold as incurred.

Marketing, selling and advertising

Marketing, selling and advertising are expensed as incurred. For the year ended December 31, 2013 and 2012, such expenses were $76,075 and 50,975, respectively.

Income Tax Provision

The Company was a Subchapter S corporation, whereby the Company was treated as a pass through entity for federal income tax purposes. Under Subchapter S of the Internal Revenue Code stockholder of an S corporation are taxed separately on their distributive share of the S corporation’s income whether or not that income is actually distributed.

Tax years that remain subject to examination by major tax jurisdictions

The Company discloses tax years that remain subject to examination by major tax jurisdictions pursuant to the ASC Paragraph 740-10-50-15.

Pro Forma Income Tax Provision (Benefit) (Unaudited)

The unaudited pro forma income tax provision, deferred tax assets, and the valuation allowance of deferred tax assets, if any, included in the consolidated financial statements and income tax provision note reflect the income tax provision which would have been recorded as if the S corporation had always been a C corporation upon its incorporation.

F-12

Earnings per Share

Earnings per share ("EPS") is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16 Basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.

Pursuant to ASC Paragraphs 260-10-45-45-21 through 260-10-45-45-23 Diluted EPS shall be based on the most advantageous conversion rate or exercise price from the standpoint of the security holder. The dilutive effect of outstanding call options and warrants (and their equivalents) issued by the reporting entity shall be reflected in diluted EPS by application of the treasury stock method unless the provisions of paragraphs 260-10-45-35 through 45-36 and 260-10-55-8 through 55-11 require that another method be applied. Equivalents of options and warrants include non-vested stock granted to employees, stock purchase contracts, and partially paid stock subscriptions (see paragraph 260–10–55–23). Anti-dilutive contracts, such as purchased put options and purchased call options, shall be excluded from diluted EPS. Under the treasury stock method: a. Exercise of options and warrants shall be assumed at the beginning of the period (or at time of issuance, if later) and common shares shall be assumed to be issued. b. The proceeds from exercise shall be assumed to be used to purchase common stock at the average market price during the period. (See paragraphs 260-10-45-29 and 260-10-55-4 through 55-5.) c. The incremental shares (the difference between the number of shares assumed issued and the number of shares assumed purchased) shall be included in the denominator of the diluted EPS computation.

At December 31, 2013 and 2012, the Company did not have any potentially dilutive securities outstanding.

Cash Flows Reporting

The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.

Subsequent Events

The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued the FASB Accounting Standards Update No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”).

This guidance amends the existing FASB Accounting Standards Codification, creating a new Topic 606, Revenue from Contracts with Customer. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

F-13

To achieve that core principle, an entity should apply the following steps:

	1	Identify the contract(s) with the customer
	2	Identify the performance obligations in the contract
	3	Determine the transaction price
	4	Allocate the transaction price to the performance obligations in the contract
	5	Recognize revenue when (or as) the entity satisfies a performance obligations

The ASU also provides guidance on disclosures that should be provided to enable financial statement users to understand the nature, amount, timing, and uncertainty of revenue recognition and cash flows arising from contracts with customers. Qualitative and quantitative information is required about the following:

	1.	Contracts with customers – including revenue and impairments recognized, disaggregation of revenue, and information about contract balances and performance obligations (including the transaction price allocated to the remaining performance obligations)
	2.	Significant judgments and changes in judgments – determining the timing of satisfaction of performance obligations (over time or at a point in time), and determining the transaction price and amounts allocated to performance obligations
	3.	Assets recognized from the costs to obtain or fulfill a contract.

ASU 2014-09 is effective for periods beginning after December 15, 2016, including interim reporting periods within that reporting period for all public entities. Early application is not permitted.

In August 2014, the FASB issued the FASB Accounting Standards Update No. 2014-15 “Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”).

In connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued (or at the date that the financial statements are available to be issued when applicable). Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued). The term probable is used consistently with its use in Topic 450, Contingencies.

When management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern, management should consider whether its plans that are intended to mitigate those relevant conditions or events will alleviate the substantial doubt. The mitigating effect of management’s plans should be considered only to the extent that (1) it is probable that the plans will be effectively implemented and, if so, (2) it is probable that the plans will mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, but the substantial doubt is alleviated as a result of consideration of management’s plans, the entity should disclose information that enables users of the financial statements to understand all of the following (or refer to similar information disclosed elsewhere in the footnotes):

Principal conditions or events that raised substantial doubt about the entity’s ability to continue as a going concern (before consideration of management’s plans)

Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations

Management’s plans that alleviated substantial doubt about the entity’s ability to continue as a going concern.

