| ☐ | | | Preliminary Proxy Statement | | | ☐ | | | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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| ☑ | | | Definitive Proxy Statement | | | ☐ | | | Definitive Additional Materials | |
| ☐ | | | Soliciting Materials Pursuant to §240.14a-12 | | | |
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Proxy Statement of Vaporin, Inc.
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| |
Proxy Statement and Prospectus of Vapor Corp.
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| /s/ Scott Frohman Scott Frohman Chief Executive Officer Vaporin, Inc. |
| | /s/ Jeffrey E. Holman Jeffrey E. Holman Chief Executive Officer Vapor Corp. |
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| | | | F-1 | | | |
APPENDICES | | | | | | | |
| | | | A-1 | | | |
| | | | B-1 | | | |
| | | | C-1 | | | |
| | | | D-1 | | |
| |
Proposals
|
| | |
Vote
Required |
| | |
Broker
Discretionary Vote Allowed? |
| | |
Effect of
Broker Non-Vote |
| | |
Effect of
Abstentions on the Proposal |
| |
| |
Vaporin
|
| | ||||||||||||||||
| |
(1)
Approve the merger agreement
|
| | |
Majority of the
outstanding shares |
| | |
No
|
| | |
Vote against
|
| | |
Vote
against |
| |
| |
(2)
Approve the Executive Compensation Proposal
|
| | |
Majority of the shares
present, in person or represented by proxy, and |
| | |
No
|
| | |
No effect
|
| | |
Vote
against |
| |
| |
Proposals
|
| | |
Vote
Required |
| | |
Broker
Discretionary Vote Allowed? |
| | |
Effect of
Broker Non-Vote |
| | |
Effect of
Abstentions on the Proposal |
| |
| | | | | |
entitled to vote
on this proposal |
| | | | | | | | | | | | | |
| |
(3)
Approve the Vaporin Adjournment Proposal
|
| | |
Majority of the shares
present, in person or represented by proxy, and entitled to vote on this proposal |
| | |
No
|
| | |
No effect
|
| | |
Vote against
|
| |
| |
Vapor
|
| | ||||||||||||||||
| |
(1)
Approve the merger agreement and
the issuance of Vapor common stock in connection with the merger |
| | |
Majority of the
outstanding shares |
| | |
No
|
| | |
Vote
Against |
| | |
Vote against
|
| |
| |
(2)
Ratification of the Bridge Financing
and the issuance of Vapor common stock in connection therewith |
| | |
Majority of the shares
present, in person or represented by proxy, and entitled to vote on this proposal |
| | |
No
|
| | |
No effect
|
| | |
Vote
against |
| |
| |
(3)
Approval of the Pre-Closing Financing Proposal
|
| | |
Majority of the shares
present, in person or by proxy, and entitled to vote thereon |
| | |
No
|
| | |
No effect
|
| | |
Vote against
|
| |
| |
(4)
Approval of the Post-Closing Financing Proposal
|
| | |
Majority of the shares
present, in person or by proxy, and entitled to vote thereon |
| | |
No
|
| | |
No effect
|
| | |
Vote against
|
| |
| |
(5)
Approve the Vapor Adjournment Proposal
|
| | |
Majority of the shares
present, in person or represented by proxy, and entitled to vote on this proposal |
| | |
No
|
| | |
No effect
|
| | |
Vote
against |
| |
Date
|
| |
Closing Sale
Price Per Share of Vapor Common Stock |
| |
Closing Sale
Price Per Share of Vaporin Common Stock |
| |
Equivalent
Value of Consideration Per Share of Vaporin Common Stock |
| |||||||||
September 30, 2014
|
| | | $ | 1.47 | | | | | $ | 2.70 | | | | | $ | 3.12 | | |
January 13, 2015
|
| | | $ | 1.19 | | | | | $ | 1.54 | | | | | $ | 2.46 | | |
| | |
Nine Months Ended
September 30, 2014 |
| |
Year Ended
December 31, 2013 |
| ||||||
| | |
(In thousands, except per share amounts)
|
| |||||||||
Pro Forma Statement of Operations Information | | | | | | | | | | | | | |
Sales, net
|
| | | $ | 16,761 | | | | | $ | 28,259 | | |
Operating (loss) income
|
| | | | (9,676) | | | | | | 596 | | |
Net (loss)
|
| | | | (10,821) | | | | | | 415 | | |
| | | | $ | (0.34) | | | | | $ | 0.01 | | |
| | |
As of
September 30, 2014 |
| | | |||||||
| | |
(In thousands)
|
| | | |||||||
Pro Forma Balance Sheet Information | | | | | | | | | | | | | |
Total current assets
|
| | | $ | 14,262 | | | | | ||||
Intangible assets
|
| | | | 1,750 | | | | | ||||
Goodwill
|
| | | | 16,169 | | | | | ||||
Total assets
|
| | | | 32,778 | | | | | ||||
Total debt (current)
|
| | | | 1,200 | | | | | ||||
Total liabilities
|
| | | | 4,141 | | | | | ||||
Total stockholders’ equity
|
| | | | 28,637 | | | | | | |
| | |
Historical
Vapor |
| |
Historical
Vaporin |
| |
Pro Forma
Combined |
| |||||||||
Nine Months Ended September 30, 2014 | | | | | | | | | | | | | | | | | | | |
Loss per share: | | | | | | | | | | | | | | | | | | | |
Basic
|
| | | $ | (0.45) | | | | | $ | (1.13) | | | | | $ | (0.34) | | |
Diluted
|
| | | | (0.45) | | | | | | (1.13) | | | | | | (0.34) | | |
Period-end book value per share
|
| | | | 0.34 | | | | | | 1.20 | | | | | | 0.88 | | |
Cash dividends per share
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | |
Year Ended December 31, 2013 | | | | | | | | | | | | | | | | | | | |
Earnings (loss) per share: | | | | | | | | | | | | | | | | | | | |
Basic
|
| | | $ | 0.06 | | | | | $ | (0.18) | | | | | $ | 0.01 | | |
Diluted
|
| | | | 0.06 | | | | | | (0.18) | | | | | | 0.01 | | |
Period-end book value per share
|
| | | | 0.72 | | | | | | (0.13) | | | | | | 1.01 | | |
Cash dividends per share
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | |
| | |
Price of Vapor Common Stock
and Dividends Declared |
| |
Price of Vaporin Common Stock
and Dividends Declared |
| ||||||||||||||||||||||||||||||
| | |
High
|
| |
Low
|
| |
Dividends
|
| |
High
|
| |
Low
|
| |
Dividends
|
| ||||||||||||||||||
2014: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Fourth Quarter (through December 23, 2014)
|
| | | $ | 2.81 | | | | | $ | 1.02 | | | | | $ | — | | | | | $ | 3.05 | | | | | $ | 1.45 | | | | | $ | — | | |
Third Quarter
|
| | | | 5.09 | | | | | | 1.33 | | | | | | — | | | | | | 5.00 | | | | | | 2.35 | | | | | | — | | |
Second Quarter
|
| | | | 6.75 | | | | | | 3.90 | | | | | | — | | | | | | 8.25 | | | | | | 3.50 | | | | | | — | | |
First Quarter
|
| | | | 9.05 | | | | | | 5.63 | | | | | | — | | | | | | 11.00 | | | | | | 2.55 | | | | | | — | | |
2013: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Fourth Quarter
|
| | | $ | 9.80 | | | | | $ | 4.00 | | | | | $ | — | | | | | $ | 12.50 | | | | | $ | 2.00 | | | | | $ | — | | |
Third Quarter
|
| | | | 5.85 | | | | | | 3.80 | | | | | | — | | | | | | 15.00 | | | | | | 6.25 | | | | | | — | | |
Second Quarter
|
| | | | 6.60 | | | | | | 1.95 | | | | | | — | | | | | | 27.50 | | | | | | 6.00 | | | | | | — | | |
First Quarter
|
| | | | 4.00 | | | | | | 1.15 | | | | | | — | | | | | | 36.25 | | | | | | 17.00 | | | | | | — | | |
Date
|
| |
Closing Sale Price
Per Share of Vapor Common Stock |
| |
Closing Sale Price
Per Share of Vaporin Common Stock |
| |
Equivalent Value of
Merger Consideration Per Share of Vaporin Common Stock(1) |
| |||||||||
September 30, 2014
|
| | | $ | 1.47 | | | | | $ | 2.70 | | | | | $ | 3.12 | | |
November 5, 2014
|
| | | $ | 2.71 | | | | | $ | 2.15 | | | | | $ | 5.61 | | |
January 12, 2015
|
| | | $ | 1.23 | | | | | $ | 1.54 | | | | | $ | 2.53 | | |
| | |
For the Year
ended December 31, 2013 |
| |
For the Year
ended December 31, 2012 |
|||||
Revenues
|
| | | $ | — | | | | | $ | — |
Cost of sales
|
| | | | — | | | | | | — |
Gross profit
|
| | | | — | | | | | | — |
Operating and other non-operating expenses
|
| | | | (536,839) | | | | | | (3,813,593) |
Loss from discontinued operations
|
| | | | (536,839) | | | | | $ | (3,813,593) |
|
Outstanding Equity Awards of Vaporin
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Name
(a) |
| |
Number of
