Vapor Corp. Reports Full Year 2012 Results Company Prepares for Future Growth, Makes Key Investments in Infrastructure; Innovation Fuels Its Continued Leadership Position in Growing Market for Premium E-Cigarette Products & Accessories PR Newswire DANIA BEACH, Fla., April 1, 2013 DANIA BEACH, Fla., April1, 2013 /PRNewswire/ --Vapor Corp. (OTCQB: VPCO; "Vapor" or the "Company"), a leading U.S. based electronic cigarette company whose brands include Fifty-One®, Krave®, VaporX®, EZ Smoker®, Alternacig®, Green Puffer®, Americig®, Fumare™, Hookah Stix™ and Smoke Star®, today announced its results for the full year ended December 31, 2012. Financial Highlights for the Full Year Ended December 31, 2012 oNet sales reached a record $21.4 million, an increase of 33.6% year-over-year stemming from increased sales through new distributors and wholesale customers, as well as increases in direct to consumer sales. oCost of goods sold rose 96.4% to $13.2 million as compared to the previous year, primarily resulting from increased distributor and wholesaler sales, which have lower gross margins than direct sales to consumers. oGross margins decreased to 38.1% from 57.8% the prior year as a result of the product mix and the above factors. oSelling, general and administrative expenses increased to $6.9 million, up 65.1% from the prior year due to increases in infrastructure costs and the hiring of key management and personnel. These investments in infrastructure and personnel will benefit us in 2013 as we are well positioned to service and support our customer needs and our anticipated growth. oAdvertising expenses decreased 10.1% year-over-year to $3.6 million as we decreased expenses paid to certain direct marketing campaigns, while increasing brand awareness through various product marketing and advertising campaigns. Our advertising efforts have created effective brand presence and awareness and we expect to continue to leverage and increase our brand presence and awareness through our distribution channels with effective advertising campaigns in 2013. oInterest expense was $89,348 as compared to $0 in the prior year. The increase was attributable to the issuance of new debt during 2012. oNet loss was ($1,920,972) versus net income of $713,338 for the prior year as a result of the above factors. oWe ended the year with working capital of $325,836 compared with approximately $1.3 million at year end the prior year as a result of the above factors. Kevin Frija, Chief Executive Officer of Vapor Corp., commented, "With continued sales growth, an increase of 33.6% year-over-year, we are happy to have achieved our fourth consecutive year of sales growth. This is encouraging for our efforts in 2013, as we have major initiatives lined up, the most important of which is the expansion of our soft tip filters and Krave King product line. 2012's results were as we anticipated with record sales of $21.4 million offset by heightened expenses incurred as we made certain strategic investments in the business. We brought on our co-founder Jeffrey Holman as President, Harlan Press as our Chief Financial Officer and Christopher Santi as our Chief Operating Officer. Assembling this executive team was critical to building a solid foundation for the Company to operate effectively, strategize intelligently, and in essence, execute on all of our expansion initiatives. We now believe we have the right management team in place to take the Company to its next stage of growth." In terms of market presence, he continued, "By our estimates, we're holding a strong position in the e-cigarettes market and continue to see our share of that market grow. We invested aggressively in expanding our product offerings including the launch and introduction of our new innovative soft-tip filters and Krave King product line, which have helped establish our brand presence and awareness. We believe that our recent customer 'wins' are largely attributable to these investments. We have enhanced our nationwide distribution capacity through our existing distributors and master distributor partners. Our expansion into Canada during 2012 has helped fuel our growth." Looking ahead, Mr. Frija stated, "We remain staunchly committed to investing in the long-term growth of the company and its brands, reinvesting in, marketing & advertising, trade shows and conferences, product development, patent protection, personnel and operations while offering our