If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, and substantial doubt is not alleviated after consideration of management’s plans, an entity should include a statement in the footnotes indicating that there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued). Additionally, the entity should disclose information that enables users of the financial statements to understand all of the following:

Principal conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern

Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations

Management’s plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

F-14

The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted.

Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying financial statements.

NOTE 3 – GOING CONCERN

The Company has elected to adopt early application of Accounting Standards Update No. 2014-15, “Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”).

The Company’s financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

As reflected in the interim financial statements, included with this filing, the Company had an accumulated deficit at September 30, 2014, a net loss and net cash used in operating activities for the interim reporting period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The Company is attempting to further implement its business plan and generate sufficient revenue; however, the Company’s cash position may not be sufficient to support its daily operations. Management intends to raise additional funds by way of a private or public offering. While the Company believes in the viability of its strategy to further implement its business plan and generate sufficient revenue and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering.

The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company is unable to continue as a going concern.

NOTE 4 – PROPERTY AND EQUIPMENT

Property and equipment, stated at cost, less accumulated depreciation consisted of the following:

	Estimated life	December 31, 2013			December 31, 2012

Auto	3 years		12,522			12,522
Furniture and fixtures	5 years		23,743			19,103
Leasehold improvements	5 years		35,206			35,206
Less: Accumulated depreciation			(44,296	)		(37,049	)
		$	27,175		$	29,782

(i)

Depreciation Expense

For the year ended December 31, 2013 and 2012, depreciation expense amounted to $7,247 and $7,024, respectively.

(ii)

Impairment

The Company completed the annual impairment test of property and equipment and determined that there was no impairment as the fair value of property and equipment, exceeded their carrying values at December 31, 2013.

F-15

NOTE 5 – INTANGIBLE ASSETS

Intangible assets consist of the following:

	December 31,			December 31,
	2013			2012

Customer relationships associated with a 2006 acquisition (see Note 1)	$	1,001,212		$	1,001,212
Trademarks		6,430			2,530
		1,007,642			1,003,742
Accumulated amortization		(498,114	)		(431,210	)
Intangible assets, net	$	509,528		$	572,532

Customer Relationships are amortized based upon the estimated percentage of annual or period projected cash flows generated by such relationships, to the total cash flows generated over the estimated fifteen year life of the Customer Relationships.

Legal costs associated with serving and protecting trademark are being capitalized. The Company filed trademarks for its company logos with an estimated useful life of 15 years. The Company will amortize the costs of intangible assets over their estimated useful lives on a straight-line basis. Amortization of intangible assets is included in operating expenses as reflected in the accompanying statements of operations. The Company assesses fair market value for any impairment to the carrying values.

As of December 31, 2013 and 2012 management concluded that there was no impairment to the acquired assets. Amortization expense for the year ended December 31, 2013 and 2012 was $66,904 and $66,916, respectively.

Future amortization of intangible assets is as follows:

2014	$	67,205
2015		67,205
2016		67,205
2017		67,205
2018		67,205
2019 and thereafter		173,503
Total	$	509,528

Impairment

The Company completed the annual impairment test of intangibles and determined that there was no impairment as the fair value of property and equipment, exceeded their carrying values at December 31, 2013.

NOTE 6 – NOTE AND LOAN PAYABLE

Loan payable

	December 31, 2013		December 31, 2012

Business loan obtained in May 2011 from Bank of the West with a credit line up to $200,000 and secured by all assets of the Company. This loan bears interest at 4.75% per annum.	$	176,000	$	66,000

F-16

Note payable

	December 31, 2013			December 31, 2012

4.75% Promissory note of $100,000 issued to Bank of the West on May 10, 2011 payable at 60 consecutive monthly installments starting in June 2012		64,650			84,450

Less : Current maturities		(19,800	)		(19,800	)
Note payable, net of current maturities	$	44,850		$	64,650

Future minimum principal and interest payment under the note are as follows:

Fiscal Year ending December 31:

2014	$	22,440

2015		21,499

2016		20,559

2017		5,294

		69,792

Less interest portion		(5,142	)

Total		64,650

Less current maturities		(19,800	)

Note payable, net of current maturities	$	44,850

Amounts outstanding under the loan and note above are personally guaranteed by the President of the Company.

NOTE 7 – RELATED PARTY TRANSACTIONS

Parties are considered to be related to the Company if the parties directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. All transactions shall be recorded at fair value of the goods or services exchanged. Property purchased from a related party is recorded at the cost to the related party and any payment to or on behalf of the related party in excess of the cost is reflected as compensation or distribution to related parties depending on the transaction.