Securities Underlying Unexercised Options (#) Exercisable (b) |
| |
Number of
Securities Underlying Unexercised Options (#) Unexercisable (c) |
| |
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d) |
| |
Option
Exercise Price ($) (e) |
| |
Option
Expiration Date (f) |
| |
Number of
Shares or Units of Stock That Have Not Vested (#) (g) |
| |
Market
Value of Shares or Units of Stock That Have Not Vested ($) (h) |
| |
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (i) |
| |
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#) (j) |
| |||||||||||||||||||||||||||
|
Gregory Brauser(1)
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 166,667 | | | | | | 256,667 | | | | | | — | | | | | | — | | |
|
Scott Frohman(1)
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 166,667 | | | | | | 256,667 | | | | | | — | | | | | | — | | |
Name
|
| |
Security
|
| |
Number of Vested Securities
(c) |
| |||
Gregory Brauser
|
| |
RSU
|
| | | | 33,333 | | |
Steve Cantrell
|
| |
Common Stock
|
| | | | 571,428 | | |
Scott Frohman
|
| |
RSU
|
| | | | 33,333 | | |
James Martin
|
| |
Common Stock
|
| | | | 100,000 | | |
| | |
Common Stock Beneficially Owned(1)
|
| |||||||||||||||||||||
| | |
Pre-Merger
|
| |
Post-Merger
|
| ||||||||||||||||||
Name of Beneficial Owner
|
| |
Number of
Shares of Common Stock |
| |
Percentage
of Class |
| |
Number of
Shares of Common Stock |
| |
Percentage
of Class |
| ||||||||||||
Scott Frohman(2)
|
| | | | 101,000 | | | | | | 1.5% | | | | | | 625,232 | | | | | | 2.0% | | |
Steven Cantrell(3)
|
| | | | 571,428 | | | | | | 8.7% | | | | | | 1,186,961 | | | | | | 3.9% | | |
Gregory Brauser(4)
|
| | | | 332,420 | | | | | | 4.9% | | | | | | 1,087,239 | | | | | | 3.6% | | |
James Martin(5)
|
| | | | 100,000 | | | | | | 1.5% | | | | | | 207,718 | | | | | | * | | |
David Rector(6)
|
| | | | 60,000 | | | | | | * | | | | | | 124,631 | | | | | | * | | |
Michael Brauser(7)
|
| | | | 493,831 | | | | | | 9.99% | | | | | | 2,209,099 | | | | | | 7.2% | | |
Mark Groussman(8)
|
| | | | 493,831 | | | | | | 9.99% | | | | | | 1,059,351 | | | | | | 3.5% | | |
Barry Honig(9)
|
| | | | 493,831 | | | | | | 9.99% | | | | | | 1,847,308 | | | | | | 6.0% | | |
All executive officers and directors as a group (4 persons)
|
| | | | 1,095,848 | | | | | | 16.6% | | | | | | 3,107,150 | | | | | | 10.2% | | |
| | |
High
|
| |
Low
|
| |
Median
|
| |||||||||
TEV/TTM Rev (E-Cig Companies)
|
| | | | 477.1X | | | | | | 0.6X | | | | | | 18.2X | | |
TEV/TTM Rev (Tobacco cos with E-Cig divisions)
|
| | | | 6.4X | | | | | | 2.7X | | | | | | 5.0X | | |
| | |
Vaporin
|
| |
Vapor
|
| ||||||
| | |
(dollars in thousands except per share data)
|
| |||||||||
Net Income Available to Common Stockholders
|
| | | $ | (1,713) | | | | | $ | (8,863) | | |
Earnings Per Share
|
| | | $ | (0.36) | | | | | $ | (0.54) | | |
Total Assets
|
| | | $ | 5,300 | | | | | $ | 7,963 | | |
| | |
Historical
Vapor Corp. |
| |
Historical
Vaporin, Inc. |
| |
Pro Forma
Adjustments |
| | | | | | | |
Pro Forma
Combined |
||||||||||||||||
CURRENT ASSETS: | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||
Cash
|
| | | $ | 1,672,664 | | | | | $ | 769,515 | | | | | $ | 3,100,000 | | | | |
|
(d)
|
| | | | $ | 5,542,179 | |||||
Due from merchant credit card processor, net of reserve
|
| | | | 115,894 | | | | | | — | | | | | | — | | | | | | | | | | | | 115,894 | |||||
Accounts receivable, net of allowances
|
| | | | 824,459 | | | | | | 284,923 | | | | | | — | | | | | | | | | | | | 1,109,382 | |||||
Inventories
|
| | | | 4,135,522 | | | | | | 1,480,271 | | | | | | — | | | | | | | | | | | | 5,615,793 | |||||
Prepaid Expenses
|
| | | | 1,332,110 | | | | | | 34,054 | | | | | | — | | | | | | | | | | | | 1,366,164 | |||||
Loan receivable
|
| | | | 512,207 | | | | | | — | | | | | | — | | | | | | | | | | | | 512,207 | |||||
TOTAL CURRENT ASSETS
|
| | | | 8,592,856 | | | | | | 2,568,763 | | | | | | 3,100,000 | | | | | | | | | | | | 14,261,619 | |||||
OTHER ASSETS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
Property and equipment, net
|
| | | | 114,593 | | | | | | 103,782 | | | | | | — | | | | | | | | | | | | 218,375 | |||||
Intangible assets
|
| | | | | | | | | | | | | | | | 1,750,000 | | | | |
|
(a)
|
| | | | | 1,750,000 | |||||
Goodwill
|
| | | | — | | | | | | 3,732,268 | | | | | | 12,436,711 | | | | |
|
(a)
|
| | | | | 16,168,979 | |||||
Other assets
|
| | | | 374,565 | | | | | | 4,173 | | | | | | — | | | | | | | | | | | | 378,738 | |||||
TOTAL ASSETS
|
| | | $ | 9,082,014 | | | | | $ | 6,408,986 | | | | | $ | 17,286,711 | | | | | | | | | | | $ | 32,777,711 | |||||
CURRENT LIABILITIES: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
Accounts payable
|
| | | $ | 1,809,577 | | | | | $ | 416,399 | | | | | $ | — | | | | | | | | | | | $ | 2,225,976 | |||||
Accrued expenses
|
| | | | 333,860 | | | | | | — | | | | | | — | | | | | | | | | | | | 333,860 | |||||
Notes payable – related party
|
| | | | — | | | | | | 200,000 | | | | | | — | | | | | | | | | | | | 200,000 | |||||
Derivative liabilities
|
| | | | — | | | | | | 122,979 | | | | | | — | | | | | | | | | | | | 122,979 | |||||
Term Loan
|
| | | | 1,000,000 | | | | | | — | | | | | | — | | | | | | | | | | | | 1,000,000 | |||||
Customer deposits
|
| | | | 255,200 | | | | | | — | | | | | | — | | | | | | | | | | | | 255,200 | |||||
Income taxes payable
|
| | | | 3,092 | | | | | | — | | | | | | — | | | | | | | | | | | | 3,092 | |||||
TOTAL CURRENT LIABILITIES
|
| | | | 3,401,729 | | | | | | 739,378 | | | | | | — | | | | | | | | | | | | 4,141,107 | |||||
COMMITMENTS AND CONTINGENCIES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
Preferred stock
|
| | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | — | |||||
Series A preferred stock
|
| | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | — | |||||
Series B preferred stock
|
| | | | — | | | | |
|
10
|
| | | |
|
(10)
|
| | | |
|
(b)
|
| | | | | — | |||||
Series C preferred stock
|
| | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | — | |||||
Series E preferred stock
|
| | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | — | |||||
Common stock
|
| | | | 16,759 | | | | | | 473 | | | | | | 15,416 | | | | |
|
(b,c)
|
| | | |
|
32,648
|
|||||
Additional paid-in capital
|
| | | | 14,383,218 | | | | | | 9,912,247 | | | | | | 13,428,183 | | | | |
|
(b,c)
|
| | | |
|
37,723,648
|
|||||
Accumulated deficit
|
| | | | (8,719,692) | | | | | | (4,243,122) | | | | | | 3,843,122 | | | | |
|
(b,d)
|
| | | |
|
(9,119,692)
|
|||||
TOTAL STOCKHOLDERS’ EQUITY
|
| | | | 5,680,285 | | | | | | 5,669,608 | | | | | | 17,286,711 | | | | | | | | | | | | 28,636,604 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
| | | $ | 9,082,014 | | | | | $ | 6,408,986 | | | | | $ | 17,286,711 | | | | | | | | | | | $ | 32,777,711 | |||||
|
| | |
Historical
Vapor Corp. |
| |
Historical
Vaporin, Inc. |
| |
Pro Forma
Adjustments – Vape Store Acquisition(e) |
| |
Pro Forma
Adjustments – Vaporin Acquisition |
| | | | | | | |
Pro Forma
Combined |
||||||||||||||||||||
SALES, NET
|
| | | $ | 13,547,792 | | | | | $ | 1,204,450 | | | | | $ | 3,213,559 | | | | | $ | — | | | | | | | | | | | $ | 16,761,351 | ||||||
Cost of goods sold
|
| | | | 10,400,944 | | | | | | 718,031 | | | | | | 1,217,160 | | | | | | — | | | | | | | | | | | | 11,618,104 | ||||||
Gross Profit
|
| | | | 3,146,848 | | | | | | 486,419 | | | | | | 1,996,399 | | | | | | — | | | | | | | | | | | | 5,143,247 | ||||||
EXPENSES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
Selling, general and administrative
|
| | | | 7,838,380 | | | | | | 2,857,258 | | | | | | 4,300,028 | | | | | | 131,250 | | | | |
|
(f)
|
| | | | | 12,269,658 | ||||||
Advertising
|
| | | | 1,815,450 | | | | | | 713,299 | | | | | | 733,896 | | | | | | — | | | | | | | | | | | | 2,549,346 | ||||||
Total operating expenses
|
| | | | 9,653,830 | | | | | | 3,570,557 | | | | | | 5,033,924 | | | | | | 131,250 | | | | | | | | | | | | 14,819,004 | ||||||
Operating loss
|
| | | | (6,506,982) | | | | | | (3,084,138) | | | | | | (3,037,525) | | | | | | (131,250) | | | | | | | | | | | | (9,675,757) | ||||||
Other expenses/income | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
Derivative expense
|
| | | | — | | | | | | 86,484 | | | | | | 86,484 | | | | | | — | | | | | | | | | | | | 86,484 | ||||||
Change in fair value of derivatives
|
| | | | — | | | | | | (91,312) | | | | | | (91,312) | | | | | | — | | | | | | | | | | | | (91,312) | ||||||
Interest expenses
|
| | | | 65,723 | | | | | | 344,550 | | | | | | 316,612 | | | | | | — | | | | | | | | | | | | 382,335 | ||||||
Total other expenses
|
| | | | 65,723 | | | | | | 339,722 | | | | | | 311,784 | | | | | | — | | | | | | | | | | | | 377,507 | ||||||
LOSS BEFORE INCOME TAX EXPENSE
|
| | | | (6,572,705) | | | | | | (3,423,860) | | | | | | (3,349,309) | | | | | | (131,250) | | | | | | | | | | | | (10,053,264) | ||||||
Income tax expense
|
| | | | 767,333 | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | 767,333 | ||||||
NET LOSS
|
| | | $ | (7,340,038) | | | | | $ | (3,423,860) | | | | | $ | (3,349,309) | | | | | $ | (131,250) | | | | | | | | | | | $ | (10,820,597) | ||||||
NET LOSS PER COMMON SHARE – BASIC AND DILUTED
|
| | | $ | (0.45) | | | | | $ | (1.13) | | | | | | | | | | | | | | | | | | | | | | | $ | (0.34) | ||||||
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING – BASIC AND DILUTED |
| | | | 16,372,260 | | | | | | 3,038,858 | | | | | | | | | | | | 15,888,652 | | | | |
|
(g)
|
| | | | | 32,260,912 | ||||||
|
| | |
Historical
Vapor Corp. |
| |
Historical
Vaporin, Inc. |
| |
Pro Forma
Vape Store Acquisition(e) |
| |
Pro Forma
Adjustments |
| | | | | | | |
Pro Forma
Combined |
||||||||||||||||||||
SALES NET
|
| | | $ | 25,990,228 | | | | | $ | 23,268 | | | | | $ | 2,269,081 | | | | | $ | — | | | | | | | | | | | $ | 28,259,309 | ||||||
Cost of goods sold
|
| | | | 16,300,333 | | | | | | 10,851 | | | | | | 1,059,692 | | | | | | — | | | | | | | | | | | | 17,360,025 | ||||||
Gross Profit
|
| | | | 9,689,895 | | | | | | 12,417 | | | | | | 1,209,389 | | | | | | — | | | | | | | | | | | | 10,899,284 | ||||||
EXPENSES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
Selling, general and administrative
|
| | | | 6,464,969 | | | | | | 260,860 | | | | | | 1,273,069 | | | | | | 175,000 | | | | |
|
(f)
|
| | | | | 7,913,038 | ||||||
Advertising
|
| | | | 2,264,807 | | | | | | 57,189 | | | | | | 125,684 | | | | | | — | | | | | | | | | | | | 2,390,491 | ||||||
Total operating expenses
|
| | | | 8,729,776 | | | | | | 318,049 | | | | | | 1,398,753 | | | | | | 175,000 | | | | | | | | | | | | 10,303,529 | ||||||
Operating loss
|
| | | | 960,119 | | | | | | (305,632) | | | | | | (189,364) | | | | | | (175,000) | | | | | | | | | | | | 595,755 | ||||||
Other expenses/income | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
Induced conversion expense
|
| | | | 299,577 | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | 299,577 | ||||||
Interest expenses
|
| | | | 383,981 | | | | | | 1,023 | | | | | | 2,046 | | | | | | — | | | | | | | | | | | | 386,027 | ||||||
Total other expenses
|
| | | | 683,558 | | | | | | 1,023 | | | | | | 2,046 | | | | | | — | | | | | | | | | | | | 685,604 | ||||||
INCOME (LOSS) BEFORE INCOME TAX EXPENSE
|
| | | | 276,561 | | | | | | (306,655) | | | | | | (191,410) | | | | | | (175,000) | | | | | | | | | | | | (89,849) | ||||||
Income tax expense (benefit)
|
| | | | (524,791) | | | | | | — | | | | | | 19,606 | | | | | | — | | | | | | | | | | | | (505,185) | ||||||
NET INCOME (LOSS)
|
| | | $ | 801,352 | | | | | $ | (306,655) | | | | | $ | (211,016) | | | | | $ | (175,000) | | | | | | | | | | | $ | 415,336 | ||||||
EARNINGS (LOSS) LOSS PER COMMON SHARE – BASIC AND DILUTED
|
| | | $ | 0.06 | | | | | $ | (0.18) | | | | | | | | | | | | | | | | | | | | | | | $ | 0.01 | ||||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC
|
| | | | 12,818,487 | | | | | | 1,733,250 | | | | | | | | | | | | 15,888,652 | | | | |
|
(g)
|
| | | | | 28,707,139 | ||||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – DILUTED
|
| | | | 13,186,365 | | | | | | 1,733,250 | | | | | | | | | | | | 15,888,652 | | | | |
|
(g)
|
| | | | | 29,075,017 | ||||||
|
|
Vaporin common shares outstanding
|
| | | | 4,747,252 | |
| Issuable common shares upon conversion: | | | ||||
|
Series B preferred stock
|
| | | | 100,000 | |
|
Series C preferred stock
|
| | | | 1,550,000 | |
|
Total Vaporin common and preferred shares eligible for exchange
|
| | | | 6,397,252 | |
|
Exchange ratio
|
| | | | 2.112 | |
|
Vapor common shares to be issued
|
| | | | 13,507,700 | |
|
Vapor price per common share at September 30, 2014
|
| | | $ | 1.47 | |
|
Fair value of total consideration transferred
|
| | | $ | 19,856,319 | |
|
| Purchase Consideration: | | | ||||
|
Value of common stock issued to sellers
|
| | | $ | 19,856,319 | |
| Tangible assets acquired and liabilities assumed: | | | ||||
|
Cash
|
| | | | 769,515 | |
|
Inventories
|
| | | | 1,480,271 | |
|
Accounts receivable
|
| | | | 284,923 | |
|
Other current assets
|
| | | | 34,054 | |
|
Property and equipment
|
| | | | 103,782 | |
|
Other long term assets
|
| | | | 4,173 | |
|
Notes payable
|
| | | | (200,000) | |
|
Accounts payable and accrued expenses
|
| | | | (416,399) | |
|
Derivative liabilities
|
| | | | (122,979) | |
|
Net tangible assets acquired
|
| | | | 1,937,340 | |
|
Purchase consideration in excess of fair value of net tangible assets
|
| | | | 17,918,979 | |
| Allocated to: | | | ||||
|
Trade names and technology
|
| | | | 1,500,000 | |
|
Customer relationships
|
| | | | 250,000 | |
|
Goodwill
|
| | | | 16,168,979 | |
| | | | | $ | — | |
|
| | | | | | | | | | | | | | |
Pro Forma Amortization
|
| |||||||||||||
| | |
Intangible
Assets |
| |
Estimated
Useful Lives (years) |
| |
For the
Nine Months Ended September 30, 2014 |
| |
For the
Year Ended December 31, 2013 |
| ||||||||||||||||
Trade names and technology
|
| | | $ | 1,500,000 | | | | | | 10 | | | | | $ | 112,500 | | | | | $ | 150,000 | | | ||||
Customer Relationships
|
| | | | 250,000 | | | | | | 10 | | | | | | 18,750 | | | | | | 25,000 | | | ||||
| | | | $ | 1,750,000 | | | | | | | | | | | $ | 131,250 | | | | | $ | 175,000 | | | ||||
|
Name
|
| |
Cash
($) |
| |
Equity
($)(1) |
| |
Pension/
NQDC ($) |
| |
Perquisites/
Benefits ($) |
| |
Tax
Reimbursements ($) |
| |
Total
($) |
|||||||||||||||||
Scott Frohman
|
| | | | — | | | | | | 604,021 | | | | | | — | | | | | | — | | | | | | — | | | | | | 604,021 |
Gregory Brauser
|
| | | | — | | | | | | 604,021 | | | | | | — | | | | | | — | | | | | | — | | | | | | 604,021 |
Name
|
| |
Cash
($) |
| |
Equity
($)(1) |
| |
Pension/
NQDC ($) |
| |
Perquisites/
Benefits ($) |
| |
Tax
Reimbursements ($) |
| |
Total
($) |
|||||||||||||||||
Scott Frohman
|
| | | | — | | | | | | 604,021 | | | | | | — | | | | | | — | | | | | | — | | | | | | 604,021 |
Gregory Brauser
|
| | | | — | | | | | | 604,021 | | | | | | — | | | | | | — | | | | | | — | | | | | | 604,021 |
| | |
Common Stock Beneficially Owned(2)
|
| |||||||||
Name of Beneficial Owner
|
| |
Number of Shares of
Common Stock |
| |
Percentage of
Class |
| ||||||
Doron Ziv(2) 4969 SW 33rd Way, Fort Lauderdale, FL 33312 |