Amounts outstanding under the loan and note to a bank (see Note 6) are personally guaranteed by the President of the Company.

F-17

NOTE 8 – COMMITMENTS AND CONTINGENCIES

Operating lease

A lease agreement was signed for an office and warehousing space consisting of approximately 3,200 square feet located in San Jose, California with an initial term commencing in October 2009 and expiring in September 30, 2030. The lease required the Company to pay a monthly base rent of $3,135 plus real property taxes on the lease premises. In June 2014, the Company entered into a termination agreement with the landlord thereby terminating this lease agreement. The Company has fulfilled its obligation under this lease agreement upon termination.

In August 2011, the Company entered into a 1 year lease agreement for a temporary housing space located in San Jose, California for a marketing contractor of the Company. This lease became a month to month lease after the initial 1 year lease term. The lease required the Company to pay a monthly base rent of $2,590. This month to month lease was terminated in June 2014.

In February 2013, the Company entered into a motor vehicle lease agreement. The lease is for 24 months with monthly payments of $759.

Future minimum rental payments required under this operating lease are as follows:

Fiscal Year ending December 31:

2014	$	27,918

2015		459

Total	$	28,377

Rent expense was $72,966 and $77,017 for the year ended December 31, 2013 and 2012, respectively.

Litigation

From time to time, the Company is involved in litigation matters relating to claims arising from the ordinary course of business. While the results of such claims and legal actions cannot be predicted with certainty, the Company’s management does not believe that there are claims or actions, pending or threatened against the Company, the ultimate disposition of which would have a material adverse effect on the Company’s business, results of operations, financial condition or cash flows.

Notwithstanding the foregoing, on November 3, 2014, the Company was served with a lawsuit from Storz & Bickel, a German competitor of the Company. The lawsuit claims patent infringement of Storz & Bickel’s German patent no DE 198 03 376 C1. The lawsuit was filed in Germany with the regional court of Mannheim. The lawsuit alleges estimated damages in the amount of €750,000 euros. The Company has filed a notice of its intent to defend the lawsuit and has filed an answer to the complaint requesting additional time. The lawsuit is still ongoing and the Company is working to settle the matter.

Additionally, on October 15, 2014, Storz & Bickel have filed a lawsuit with the United States District Court, Central District of California against the Company alleging patent infringement of Storz & Bickel’s US patent no. 6,513,524, which is the US counterpart to the German patent. The US District lawsuit seeks injunction against distribution of the Company’s VapiRise product, damages, interest, costs, treble damages, and attorney’s fees.

Storz & Bickel have not yet served the US District lawsuit; Storz & Bickel’s US counsel have contacted the Company to initiate settlement discussion, but it is anticipated that Storz & Bickel will serve the US District complaint if settlement discussions are not productive.

The Company may be subject to legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business. While the outcome of these claims cannot be predicted with certainty, the Company does not believe that any of the outcomes will have a material effect on the Company’s operations.

NOTE 9 – STOCKHOLDER’S EQUITY

The Company was authorized to issue up to 100,000 shares of common stock, no par value per share.

In October 2006, the Company issued 100,000 shares of its common stock to the founder and President of the Company.

In October 2006, the President of the Company contributed capital amounting to $400,000 to the Company and were used in connection with a 2006 acquisition (see Note 1) of a company.

F-18

NOTE 10 – INCOME TAX PROVISION

Pro Forma Income Tax Provision in the Statements of Operations (Unaudited)

The Company was a Subchapter S corporation, whereby the Company was treated as a pass through entity for federal income tax purpose. Under Subchapter S of the Internal Revenue Code the operating results of the S corporation were included in the income tax returns of the stockholders of the S corporation, i.e. the stockholders of an S corporation are taxed separately on their distributive share of the S corporation’s income whether or not that income is actually distributed.

The unaudited pro forma income tax provision included in the financial statements and income tax provision note reflect the income tax provision which would have been recorded as if the S corporation had always been a C corporation upon its incorporation.

A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income tax provision is as follows would the Company had always been the C Corporation upon the incorporation of the Company:

	For the Year Ended December 31, 2013			For the Year Ended December 31, 2012

Federal statutory income tax rate		34.0	%		34.0	%

Effective income tax rate		34.0	%		34.0	%

NOTE 11 – CONCENTRATION OF CREDIT RISK

Concentration of Revenue and Supplier

During the year ended December 31, 2013 sales to two customers represented approximately 67% of the Company’s net sales. During the year ended December 31, 2012 sales to two customers represented approximately 69% of the Company’s net sales. As of December 31, 2013 and 2012, the Company had one customer representing approximately 93% of accounts receivable and one customer representing approximately 100% of accounts receivable, respectively.