| | | | 1,626,822 | | | | | | 9.75% | | |
Kevin Frija(3) 4401 N.W. 167st, Miami, FL 33055 |
| | | | 1,419,781 | | | | | | 8.48% | | |
Jeffrey Holman(4) 3001 Griffin Road, Dania Beach, FL 33312 |
| | | | 1,281,110 | | | | | | 7.68% | | |
Isaac Galazan(5) 16711 Collins Avenue #2204, Sunny Isles, FL 33160 |
| | | | 963,469 | | | | | | 5.78% | | |
Ryan Kavanaugh(6)
|
| | | | 200,000 | | | | | | 1.21% | | |
Harlan Press(7)
|
| | | | 155,887 | | | | | | * | | |
Frank Jaumot(6)
|
| | | | 2,000 | | | | | | * | | |
Robert Barrett III(6)
|
| | | | — | | | | | | * | | |
Angela Courtin(6)
|
| | | | — | | | | | | * | | |
All executive officers and directors as a group (6 persons)
|
| | | | 1,662,330 | | | | | | 9.93% | | |
| | |
High
|
| |
Mean
|
| |
Median
|
| |
Low
|
|||||||||||
EV/ 2015 P Revenue
|
| | | | 6.06x | | | | | | 4.29x | | | | | | 4.74x | | | | | | 1.57x |
EV/ 2016 P EBITDA
|
| | | | 12.4x | | | | | | 10.5x | | | | | | 10.5x | | | | | | 7.6x |
Target
|
| |
Acquiror
|
|
Lorillard, Inc. | | | Reynolds American, Inc. | |
US Cigarette Brands and Other Assets of Lorillard, Inc. and Reynolds American Inc. | | | Imperial Tobacco Group plc | |
A1 Vapors, Inc. | | | FreeButton, Inc. | |
Gankit Corporation (nka: Nhale Inc.) | | | Riverview Heights, LLC | |
Green Smoke, Inc. | | | Nu Mark LLC | |
Shenzhen Mike Weir Technology Co., Ltd. | | | EVE Energy Co., Ltd | |
FIN Branding Group, LLC | | | Victory Electronic Cigarettes Corporation (nka: Electronic Cigarettes International Group, Ltd.) | |
The Vapestick Group Limited | | | Victory Electronic Cigarettes Corporation (nka: Electronic Cigarettes International Group, Ltd.) | |
Shenzhen Mike Weir Technology Co., Ltd. | | | Chen Zhiping, Xiong Shaoming, Wang Jianliang, Qiu Lingyun and Luo Chunhua | |
Al Nakhla Tobacco Company S.A.E. and Al Nakhla Tobacco Company Free Zone S.A.E. | | | Japan Tobacco Inc. | |
Blu Cigs | | | Lorillard, Inc. | |
CN Creative Ltd. | | | British American Tobacco plc | |
Bulgartabac Holding AD | | | BT Invest GmbH | |
| | |
High
|
| |
Mean
|
| |
Median
|
| |
Low
|
|||||||||||
EV/TTM Revenue
|
| | | | 26.03x | | | | | | 8.45x | | | | | | 3.25x | | | | | | 0.39x |
| | |
Page
|
| |||
KBL, LLP | | | | | | | |
| | | | F-2 | | | |
Vaporin, Inc. | | | | | | | |
| | | | F-3 | | | |
| | | | F-4 | | | |
| | | | F-5 | | | |
| | | | F-6 | | | |
| | | | F-7 | | | |
| | | | F-30 | | | |
| | | | F-31 | | | |
| | | | F-32 | | | |
| | | | F-33 | | |
| | |
December 31,
2013 |
| |
December 31,
2012 |
|||||||
ASSETS
|
| | | | | | | | | | | ||
CURRENT ASSETS: | | | | | | | | | | | | ||
Cash
|
| | | $ | 8,317 | | | | | $ | 812,671 | ||
Note receivable
|
| | | | 50,000 | | | | | | — | ||
Prepaid expenses and other current assets
|
| | | | 1,750 | | | | | | 982,219 | ||
Assets of discontinued operations
|
| | | | — | | | | | | 144,986 | ||
Total Current Assets
|
| | | | 60,067 | | | | | | 1,939,876 | ||
Other assets: | | | | | | | | | | | | ||
Assets of discontinued operations – long term portion
|
| | | | — | | | | | | 118,000 | ||
Total Other Assets
|
| | | | — | | | | | | 118,000 | ||
Total Assets
|
| | | $ | 60,067 | | | | | $ | 2,057,876 | ||
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
|
| | | | | | | | | | | ||
CURRENT LIABILITIES: | | | | | | | | | | | | ||
Accounts payable and accrued expenses
|
| | | $ | 103,876 | | | | | $ | 671,195 | ||
Convertible notes payable, net of debt discount
|
| | | | 96,156 | | | | | | — | ||
Derivative liabilities
|
| | | | 120,280 | | | | | | — | ||
Total Liabilities
|
| | | | 320,312 | | | | | | 671,195 | ||
STOCKHOLDERS’ (DEFICIT) EQUITY: | | | | | | | | | | | | ||
Preferred stock, $0.0001 par value; 50,000,000 authorized Convertible Series A Preferred stock ($.0001 Par Value; 10,000,000 Shares Authorized; 10,000,000 and 5,000,000 shares issued and outstanding as of December 31, 2013 and 2012, respectively)
|
| | | | 1,000 | | | | | | 500 | ||
Common stock ($.0001 Par Value; 200,000,000 Shares Authorized; 86,662,500 and 77,112,500 shares issued and outstanding as of December 31, 2013 and 2012, respectively)
|
| | | | 8,667 | | | | | | 7,712 | ||
Additional paid-in capital
|
| | | | 12,346,539 | | | | | | 10,812,491 | ||
Deficit accumulated during the development stage
|
| | | | (12,616,451) | | | | | | (9,434,022) | ||
Total Stockholders’ (Deficit) Equity
|
| | | | (260,245) | | | | | | 1,386,681 | ||
Total Liabilities and Stockholders’ (Deficit) Equity
|
| | | $ | 60,067 | | | | | $ | 2,057,876 | ||
|
| | |
For the Year
Ended December 31, 2013 |
| |
For the Year
Ended December 31, 2012 |
| |
For the Period
from April 28, 2011 (Inception) to December 31, 2013 |
|||||||||||
Revenues
|
| | | $ | — | | | | | $ | — | | | | | $ | — | |||
Operating expenses: | | | | | | | | | | | | | | | | | | |||
Compensation and related expenses
|
| | | | 1,273,385 | | | | | | 2,258,937 | | | | | | 3,727,057 | |||
Consulting fees
|
| | | | 1,531,233 | | | | | | 1,848,640 | | | | | | 3,381,514 | |||
Professional fees
|
| | | | 182,962 | | | | | | 221,518 | | | | | | 411,980 | |||
General and administrative expenses
|
| | | | 136,404 | | | | | | 159,995 | | | | | | 342,690 | |||
Total operating expenses
|
| | | | 3,123,984 | | | | | | 4,489,090 | | | | | | 7,863,241 | |||
Operating loss from continuing operations
|
| | | | (3,123,984) | | | | | | (4,489,090) | | | | | | (7,863,241) | |||
Other income (expense) | | | | | | | | | | | | | | | | | | |||
Interest income
|
| | | | 1,750 | | | | | | — | | | | | | 1,750 | |||
Gain from forgiveness of accrued expenses
|
| | | | 686,063 | | | | | | — | | | | | | 686,063 | |||
Derivative expense
|
| | | | (310,375) | | | | | | — | | | | | | (310,375) | |||
Change in fair value of derivative liabilities
|
| | | | 203,137 | | | | | | — | | | | | | 203,137 | |||
Interest expense
|
| | | | (102,181) | | | | | | (11,556) | | | | | | (113,737) | |||
Total other income (expense)
|
| | | | 478,394 | | | | | | (11,556) | | | | | | 466,838 | |||
Loss from continuing operations before provision for income taxes
|
| | | | (2,645,590) | | | | | | (4,500,646) | | | | | | (7,396,403) | |||
Provision for income taxes
|
| | | | — | | | | | | — | | | | | | — | |||
Loss from continuing operations
|
| | | | (2,645,590) | | | | | | (4,500,646) | | | | | | (7,396,403) | |||
Discontinued operations: | | | | | | | | | | | | | | | | | | |||
Loss from discontinued operations, net of tax
|
| | | | (536,839) | | | | | | (3,813,593) | | | | | | (5,220,048) | |||
Net loss
|
| | | $ | (3,182,429) | | | | | $ | (8,314,239) | | | | | $ | (12,616,451) | |||
WEIGHTED AVERAGE COMMON SHARES | | | | | | | | | | | | | | | | | | |||
Basic and Diluted
|
| | | | 79,644,863 | | | | | | 51,498,259 | | | | | | 55,310,569 | |||
Loss per common share, basic and diluted: | | | | | | | | | | | | | | | | | | |||
Loss from continuing operations
|
| | | $ | (0.03) | | | | | $ | (0.09) | | | | | $ | (0.13) | |||
Loss from discontinued operations
|
| | | $ | (0.01) | | | | | $ | (0.07) | | | | | $ | (0.09) | |||
|
| | |
Preferred Stock –
Series A $0.0001 Par Value |
| |
Common Stock
$0.0001 Par Value |
| |
Additional
Paid-in Capital |
| |
Deficit
Accumulated During the Development Stage |
| |
Total
Stockholder’s (Deficit) Equity |
|||||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |||||||||||||||||||||||||||||||||||
Balance, April 28, 2011 (Inception)
|
| | | | — | | | | | | — | | | | | | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | |||||||
Capital Contributions
|
| | | | — | | | | | | — | | | | | | 25,000,000 | | | | | | 2,500 | | | | | | 1,997,530 | | | | | | — | | | | | | 2,000,030 | |||||||
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,119,783) | | | | | | (1,119,783) | |||||||
Balance, December 31, 2011
|
| | | | — | | | | | | — | | | | | | 25,000,000 | | | | | | 2,500 | | | | | | 1,997,530 | | | | | | (1,119,783) | | | | | | 880,247 | |||||||
Recapitalization of the Company
|
| | | | — | | | | | | — | | | | | | 25,000,000 | | | | | | 2,500 | | | | | | (2,930,224) | | | | | | — | | | | | | (2,927,724) | |||||||
Issuance of common stock for cash
|
| | | | — | | | | | | — | | | | | | 9,112,500 | | | | | | 912 | | | | | | 3,560,088 | | | | | | — | | | | | | 3,561,000 | |||||||
Issuance of preferred stock for cash
|
| | | | 5,000,000 | | | | | | 500 | | | | | | — | | | | | | — | | | | | | 1,999,500 | | | | | | — | | | | | | 2,000,000 | |||||||
Issuance of common stock to officers for services
|
| | | | — | | | | | | — | | | | | | 9,100,000 | | | | | | 910 | | | | | | 2,039,090 | | | | | | — | | | | | | 2,040,000 | |||||||
Issuance of common stock to consultants for services
|
| | | | — | | | | | | — | | | | | | 2,900,000 | | | | | | 290 | | | | | | 1,596,710 | | | | | | — | | | | | | 1,597,000 | |||||||
Stock-based compensation in connection with options granted to employees and consultants
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 150,397 | | | | | | — | | | | | | 150,397 | |||||||
Issuance of common stock in
connection with the acquisition of mineral rights |
| | | | — | | | | | | — | | | | | | 6,000,000 | | | | | | 600 | | | | | | 2,399,400 | | | | | | — | | | | | | 2,400,000 | |||||||
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (8,314,239) | | | | | | (8,314,239) | |||||||
Balance, December 31, 2012
|
| | | | 5,000,000 | | | | | | 500 | | | | | | 77,112,500 | | | | | | 7,712 | | | | | | 10,812,491 | | | | | | (9,434,022) | | | | | | 1,386,681 | |||||||
Issuance of common stock to consultants for services
|
| | | | — | | | | | | — | | | | | | 250,000 | | | | | | 25 | | | | | | 132,425 | | | | | | — | | | | | | 132,450 | |||||||
Stock-based compensation in connection with options granted to employees and consultants
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 143,250 | | | | | | — | | | | | | 143,250 | |||||||
Stock-based compensation in connection with restricted common stock grants
|
| | | | — | | | | | | — | | | | | | 3,000,000 | | | | | | 300 | | | | | | 1,025,946 | | | | | | — | | | | | | 1,026,246 | |||||||
Cancellation of shares in connection
with a termination agreement |
| | | | — | | | | | | — | | | | | | (4,000,000) | | | | | | (400) | | | | | | 400 | | | | | | — | | | | | | — | |||||||
Issuance of common stock due to most favored nations provision
|
| | | | 5,000,000 | | | | | | 500 | | | | | | 9,112,500 | | | | | | 911 | | | | | | (1,411) | | | | | | — | | | | | | — | |||||||
Issuance of common stock for exercise of warrants
|
| | | | — | | | | | | — | | | | | | 1,187,500 | | | | | | 119 | | | | | | (119) | | | | | | — | | | | | | — | |||||||
Reclassification of derivatives to equity
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 233,557 | | | | | | — | | | | | | 233,557 | |||||||
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (3,182,429) | | | | | | (3,182,429) | |||||||
Balance, December 31, 2013
|
| | | | 10,000,000 | | | | | $ | 1,000 | | | | | | 86,662,500 | | | | | $ | 8,667 | | | | | $ | 12,346,539 | | | | | $ | (12,616,451) | | | | | $ | (260,245) | |||||||
|
| | |
For the Year
Ended December 31, 2013 |
| |
For the Year
Ended December 31, 2012 |
| |
For the Period
from April 28, 2011 (Inception) to December 31, 2013 |
|||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | | | ||||||
Net loss
|
| | | $ | (3,182,429) | | | | | $ | (8,314,239) | | | | | $ | (12,616,451) | |||
Adjustments to reconcile net loss from operations to net cash used in operating activities:
|
| | | | | | | | | | | | | | | | | |||
Common stock issued for services
|
| | | | 1,026,246 | | | | | | 2,662,000 | | | | | | 3,688,246 | |||
Depreciation
|
| | | | 2,418 | | | | | | — | | | | | | 2,418 | |||
Amortization of prepaid expense in connection with the issuance of
common stock issued for prepaid services |
| | | | 1,066,825 | | | | | | 40,625 | | | | | | 1,107,450 | |||
Amortization of debt discount
|
| | | | 92,756 | | | | | | — | | | | | | 92,756 | |||
Stock-based compensation in connection with options granted
|
| | | | 143,250 | | | | | | 150,397 | | | | | | 293,647 | |||
Derivative expense
|
| | | | 310,375 | | | | | | — | | | | | | 310,375 | |||
Change in fair value of derivative liabilities
|
| | | | (203,137) | | | | | | — | | | | | | (203,137) | |||
Gain from forgiveness of accrued expenses
|
| | | | (686,063) | | | | | | — | | | | | | (686,063) | |||
Impairment expense
|
| | | | — | | | | | | 2,400,000 | | | | | | 2,400,000 | |||
Changes in assets and liabilities:
|
| | | | | | | | | | | | | | | | | |||
Assets of discontinued operations
|
| | | | 144,986 | | | | | | — | | | | | | 144,986 | |||
Prepaid expenses and other current assets
|
| | | | 46,094 | | | | | | (129,153) | | | | | | (146,736) | |||
Assets of discontinued operations – long term portion
|
| | | | 118,000 | | | | | | (67,000) | | | | | | — | |||
Accounts payable and accrued expense
|
| | | | 118,743 | | | | | | 646,370 | | | | | | 789,938 | |||
NET CASH USED IN OPERATING ACTIVITIES
|
| | | | (1,001,936) | | | | | | (2,611,000) | | | | | | (4,822,571) | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | | | | | | | |||
Purchase of property and equipment
|
| | | | (2,418) | | | | | | — | | | | | | (2,418) | |||
Issuance of note receivable
|
| | | | (50,000) | | | | | | — | | | | | | (50,000) | |||
Cash paid in connection with the recapitalization of the Company
|
| | | | — | | | | | | (2,000,000) | | | | | | (2,000,000) | |||
NET CASH USED IN INVESTING ACTIVITIES
|
| | | | (52,418) | | | | | | (2,000,000) | | | | | | (2,052,418) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | | | | | | | |||
Contributed capital
|
| | | | — | | | | | | — | | | | | | 2,000,030 | |||
Net proceeds from sale of common and preferred stock
|
| | | | — | | | | | | 5,561,000 | | | | | | 5,561,000 | |||
Payment on note payable
|
| | | | — | | | | | | (500,000) | | | | | | (500,000) | |||
Proceed from issuance of notes payable
|
| | | | 250,000 | | | | | | — | | | | | | 250,000 | |||
Advance to related parties, net of proceeds from repayment by related party
|
| | | | — | | | | | | (17,402) | | | | | | (427,724) | |||
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
| | | | 250,000 | | | | | | 5,043,598 | | | | | | 6,883,306 | |||
NET (DECREASE) INCREASE IN CASH
|
| | | | (804,354) | | | | | | 432,598 | | | | | | 8,317 | |||
CASH – beginning of year
|
| | | | 812,671 | | | | | | 380,073 | | | | | | — | |||
CASH – end of year
|
| | | $ | 8,317 | | | | | $ | 812,671 | | | | | $ | 8,317 | |||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
| | | | | | | | | | | | | | | | | |||
Cash paid for:
|
| | | | | | | | | | | | | | | | | |||
Interest
|
| | | $ | — | | | | | $ | 11,556 | | | | | $ | 11,556 | |||
Income taxes
|
| | | $ | — | | | | | $ | — | | | | | $ | — | |||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | | | | | | | | | | | | | | | | | | |||
Note payable issued in connection with the recapitalization of the Company
|
| | | $ | — | | | | | $ | 500,000 | | | | | $ | 500,000 | |||
Distribution to former parent company and its subsidiary prior to Merger included in the Recapitalization of the Company
|
| | | $ | — | | | | | $ | 427,724 | | | | | $ | 427,724 | |||
Subscription receivable in connection with the sale of common stock