The Company purchased inventories and products for sale from one vendor totaling approximately $1.3 million and $2.4 million during the years ended December 31, 2013 and 2012, respectively.

NOTE 12 – SUBSEQUENT EVENTS

The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that there were certain reportable subsequent event(s) to be disclosed as followed:

In June 2014, a lease agreement was signed for an office and warehousing space consisting of approximately 5,000 square feet located in San Jose, California with a term commencing in June 2014 and expiring in October 2015. The lease required the Company to pay a monthly base rent of $3,535 plus a pro rata share of operating expenses. The base rent is subject to an annual increase beginning in November 2014 as defined in the lease agreement. This lease agreement is personally guaranteed by the President of the Company.

F-19

Exhibit 99.2

Vapir, Inc.

September 30, 2014 and 2013

Index to the Financial Statements

CONTENTS

Financial Statements:

Balance Sheets as of September 30, 2014 (Unaudited) and December 31, 2013	F-2

Statements of Operations -
For the Nine Months Ended September 30, 2014, and 2013 (Unaudited)	F-3

Statements of Cash Flows -
For the Nine Months Ended September 30, 2014, and 2013 (Unaudited)	F-4

Notes to the Unaudited Financial Statements (Unaudited)	F-5

F-1

VAPIR, INC.
BALANCE SHEETS

	September 30, 2014			December 31, 2013
	(Unaudited)
ASSETS

CURRENT ASSETS:
Cash	$	-		$	24,803
Accounts receivable		944			122,729
Inventory		56,253			46,352

Total Current Assets		57,197			193,884

OTHER ASSETS:
Property and equipment, net		4,122			27,175
Intangible assets, net		459,146			509,528

Total Other Assets		463,268			536,703

Total Assets	$	520,465		$	730,587

LIABILITIES AND STOCKHOLDER'S EQUITY

CURRENT LIABILITIES:
Bank overdraft	$	1,434		$	-
Accounts payable and accrued expenses		68,276			41,317
Loan payable		197,000			176,000
Note payable - current maturities		19,800			19,800
Customer deposits		188,809			13,929

Total Current Liabilities		475,319			251,046

LONG-TERM LIABILITIES:
Note payable, net of current maturities		30,000			44,850

Total Long-term Liabilities		30,000			44,850

Total Liabilities		505,319			295,896

COMMITMENTS AND CONTINGENCIES

STOCKHOLDER'S EQUITY:
Common stock no par value: 100,000 shares authorized; 100,000 shares issued and outstanding		-			-
Additional paid in capital		400,000			400,000
Retained earnings (accumulated deficit)		(384,854	)		34,691

Total Stockholder's Equity		15,146			434,691

Total Liabilities and Stockholder's Equity	$	520,465		$	730,587

See accompanying notes to the unaudited financial statements

F-2

VAPIR, INC.
STATEMENTS OF OPERATIONS

	For the Nine Months Ended
	September 30, 2014			September 30, 2013
	(Unaudited)			(Unaudited)

Net Sales	$	1,136,886		$	1,962,883

Cost of Sales		564,124			1,001,497

Gross margin		572,762			961,386

OPERATING EXPENSES:
Depreciation and amortization		73,435			55,613
Marketing and selling expenses		41,467			63,346
Compensation		516,587			392,430
Professional fees		47,573			12,486
Research and development		54,039			80,766
Rent		57,894			55,016
General and administrative		189,854			206,810

Total Operating Expenses		980,849			866,467

INCOME (LOSS) FROM OPERATIONS		(408,087	)		94,919

OTHER INCOME (EXPENSE):
Interest expense		(11,458	)		(23,359	)

Other Income (Expense), net		(11,458	)		(23,359	)

NET INCOME (LOSS)	$	(419,545	)	$	71,560

PRO FORMA FINANCIAL INFORMATION (UNAUDITED):

INCOME (LOSS) BEFORE INCOME TAX PROVISION		(419,545	)		71,560

INCOME TAX PROVISION (BENEFIT)		(142,645	)		24,330

NET INCOME (LOSS)	$	(276,900	)	$	47,230

EARNINGS PER SHARE:
Basic and diluted	$	(4.20	)	$	0.72

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and diluted		100,000			100,000

See accompanying notes to the unaudited financial statements

F-3

VAPIR, INC.
STATEMENTS OF CASH FLOWS

	For the Nine Months Ended
	September 30, 2014			September 30, 2013
	(Unaudited)			(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(419,545	)	$	71,560
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization		73,435			55,613
Changes in assets and liabilities:
Accounts receivable		121,785			(16,975	)
Inventory		(9,901	)		(119,850	)
Accounts payable and accrued expenses		26,959			(40,862	)
Customer deposits		174,880			95,764

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(32,387	)		45,250

CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalized cost of trademark		-			(3,900	)
Purchase of property and equipment		-			(4,640	)

NET CASH USED IN INVESTING ACTIVITIES		-			(8,540	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from (repayments to) to related party		-			(11,316	)
Bank overdraft		1,434			23,345
Proceeds received from loan		21,000			160,000
Payments on loan		-			(50,000	)
Payments on notes payable		(14,850	)		(14,850	)
Stockholder's distribution		-			(180,855	)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		7,584			(73,676	)

NET CHANGE IN CASH		(24,803	)		(36,966	)

CASH - beginning of reporting period		24,803			108,872

CASH - end of reporting period	$	-		$	71,906

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid	$	11,458		$	23,359
Income taxes paid	$	-		$	-

See accompanying notes to the unaudited financial statements

F-4

Vapir, Inc.

September 30, 2014 and 2013

Notes to the Financial Statements

(Unaudited)

NOTE 1 – ORGANIZATION AND OPERATIONS

Organization

NOTE 2 – SIGNFICIANT AND CRITICAL ACCOUNTING POLICIES AND PRACTICES

Basis of Presentation- Unaudited Interim Financial Information

The accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited interim consolidated financial statements should be read in conjunction with the financial statements of the Company as of and for the year ended December 31, 2013 and notes thereto included elsewhere in the Company’s Registration Statement on Form S-1 filed with the SEC herewith.

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

(i)

(ii)

(iii)

F-5

(iv)

Valuation allowance for deferred tax assets: Management assumes that the realization of the Company’s net deferred tax assets resulting from its net operating loss (“NOL”) carry–forwards for Federal income tax purposes that may be offset against future taxable income was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by a full valuation allowance. Management made this assumption based on (a) the Company has incurred recurring losses, (b) general economic conditions, and (c) its ability to raise additional funds to support its daily operations by way of a public or private offering, among other factors.

Actual results could differ from those estimates.

Fair Value of Financial Instruments

Level 1		Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2		Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3		Pricing inputs that are generally observable inputs and not corroborated by market data.

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, accounts payable and accrued liabilities, and customer deposits approximate their fair values because of the short maturity of these instruments. The carrying amount of the note and loan payable at September 30, 2014 approximate their respective fair value based on the Company’s incremental borrowing rate.

F-6

Fair Value of Non-Financial Assets or Liabilities Measured on a Recurring Basis

Carrying Value, Recoverability and Impairment of Long-Lived Assets

Cash equivalents

The Company considers all highly liquid debt instruments and other short-term investments with maturity of three months or less, when purchased, to be cash equivalents.

Accounts receivable and allowance for doubtful accounts

F-7

As of September 30, 2014 and December 31, 2013, there is no allowance for doubtful accounts. The Company recorded bad debt expense of $170 and $0 during the nine months ended September 30, 2014 and 2013, respectively.

Inventory

Inventory Valuation

Inventory Obsolescence and Markdowns

There was no inventory obsolescence for the reporting period ended September 30, 2014 and 2013.

There was no lower of cost or market adjustments for the reporting period ended September 30, 2014 and 2013.

Property and equipment

	Estimated Useful Life (Years)

Auto		3

Furniture and fixture		5

Leasehold improvement		*

(*) Amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever is shorter.

Upon sale or retirement, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the statements of operations.

Intangible assets

Customer relationships are based upon the estimated percentage of annual or period projected cash flows generated by such relationships, to the total cash flows generated over the estimated life of the customer relationships.

F-8

	1.	Significant underperformance relative to expected historical or projected future operating results;
	2.	Significant changes in the manner of use of the acquired assets or the strategy for the overall business; and
	3.	Significant negative industry or economic trends.

Leases

Customer Deposit

Customer deposits at September 30, 2014 and December 31, 2013 were $188,809 and $13,929, respectively, which consist of prepayments from customers to the Company. The Company will recognize the prepayments as revenue upon delivery of the products, in compliance with its revenue recognition policy.

Related Parties

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.

F-9

Commitment and Contingencies

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

Revenue recognition

Shipping and Handling Costs

Marketing, selling and advertising

Marketing, selling and advertising are expensed as incurred. For the nine months ended September 30, 2014 and 2013, such expenses were $41,467 and $63,346, respectively.

Income Tax Provision

Tax years that remain subject to examination by major tax jurisdictions

The Company discloses tax years that remain subject to examination by major tax jurisdictions pursuant to the ASC Paragraph 740-10-50-15.