|
| | | $ | — | | | | | $ | — | | | | | $ | 75,000 | |||
Reclassification of derivatives to equity
|
| | | $ | 233,557 | | | | | $ | — | | | | | $ | 233,557 | |||
|
| | |
Conversion
feature derivative liability |
| |
Warrant
liability |
|||||||
Balance at January 1, 2013
|
| | | $ | — | | | | | $ | — | ||
Recognition of derivative liability
|
| | | | 153,849 | | | | | | 403,125 | ||
Reclassification of derivative liability to equity
|
| | | | — | | | | | | (233,557) | ||
Change in fair value included in earnings
|
| | | | (111,968) | | | | | | (91,169) | ||
Balance at December 31, 2013
|
| | | $ | 41,881 | | | | | $ | 78,399 | ||
|
| | |
For the Year
Ended December 31, 2013 |
| |
For the Year
Ended December 31, 2012 |
||||||
Numerator: | | | | | | | | | | | | |
Loss from continuing operations
|
| | | $ | (2,645,590) | | | | | $ | (4,500,646) | |
Loss from discontinued operations
|
| | | $ | (536,839) | | | | | $ | (3,813,593) | |
Denominator: | | | | |||||||||
Denominator for basic and diluted loss per share (weighted-average shares)
|
| | | | 79,644,863 | | | | | | 51,498,259 | |
Loss per common share, basic and diluted: | | | | |||||||||
Loss from continuing operations
|
| | | $ | (0.03) | | | | | $ | (0.09) | |
Loss from discontinued operations
|
| | | $ | (0.01) | | | | | $ | (0.07) |
| | |
December 31,
2013 |
| |
December 31,
2012 |
| ||||||||
Common stock equivalents: | | | | | | | | | | | | | | ||
Stock options
|
| | | | 300,000 | | | | | | 700,000 | | | ||
Stock warrants
|
| | | | 2,893,750 | | | | | | 2,268,750 | | | ||
Convertible notes payable
|
| | | | 1,250,000 | | | | | | — | | | ||
Convertible preferred stock
|
| | | | 10,000,000 | | | | | | 5,000,000 | | | ||
| | | | | 14,443,750 | | | | | | 7,968,750 | | | ||
|
| | |
December 31,
2013 |
| |
December 31,
2012 |
| ||||||||
Convertible promissory notes
|
| | | $ | 250,000 | | | | | $ | — | | | ||
Less: debt discount
|
| | | | (153,844) | | | | | | — | | | ||
Convertible notes payable, net
|
| | | $ | 96,156 | | | | | $ | — | | | ||
|
| | |
December 31,
2013 |
|
Dividend rate
|
| |
0%
|
|
Term (in years)
|
| |
0.58 – 5 Years
|
|
Volatility
|
| |
120% – 125%
|
|
Risk-free interest rate
|
| |
0.10% – 1.75%
|
|
Due Date of Advance Minimum Royalty Payment
|
| |
Amount of Advance
Minimum Royalty Payment |
| |||
1st Anniversary (August 2012 – paid)
|
| | | $ | 12,000 | | |
On or before each of the 2nd and 3rd Anniversary (August 2013 – paid and August 2014)
|
| | | | 15,000 | | |
On or before each of the 4th and 5th Anniversary (August 2015 and August 2016)
|
| | | | 20,000 | | |
On or before each of the 6th and 7th Anniversary (August 2017 and August 2018)
|
| | | | 25,000 | | |
On or before each of the 8th and 9th Anniversary (August 2019 and August 2020)
|
| | | | 30,000 | | |
10th Anniversary and subsequent anniversaries so long the agreement shall remain in effect (August 2021)
|
| | | | 40,000 | | |
| | |
December 31,
2013 |
| |
December 31,
2012 |
| ||||||
Assets: | | | | | | | | | | | | | |
Prepaid expenses
|
| | | $ | — | | | | | $ | 144,986 | | |
Deposits
|
| | | | — | | | | | | 118,000 | | |
Assets of discontinued operations
|
| | | | — | | | | | | 262,986 | | |
Liabilities: | | | | | | | | | | | | | |
Liabilities of discontinued operations
|
| | | $ | — | | | | | $ | — | | |
| | |
For the Year
ended December 31, 2013 |
| |
For the Year
ended December 31, 2012 |
|||||
Revenues
|
| | | $ | — | | | | | $ | — |
Cost of sales
|
| | | | — | | | | | | — |
Gross profit
|
| | | | — | | | | | | — |
Operating and other non-operating expenses
|
| | | | (536,839) | | | | | | (3,813,593) |
Loss from discontinued operations
|
| | | $ | (536,839) | | | | | $ | (3,813,593) |
| | |
Number of
Options |
| |
Weighted Average
Exercise Price |
| |
Weighted Average
Remaining Contractual Life (Years) |
| ||||||||||||
Balance at December 31, 2011
|
| | | | — | | | | | | — | | | | | | — | | | |||
Granted
|
| | | | 700,000 | | | | | $ | 0.40 | | | | | | 10.0 | | | |||
Exercised
|
| | | | — | | | | | | — | | | | | | — | | | |||
Forfeited
|
| | | | — | | | | | | — | | | | | | — | | | |||
Cancelled
|
| | | | — | | | | | | — | | | | | | — | | | |||
Balance outstanding at December 31, 2012
|
| | | | 700,000 | | | | | | 0.40 | | | | | | 9.55 | | | |||
Granted
|
| | | | — | | | | | | — | | | | | | — | | | |||
Exercised
|
| | | | — | | | | | | — | | | | | | — | | | |||
Forfeited
|
| | | | (400,000) | | | | | | 0.40 | | | | | | 9.39 | | | |||
Cancelled
|
| | | | — | | | | | | — | | | | | | — | | | |||
Balance outstanding at December 31, 2013
|
| | | | 300,000 | | | | | $ | 0.40 | | | | | | 8.76 | | | |||
Options exercisable at end of year
|
| | | | 225,000 | | | | | $ | 0.40 | | | | | | | | | |||
Options expected to vest
|
| | | | — | | | | | | | | | | | | | | | |||
Weighted average fair value of options granted during the period
|
| | | | | | | | | $ | — | | | | | | | | | |||
|
| | |
Number of
Warrants |
| |
Weighted Average
Exercise Price |
| |
Weighted Average
Remaining Contractual Life (Years) |
| |||||||||
Balance at December 31, 2011
|
| | | | — | | | | | $ | — | | | | | | — | | |
Granted
|
| | | | 2,268,750 | | | | | | 0.55 | | | | | | 5.00 | | |
Cancelled
|
| | | | — | | | | | | — | | | | | | — | | |
Forfeited
|
| | | | — | | | | | | — | | | | | | — | | |
Exercised
|
| | | | — | | | | | | — | | | | | | — | | |
Balance at December 31, 2012
|
| | | | 2,268,750 | | | | | | 0.55 | | | | | | 4.84 | | |
Granted
|
| | | | 1,875,000 | | | | | | 0.05 | | | | | | 5.00 | | |
Cancelled
|
| | | | — | | | | | | — | | | | | | — | | |
Forfeited
|
| | | | — | | | | | | — | | | | | | — | | |
Exercised
|
| | | | (1,250,000) | | | | | | 0.07 | | | | | | 5.00 | | |
Balance at December 31, 2013
|
| | | | 2,893,750 | | | | | $ | 0.43 | | | | | | 4.02 | | |
Warrants exercisable at December 31, 2013
|
| | | | 2,893,750 | | | | | $ | 0.43 | | | | | | 4.02 | | |
Weighted average fair value of warrants granted during the year ended December 31, 2013
|
| | | | | | | | | $ | 0.22 | | | | | | | | |
| | |
December 31,
2013 |
| |
December 31,
2012 |
|||||||
Tax benefit computed at “expected” statutory rate
|
| | | $ | (1,114,000) | | | | | $ | (2,910,000) | ||
State income taxes, net of benefit
|
| | | | (191,000) | | | | | | (498,000) | ||
Permanent differences: | | | | | | | | | | | | ||
Stock based compensation and consulting
|
| | | | 917,000 | | | | | | 1,169,000 | ||
Derivative expense
|
| | | | 127,000 | | | | | | — | ||
Loss (gain) from change in fair value of derivative liability
|
| | | | (83,000) | | | | | | — | ||
Amortization of debt discount, deferred financing cost, and other non-cash interest
|
| | | | 38,000 | | | | | | — | ||
Gain from forgiveness of debt
|
| | | | (281,000) | | | | | | — | ||
Impairment expense
|
| | | | — | | | | | | 984,000 | ||
Pre-merger stub period losses
|
| | | | — | | | | | | 151,000 | ||
Increase in valuation allowance
|
| | | | 587,000 | | | | | | 1,104,000 | ||
Net income tax benefit
|
| | | $ | — | | | | | $ | — | ||
|
| | |
December 31,
2013 |
| |
December 31,
2012 |
| ||||||||
Computed “expected” tax expense (benefit)
|
| | | | (35.0)% | | | | | | (35.0)% | | | ||
State income taxes
|
| | | | (6.0)% | | | | | | (6.0)% | | | ||
Permanent differences
|
| | | | 23.0% | | | | | | 28.0% | | | ||
Change in valuation allowance
|
| | | | 18.0% | | | | | | 13.0% | | | ||
Effective tax rate
|
| | | | 0.0% | | | | | | 0.0% | | | ||
|
Deferred tax assets:
|
| |
December 31,
2013 |
| |
December 31,
2012 |
|||||
Net operating loss carryover
|
| | | $ | 1,519,000 | | | | | $ | 985,000 |
Amortizable exploration cost
|
| | | | 172,000 | | | | | | 119,000 |
Gross deferred tax asset
|
| | | | 1,691,000 | | | | | | 1,104,000 |
Less: valuation allowance
|
| | | | (1,691,000) | | | | | | (1,104,000) |
Net deferred tax asset
|
| | | $ | — | | | | | $ | — |
| | |
For the Year Ended
December 31, 2013 |
| |
For the Year Ended
December 31, 2012 |
|||||||||||||||||||||
| | |
As Reported
|
| |
Pro Forma
|
| |
As Reported
|
| |
Pro Forma
|
|||||||||||||||
Net Revenues
|
| | | $ | — | | | | | $ | 23,268 | | | | | $ | — | | | | | $ | — | ||||
Loss from operations
|
| | | | (3,123,984) | | | | | | (3,429,616) | | | | | | (4,489,090) | | | | | | (4,489,254) | ||||
Net Loss
|
| | | | (3,182,429) | | | | | | (3,489,084) | | | | | | (8,314,239) | | | | | | (8,314,403) | ||||
Loss per common share: | | | | | | | | | | | | | | | | | | | | | | | | ||||
Basic
|
| | | $ | (0.03) | | | | | $ | (0.04) | | | | | $ | (0.09) | | | | | $ | (0.16) | ||||
Diluted
|
| | | $ | (0.01) | | | | | $ | (0.04) | | | | | $ | (0.07) | | | | | $ | (0.16) | ||||
|
| | |
September 30,
2014 |
| |
December 31,
2013 |
| ||||||||
ASSETS
|
| | | | | | | | | | | | | ||
CURRENT ASSETS | | | | | | | | | | | | | | ||
Cash and cash equivalents
|
| | | $ | 769,515 | | | | | $ | 25,221 | | | ||
Accounts receivable – trade
|
| | | | 284,923 | | | | | | 16,587 | | | ||
Prepaid expenses and other current assets
|
| | | | 34,054 | | | | | | 32,522 | | | ||
Inventory
|
| | | | 1,480,271 | | | | | | 316,195 | | | ||
Total Current Assets
|
| | | | 2,568,763 | | | | | | 390,525 | | | ||
FIXED ASSETS | | | | | | | | | | | | | | ||
Property and equipment, net
|
| | | | 103,782 | | | | | | 8,395 | | | ||
OTHER ASSETS | | | | | | | | | | | | | | ||
Intangible assets, net
|
| | | | 4,173 | | | | | | 12,276 | | | ||
Goodwill
|
| | | | 3,732,268 | | | | | | — | | | ||
Total Other Assets
|
| | | | 3,736,441 | | | | | | 12,276 | | | ||
TOTAL ASSETS
|
| | | $ | 6,408,986 | | | | | $ | 411,196 | | | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
| | | | | | | | | | | | | ||
CURRENT LIABILITIES | | | | | | | | | | | | | | ||
Accounts payable and accrued liabilities
|
| | | $ | 416,399 | | | | | $ | 31,312 | | | ||
Accrued interest – related party
|
| | | | — | | | | | | 804 | | | ||
Notes payable
|
| | | | — | | | | | | 75,000 | | | ||
Notes payable – related party
|
| | | | 200,000 | | | | | | 260,899 | | | ||
Derivative liabilities
|
| | | | 122,979 | | | | | | — | | | ||
Total Current Liabilities
|
| | | | 739,378 | | | | | | 368,015 | | | ||
STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | ||
Preferred Stock, $.0001 par value per share, 50,000,000 shares authorized, as
of September 30, 2014 and December 31, 2013, respectively. |
| | | ||||||||||||
Preferred Stock Series A, $0.0001 par value per share, 100,000 shares
authorized and 0 shares issued and outstanding, as of September 30, 2014 and December 31, 2013, respectively. |
| | | | — | | | | | | — | | | ||
Preferred Stock Series B, $0.0001 par value per share, 5,000,000 shares authorized, 100,000 and 0 shares issued and outstanding, as of September 30, 2014 and December 31, 2013, respectively.
|
| | | | — | | | | | | — | | | ||
Preferred Stock Series C, $0.0001 par value per share, 100,000 shares
authorized 1,550 and 0 shares issued and outstanding, as of September 30, 2014 and December 31, 2013, respectively. |
| | | | 10 | | | | | | — | | | ||
Preferred Stock Series E, $0.0001 par value per share, 2 shares authorized 0 shares issued and outstanding, as of September 30, 2014 and December 31, 2013.
|
| | | | — | | | | | | — | | | ||
Common Stock, $0.0001 par value per share, 200,000,000 shares authorized,
4,727,254 and 700,000 shares issued and outstanding, as of September 30, 2014 and December 31, 2013, respectively. |
| | | | 473 | | | | | | 70 | | | ||
Additional paid-in capital
|
| | | | 9,912,247 | | | | | | 349,930 | | | ||
Accumulated deficit
|
| | | | (4,243,122) | | | | | | (306,819) | | | ||
Total Stockholders’ Equity
|
| | | | 5,669,608 | | | | | | 43,181 | | | ||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
| | | $ | 6,408,986 | | | | | $ | 411,196 | | | ||
|
| | |
Three Months Ended
September 30, |
| |
Nine Months Ended
September 30, |
|||||||||||||||||||||
| | |
2014
|
| |
2013
|
| |
2014
|
| |
2013
|
|||||||||||||||
Revenues
|
| | | $ | 837,205 | | | | | $ | 28,463 | | | | | $ | 1,439,368 | | | | | $ | 28,463 | ||||
Cost of sales
|
| | | | 424,209 | | | | | | 40,992 | | | | | | 778,028 | | | | | | 40,992 | ||||
Gross margin
|
| | | | 412,996 | | | | | | (12,530) | | | | | | 661,340 | | | | | | (12,530) | ||||
Costs and expenses | | | | | | | | | | | | | | | | | | | | | | | | ||||
Sales and marketing
|
| | | | 149,810 | | | | | | — | | | | | | 715,448 | | | | | | — | ||||
General and administrative
|
| | | | 1,603,787 | | | | | | 35,952 | | | | | | 3,448,995 | | | | | | 148,860 | ||||
Depreciation and amortization
|
| | | | 6,826 | | | | | | — | | | | | | 13,117 | | | | | | — | ||||
Professional fees
|
| | | | 38,897 | | | | | | — | | | | | | 108,299 | | | | | | — | ||||
Total operating costs and expenses
|
| | | | 1,799,320 | | | | | | 35,952 | | | | | | 4,285,859 | | | | | | 148,860 | ||||
Operating loss
|
| | | | (1,386,324) | | | | | | (48,482) | | | | | | (3,624,519) | | | | | | (161,390) | ||||
Other income and (expense) | | | | | | | | | | | | | | | | | | | | | | | | ||||
Derivative expense
|
| | | | — | | | | | | — | | | | | | (86,484) | | | | | | — | ||||
Change in fair value of derivatives
|
| | | | 81,278 | | | | | | — | | | | | | 172,590 | | | | | | — | ||||
Interest expense – related party
|
| | | | (53,340) | | | | | | — | | | | | | (397,890) | | | | | | — | ||||
Total other income and expense
|
| | | | 27,938 | | | | | | — | | | | | | (311,784) | | | | | | — | ||||
Loss before provision for income tax
|
| | | | (1,358,386) | | | | | | (48,482) | | | | | | (3,936,303) | | | | | | (161,390) | ||||
Provision for income tax
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | ||||
Net loss
|
| | | $ | (1,358,386) | | | | | $ | (48,482) | | | | | $ | (3,936,303) | | | | | $ | (161,390) | ||||
Loss attributable to common stockholders and loss per common share:
|
| | | | | | | | | | | | | | | | | | | | | | | ||||
Net loss
|
| | | | (1,358,386) | | | | | | (48,482) | | | | | | (3,936,303) | | | | | | (161,390) | ||||
Weighted average shares outstanding, basic and diluted
|
| | | | 3,826,695 | | | | | | 700,000 | | | | | | 3,038,858 | | | | | | 700,000 | ||||
Net loss per basic and diluted share
|
| | | $ | (0.36) | | | | | $ | (0.07) | | | | | $ | (1.30) | | | | | $ | (0.23) | ||||
|
| | |
Nine Months Ended June 30,
|
||||||||
| | |
2014
|
| |
2013
|
|||||
OPERATING ACTIVITIES | | | | | | | | | | | |
Net loss
|
| | | $ | (3,936,303) | | | | | $ | (161,390) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 13,117 | | | | | | — |
Amortization of debt discount
|
| | | | 253,844 | | | | | | — |
Derivative expense
|
| | | | 86,484 | | | | | | — |
Change in fair value of derivative liabilities
|
| | | | (172,590) | | | | | | — |
Interest expense in connection with the grant of warrants
|
| | | | 78,869 | | | | | | — |
Interest expense in connection with conversion of debt
|
| | | | 26,400 | | | | | | — |
Stock based compensation
|
| | | | 1,584,721 | | | | | | — |
Changes in operating assets and liabilities | | | | | | | | | | | |
Accounts receivable
|
| | | | (268,336) | | | | | | (641) |
Inventory
|
| | | | (825,055) | | | | | | (329,768) |
Other current assets
|
| | | | 5,065 | | | | | | (25,038) |
Accounts payable and accrued liabilities