F-10

Pro Forma Income Tax Provision (Benefit) (Unaudited)

The unaudited pro forma income tax provision, deferred tax assets, and the valuation allowance of deferred tax assets, if any, included in the financial statements and income tax provision note reflect the income tax provision which would have been recorded as if the S corporation had always been a C corporation upon its incorporation.

Earnings per Share

At September 30, 2014 and 2013, the Company did not have any potentially dilutive securities outstanding.

Cash Flows Reporting

Subsequent Events

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued the FASB Accounting Standards Update No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”).

F-11

To achieve that core principle, an entity should apply the following steps:

Identify the contract(s) with the customer
Identify the performance obligations in the contract
Determine the transaction price
Allocate the transaction price to the performance obligations in the contract
Recognize revenue when (or as) the entity satisfies a performance obligations

Contracts with customers – including revenue and impairments recognized, disaggregation of revenue, and information about contract balances and performance obligations (including the transaction price allocated to the remaining performance obligations)
Significant judgments and changes in judgments – determining the timing of satisfaction of performance obligations (over time or at a point in time), and determining the transaction price and amounts allocated to performance obligations
Assets recognized from the costs to obtain or fulfill a contract.

ASU 2014-09 is effective for periods beginning after December 15, 2016, including interim reporting periods within that reporting period for all public entities. Early application is not permitted.

Principal conditions or events that raised substantial doubt about the entity’s ability to continue as a going concern (before consideration of management’s plans)

Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations

Management’s plans that alleviated substantial doubt about the entity’s ability to continue as a going concern.

F-12

Principal conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern

Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations

Management’s plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted.

Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying financial statements.

NOTE 3 – GOING CONCERN

As reflected in the financial statements, the Company had an accumulated deficit at September 30, 2014, a net loss and net cash used in operating activities for the reporting period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

NOTE 4 – PROPERTY AND EQUIPMENT

Property and equipment, stated at cost, less accumulated depreciation consisted of the following:

	Estimated life	September 30, 2014			December 31, 2013

Auto	3 years		12,522			12,522
Furniture and fixtures	5 years		23,743			23,743
Leasehold improvements	5 years		35,206			35,206
Less: Accumulated depreciation			(67,349	)		(44,296	)
		$	4,122		$	27,175

(i)

Depreciation Expense

For the nine months ended September 30, 2014 and 2013, depreciation expense amounted to $23,053 and $5,435, respectively. During the nine months ended September 30, 2014, the Company fully depreciated the cost of leasehold improvements as the Company moved to a new office space in June 2014.

(ii)

Impairment

F-13

NOTE 5 – INTANGIBLE ASSETS

Intangible assets consist of the following:

	September 30,			December 31,
	2014			2013

Customer relationships associated with a 2006 acquisition (see Note 1)	$	1,001,212		$	1,001,212
Trademarks		6,430			6,430
		1,007,642			1,007,642
Accumulated amortization		(548,496	)		(498,114	)
Intangible assets, net	$	459,146		$	509,528

Customer relationships are amortized based upon the estimated percentage of annual or period projected cash flows generated by such relationships, to the total cash flows generated over the estimated fifteen year life of the customer relationships.

As of September 30, 2014 and December 31, 2013 management concluded that there was no impairment to the acquired assets. Amortization expense for the nine months ended September 30, 2014 and 2013 was $50,382 and $50,178, respectively.

Future amortization of intangible assets is as follows:

2014	$	16,823
2015		67,205
2016		67,205
2017		67,205
2018		67,205
2019 and thereafter		173,503
Total	$	459,146

Impairment

NOTE 6 – NOTE AND LOAN PAYABLE

Loan payable

	September 30, 2014		December 31, 2013

Business loan obtained in May 2011 from Bank of the West with a credit line up to $200,000 and secured by all assets of the Company. This loan bears interest at 4.75% per annum.	$	197,000	$	176,000

F-14

Note payable

	September 30, 2014			December 31, 2013

4.75% Promissory note of $100,000 issued to Bank of the West on May 10, 2011 payable in 60 consecutive monthly installments starting in June 2012	$	49,800		$	64,650

Less : Current maturities		(19,800	)		(19,800	)
Note payable, net of current maturities	$	30,000		$	44,850

Future minimum principal and interest payment under the note are as follows:

Fiscal Year ending December 31:

2014 (remainder of the year)	$	5,522

2015		21,499

2016		20,559

2017		5,294

		52,874

Less interest portion		(3,074	)

Total		49,800

Less current maturities		(19,800	)

Note payable, net of current maturities	$	30,000

Amounts outstanding under the loan and note above are personally guaranteed by the President of the Company.