|
| | | | 338,608 | | | | | | 1,598 |
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
|
| | | | (2,815,176) | | | | | | (515,239) |
INVESTING ACTIVITIES | | | | | | | | | | | |
Acquisition of business, net of cash acquired
|
| | | | (798,000) | | | | | | — |
(Increase) decrease in intangible assets
|
| | | | — | | | | | | (17,678) |
(Increase) decrease in fixed assets
|
| | | | — | | | | | | (7,590) |
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES
|
| | | | (798,000) | | | | | | (25,268) |
FINANCING ACTIVITIES | | | | | | | | | | | |
Payment of notes payable
|
| | | | (100,000) | | | | | | — |
Proceeds received from issuance of note payable – related party
|
| | | | — | | | | | | 541,322 |
Proceeds received from issuance of note prior to recapitalization
|
| | | | 100,000 | | | | | | — |
Issuance of common stock, net of issuance costs
|
| | | | 3,857,470 | | | | | | — |
Issuance of preferred stock
|
| | | | 500,000 | | | | | | — |
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
| | | | 4,357,470 | | | | | | 541,322 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
| | | | 744,294 | | | | | | 815 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
| | | | 25,221 | | | | | | — |
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
| | | $ | 769,515 | | | | | $ | 815 |
Supplemental disclosures: | | | | | | | | | | | |
Non cash activities:
|
| | | | | | | | | | |
Reclassification of derivative liability to equity
|
| | | | 90,064 | | | | | | — |
Note payable converted to common stock
|
| | | | 295,000 | | | | | | — |
Note payable – related party exchanged to preferred stock pursuant to the Share Exchange
|
| | | | 285,710 | | | | | | — |
Issuance of note payable in connection with the acquisition of business
|
| | | | 200,000 | | | | | | — |
Purchase of inventory and other assets upon acquisition of business
|
| | | | 345,618 | | | | | | — |
Purchase of property and equipment upon acquisition of business
|
| | | | 100,401 | | | | | | — |
Assumption of liabilities upon acquisition of business
|
| | | | 37,433 | | | | | | — |
|
Equipment
|
| |
3 – 5 years
|
|
|
Furniture
|
| |
7 years
|
|
| | |
Conversion
feature derivative liability |
| |
Warrant liability
|
| ||||||||
Balance at January 1, 2014
|
| | | $ | 41,881 | | | | | $ | 78,399 | | | ||
Recognition of derivative liability
|
| | | | 72,064 | | | | | | 193,289 | | | ||
Reclassification of derivative liability to equity
|
| | | | (90,064) | | | | | | — | | | ||
Change in fair value included in earnings
|
| | | | (23,881) | | | | | | (148,709) | | | ||
Balance at September 30, 2014
|
| | | $ | — | | | | | $ | 122,979 | | | ||
|
| | |
Year Ended
|
| |||||||||
| | |
September 30,
2014 |
| |
September 30,
2013 |
| ||||||
Estimated return and allowance liabilities at beginning of period
|
| | | $ | 0 | | | | | $ | 0 | | |
Costs accrued for new estimated returns and allowances
|
| | | $ | 4,500 | | | | | $ | 0 | | |
Return and allowance obligations honored
|
| | | | (0) | | | | | | (0) | | |
Estimated return and allowance liabilities at end of period
|
| | | $ | 4,500 | | | | | $ | 0 | | |
| | |
Percentage of Revenue during the
period ended |
| |
Percentage of Accounts Receivable
period ended |
| ||||||||||||||||||
| | |
September 30,
2014 |
| |
December 31,
2013 |
| |
September 30,
2014 |
| |
December 31,
2013 |
| ||||||||||||
Customer A
|
| | | | 17% | | | | | | 51% | | | | | | 26% | | | | | | 71% | | |
Customer B
|
| | | | 5% | | | | | | 14% | | | | | | 18% | | | | | | 0% | | |
| | |
September 30,
2014 |
| |
December 31,
2013 |
| ||||||||
Finished goods
|
| | | $ | 1,480,271 | | | | | $ | 316,195 | | | ||
|
| | |
September 30,
2014 |
| |
December 31,
2013 |
| ||||||||
Leasehold Improvements
|
| | | $ | 7,332 | | | | | | — | | | ||
Computer Equipment
|
| | | | 8,413 | | | | | $ | 8,413 | | | ||
Furniture, Fixtures and Equipment
|
| | | | 93,731 | | | | | | 662 | | | ||
Less: accumulated depreciation
|
| | | | (5,694) | | | | | | (680) | | | ||
| | | | $ | 103,782 | | | | | $ | 8,395 | | | ||
|
| | |
September 30,
2014 |
| |
December 31,
2013 |
| ||||||||
Website, capitalized
|
| | | $ | 17,678 | | | | | $ | 17,678 | | | ||
Less: accumulated amortization
|
| | | | (13,505) | | | | | | (5,402) | | | ||
| | | | $ | 4,173 | | | | | $ | 12,276 | | | ||
|
|
Current assets (including cash of $2,000)
|
| | | $ | 341,021 | | | |
|
Other Assets
|
| | | | 6,597 | | | |
|
Property and equipment
|
| | | | 100,401 | | | |
|
Goodwill
|
| | | | 3,732,268 | | | |
|
Liabilities assumed
|
| | | | (37,433) | | | |
|
Net purchase price
|
| | |
$
|
4,142,854
|
| | |
|
| | |
For the Nine months Ended
September 30, 2014 |
||||||||||
| | |
As Reported
|
| |
Pro Forma
|
|||||||
Net Revenues
|
| | | $ | 1,439,368 | | | | | $ | 3,213,559 | ||
Loss from operations
|
| | | | (3,624,519) | | | | | | (3,037,525) | ||
Net Loss
|
| | | | (3,936,303) | | | | | | (3,349,309) | ||
Loss per common share: | | | | | | | | | | | | ||
Basic
|
| | | $ | (1.30) | | | | | $ | (1.10) | ||
Diluted
|
| | | $ | (1.30) | | | | | $ | (1.10) | ||
|
| | |
September 30,
2014 |
|
Dividend rate
|
| |
0%
|
|
Term (in years)
|
| |
0.33 – 5 Years
|
|
Volatility
|
| |
126% – 131%
|
|
Risk-free interest rate
|
| |
0.05% – 1.73 %
|
|
| | |
Number of
Options |
| |
Weighted
Average Exercise Price |
| |
Weighted
Average Remaining Contractual Life (Years) |
| |||||||||
Recapitalization on January 24, 2014
|
| | | | 6,000 | | | | | | 20.00 | | | | | | 8.69 | | |
Granted
|
| | | | 5,000 | | | | | | 4.15 | | | | | | 5.00 | | |
Exercised
|
| | | | — | | | | | | — | | | | | | — | | |
Forfeited
|
| | | | — | | | | | | — | | | | | | — | | |
Cancelled
|
| | | | — | | | | | | — | | | | | | — | | |
Balance outstanding at September 30, 2014
|
| | | | 11,000 | | | | | $ | 12.80 | | | | | | 6.55 | | |
Options exercisable at September 30, 2014
|
| | | | 4,500 | | | | | $ | 20.00 | | | | | | | | |
Options expected to vest
|
| | | | 5,000 | | | | | | | | | | | | | | |
Weighted average fair value of options granted during the nine months ended September 30, 2014
|
| | | | | | | | | $ | 3.53 | | | | | | | | |
| | |
Number of
Warrants |
| |
Weighted
Average Exercise Price |
| |
Weighted
Average Remaining Contractual Life (Years) |
| |||||||||
Recapitalization on January 24, 2014
|
| | | | 90,375 | | | | | | 14.00 | | | | | | 4.32 | | |
Granted
|
| | | | 28,999 | | | | | | 5.00 | | | | | | 5.00 | | |
Cancelled
|
| | | | — | | | | | | — | | | | | | — | | |
Forfeited
|
| | | | — | | | | | | — | | | | | | — | | |
Exercised
|
| | | | — | | | | | | — | | | | | | — | | |
Balance at September 30, 2014
|
| | | | 119,374 | | | | | $ | 12.00 | | | | | | 3.85 | | |
Warrants exercisable at September 30, 2014
|
| | | | 119,374 | | | | | $ | 12.00 | | | | | | 3.85 | | |
Weighted average fair value of warrants granted during the nine months ended September 30, 2014
|
| | | | | | | | | $ | 5.00 | | | | | | | | |
| | |
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| If to Acquirer to: | | | Vapor Corp. 3001 Griffin Road Dania Beach, Florida 33312 Facsimile: (888) 882-7095 Email: jeff.holman@vapor-corp.com Attention: Jeffrey E. Holman |
|
| If to the Target, to: | | | Vaporin, Inc. 4400 Biscayne Boulevard Miami, Florida 33137 Facsimile: (305) 576-9298 Email: scott@vaporin.com Attention: Scott Frohman |
|
| VAPOR CORP. | | |||
| By: | | | /s/ Jeffrey E. Holman | |
| Name: | | | Jeffrey E. Holman | |
| Title: | | | Chief Executive Officer | |
| VAPORIN, INC. | | |||
| By: | | | /s/ Scott Frohman | |
| Name: | | | Scott Frohman | |
| Title: | | | Chief Executive Officer | |