NOTE 7 – RELATED PARTY TRANSACTIONS

Amounts outstanding under the loan and note to a bank (see Note 6) are personally guaranteed by the President of the Company.

NOTE 8 – COMMITMENTS AND CONTINGENCIES

Operating lease

A lease agreement was signed for an office and warehousing space consisting of approximately 3,200 square feet located in San Jose, California with an initial term commencing in October 2009 and expiring on September 30, 2030. The lease required the Company to pay a monthly base rent of $3,135 plus real property taxes on the lease premises. In June 2014, the Company entered into a termination agreement with the landlord thereby terminating this lease agreement. The Company has fulfilled its obligation under this lease agreement upon termination.

F-15

In February 2013, the Company entered into a motor vehicle lease agreement. The lease is for 24 months with monthly payments of $759.

Future minimum rental payments required under this operating lease are as follows:

Fiscal Year ending December 31:

	2014 (remainder of the year)	$	12,882

	2015		36,868

	Total	$	49,750

Rent expense was $57,894 and $55,015 for the nine months ended September 30, 2014 and 2013, respectively.

Litigation

From time to time, the Company is involved in litigation matters relating to claims arising from the ordinary course of business. While the results of such claims and legal actions cannot be predicted with certainty, the Company’s management does not believe that there are claims or actions, pending or threatened against the Company, the ultimate disposition of which would have a material adverse effect on the Company’s business, results of operations, financial condition or cash flows.

The Company may be subject to legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business. While the outcome of these claims cannot be predicted with certainty, the Company does not believe that any of the outcomes will have a material effect on the Company’s operations.

F-16

NOTE 9 – CONCENTRATION OF CREDIT RISK

Concentration of Revenue and Supplier

During the nine months ended September 30, 2014 sales to two customers represented approximately 61% of the Company’s net sales. During the nine months ended September 30, 2013 sales to two customers represented approximately 63% of the Company’s net sales. As of September 30, 2014 and December 31, 2013, the Company had two customers representing approximately 100% of accounts receivable and one customer representing approximately 100% of accounts receivable, respectively.

The Company purchased inventories and products for sale from one vendor totaling approximately $473,000 and $1.0 million during the nine months ended September 30, 2014 and 2013, respectively.

NOTE 10 – SUBSEQUENT EVENTS

On December 30, 2014, the Company entered into a Share Exchange Agreement (the “Exchange Agreement”) with all of the stockholders of the Company (the “Vapir Shareholders”), Vapir Enterprises, Inc. (“Vapir Enterprises”), and its controlling stockholders.

Pursuant to the Exchange Agreement, Vapir Enterprises will acquire all of the outstanding shares of the Company in exchange for the issuance of 38,624,768 shares of Vapir Enterprises’ common stock to Vapir Shareholders. The shares to be issued to the Vapir Shareholders shall constitute 80% of Vapir Enterprises issued and outstanding shares of common stock as of and immediately after the consummation of the Exchange Agreement.

Upon closing of the Exchange Agreement, the Company became Vapir Enterprises wholly owned subsidiary and Vapir Enterprises ceases its prior operations.

The Exchange Agreement is being accounted for as a reverse merger and recapitalization of the Company whereby the Company is deemed to be the acquirer in the reverse merger for accounting purposes. The consolidated financial statements after the acquisition include the balance sheets of both companies at historical cost, the historical results of the Company and the results of Vapir Enterprises from the acquisition date.

Upon the closing of the transaction, a new board of directors and new officers were appointed which consists of Mr. Hamid Emarlou and Dr. Shadi Shayegan. Following the closing, Mr. Emarlou was also appointed as Chief Executive Officer and President of Vapir Enterprises.

F-17

Exhibit 99.3

VAPIR ENTERPRISES, INC.

PRO FORMA COMBINED FINANCIAL INFORMATION

(UNAUDITED)

VAPIR ENTERPRISES, INC.

Index to Unaudited Pro Forma Combined Financial Information

		Pages

Introduction to Unaudited Pro Forma Combined Financial Information		2

Unaudited Pro Forma Combined Balance Sheet		3

Notes to Unaudited Pro Forma Combined Balance Sheet		4

VAPIR ENTERPRISES, INC.

Introduction to Unaudited Pro Forma Combined Financial Information

The following unaudited pro forma combined financial information is presented to illustrate the estimated effects of our merger with Vapir, Inc.

Upon closing of the Exchange Agreement, Vapir became our wholly owned subsidiary and the Company ceases its prior operations.

The Exchange Agreement is being accounted for as a reverse merger and recapitalization of Vapir whereby Vapir is deemed to be the acquirer in the reverse merger for accounting purposes. The consolidated financial statements after the acquisition include the balance sheets of both companies at historical cost, the historical results of Vapir and the results of the Company from the acquisition date.

The unaudited pro forma combined financial information assumes the Exchange Agreement was consummated as of September 30, 2014. The financial statements of the Company included in the following unaudited pro forma combined financial information are derived from the unaudited financial statements of the Company for the interim period September 30, 2014 contained on Form 10-Q as filed with the Securities and Exchange Commission. The financial statements of Vapir, included in the following unaudited pro forma combined financial information are derived from the unaudited financial statements for the interim period ended September 30, 2014 contained elsewhere in the Form 8-K. The unaudited pro forma combined balance sheet is prepared as though the transactions occurred at the close of business on September 30, 2014.

The information presented in the unaudited pro forma combined financial information does not purport to represent what our financial position would have been had the Exchange Agreement occurred as of the dates indicated, nor is it indicative of our future financial position for any period. You should not rely on this information as being indicative of the historical results that would have been achieved had the companies always been consolidated or the future results that the consolidated company will experience after the Share Exchange Agreement Transaction.

The pro forma adjustments are based upon available information and certain assumptions that the Company believes is reasonable under the circumstances. The unaudited pro forma combined financial information should be read in conjunction with the historical financial statements and related notes of the Company.

VAPIR ENTERPRISES, INC.

UNAUDITED PRO FORMA COMBINED BALANCE SHEET

	Vapir Enterprises, Inc.			Vapir, Inc.
	September 30,			September 30,
	2014			2014			Pro Forma Adjustments					Pro Forma
	Historical			Historical			Dr			Cr.		Balances
ASSETS	( see Note)			( see Note)								(Unaudited)

CURRENT ASSETS:
Cash	$	140,065		$	-		$	-		$	-	$	140,065
Accounts receivable		-			944			-			-		944
Inventory		-			56,253			-			-		56,253

Total Current Assets		140,065			57,197			-			-		197,262

Other assets:
Property and equipment, net		400,000			4,122			-			-		404,122
Intangible assets, net		-			459,146			-			-		459,146
Total other assets		400,000			463,268			-			-		863,268

Total Assets	$	540,065		$	520,465		$	-		$	-	$	1,060,530

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Bank overdraft	$	-		$	1,434		$	-		$	-	$	1,434
Accounts payable and accrued expenses		54,181			68,276			-			-		122,457
Interest payable		947			-			-			-		947
Accounts payable and accrued expenses - related party		54,500			-			-			-		54,500
Loan payable		-			197,000			-			-		197,000
Notes payable - current maturities		45,000			19,800			-			-		64,800
Customer deposits		-			188,809			-			-		188,809

Total Current Liabilities		154,628			475,319			-			-		629,947

LONG-TERM LIABILITIES:
Notes payable, net of current maturities		137,500			30,000			-			-		167,500
Notes payable - related party		62,500			-			-			-		62,500
Interest payable - net of current portion		240			-			-			-		240
Interest payable - related party		109			-			-			-		109

Total Long-term Liabilities		200,349			30,000			-			-		230,349

Total Liabilities		354,977			505,319			-			-		860,296

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY :

Preferred stock $0.001 par value; 20,000,000 shares authorized; none issued and outstanding		-			-			-			-		-
Common stock ($0.001 par value; 100,000,000 shares authorized; 6,816,194 shares issued and outstanding prior to merger; $0.001 par value; 100,000,000 shares authorized; 45,440,962 issued and outstanding after the merger)		6,816			-				(a)		38,625		45,441
Additional paid-in capital		3,107,752			400,000	(a)		2,968,105					539,647
Accumulated deficit		(2,929,480	)		(384,854	)			(a)		2,929,480		(384,854	)

Total Stockholders' Equity		185,088			15,146			2,968,105			2,968,105		200,234

Total Liabilities and Stockholders' Equity	$	540,065		$	520,465		$	2,968,105		$	2,968,105	$	1,060,530

See accompanying notes to unaudited pro forma combined financial statements.

NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET

Unaudited pro forma adjustments reflect the following transaction:

Additional paid in capital

Common stock, at par

Accumulated deficit

To recapitalize for the Share Exchange Agreement. On December 30, 2014, the Company entered into a Share Exchange Agreement with Vapir and the shareholders of Vapir whereby the Company agreed to acquire all of the issued and outstanding capital stock of Vapir in exchange for 38,624,768 shares of the Company’s common stock.