customers the quality, value and thoughtful innovation and improvements they have come to expect in our products. We believe that these measures will insure that we continue to gain greater brand presence and awareness with the vaping community." About Vapor Corp. Vapor Corp., a publicly traded company, is a leading U.S. based electronic cigarette company, whose brands include Fifty-One®, Krave®, VaporX®, EZ Smoker®, Alternacig®, Green Puffer®, Americig®, Fumare™, Hookah Stix™ and Smoke Star®. We also design and develop private label brands for some of our distribution customers. "Electronic cigarettes" or "e-cigarettes," are battery-powered products that enable users to inhale nicotine vapor without smoke, tar, ash or carbon monoxide. Vapor's electronic cigarettes and accessories are available online, through direct response to our television advertisements and through retail locations throughout the United States. For more information on Vapor Corp and its e-cigarette brands, please visit us at www.vapor-corp.com. Safe Harbor Statement This press release contains certain forward-looking statements that are made pursuant to the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995, as amended. Words such as "expects," "anticipates," "plans," "believes," "scheduled," "estimates", "will" and variations of these words and similar expressions are intended to identify forward-looking statements. These forward-looking statements concern Vapor's operations, economic performance and financial condition and are based largely on Vapor's beliefs and expectations. These statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Vapor to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Certain of these factors and risks, as well as other risks and uncertainties are stated in Vapor's Annual Report on Form 10-K for the fiscal year ended December 31, 2012 and in its subsequent filings with the U.S. Securities and Exchange Commission. These forward-looking statements are made as of the date of this press release, and Vapor assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements. VAPOR CORP. CONSOLIDATED BALANCE SHEETS DECEMBER31, 2012 2011 ASSETS CURRENT ASSETS: Cash $ 176,409 $ 356,485 Due from merchant credit card processors, net of reserve for charge-backs of $15,000 and 1,031,476 661,575 $40,000, respectively Accounts receivable, net of allowance of 748,580 624,593 $61,000 and $80,000, respectively Inventories 1,670,007 2,234,834 Prepaid expenses 465,860 639,660 Income tax receivable 47,815 - Deferred tax asset, net 222,130 143,037 TOTAL CURRENT ASSETS 4,362,277 4,660,184 Property and equipment, net of accumulated depreciation of $16,595 and $5,144 25,190 27,323 respectively Other assets 12,000 12,000 TOTAL ASSETS $ 4,399,467 $ 4,699,507 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) CURRENT LIABILITIES: Accounts payable $ 3,208,595 $1,628,940 Accrued expenses 350,151 284,042 Customer deposits 477,695 675,000 Income taxes payable - 724,356 TOTAL CURRENT LIABILITIES 4,036,441 3,312,338 LONG-TERM DEBT: Senior convertible notes payable to related parties, net of debt discount of $3,530 and $0 346,470 - respectively Senior note payable to stockholder 500,000 - TOTAL LONG-TERM DEBT 846,470 - TOTAL LIABILITIES 4,882,911 3,312,338 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY (DEFICIENCY): Preferred stock, $.001 par value, $1,000,000 shares authorized, none issued Common stock, $.001 par value, 250,000,000 shares authorized 60,185,344 shares issued 60,185 60,185 and outstanding Additional paid-in capital 1,637,377 1,587,018 Accumulated deficit (2,181,006) (260,034) TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) (483,444) 1,387,169 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,399,467 $ 4,699,507 (DEFICIENCY) VAPOR CORP. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER31, 2012 2011 SALES NET $21,352,691 $15,982,097 Cost of goods sold 13,225,008 6,732,335 Gross Profit 8,127,683 9,249,762 EXPENSES: Selling, general and 6,865,633 4,157,638 administrative Advertising 3,559,616 3,961,946 Total operating expenses 10,425,249 8,119,584 Operating (loss) income (2,297,566) 1,130,178 Other expense: Interest expense 89,347 - Total other expenses 89,347 - (LOSS) INCOME BEFORE INCOME TAX (BENEFIT) (2,386,913) 1,130,178 EXPENSE Income tax (benefit) (465,941) 416,840 expense NET (LOSS) INCOME $(1,920,972) $713,338 BASIC AND DILUTED NET (LOSS) INCOME PER COMMON $ $ (0.03) 0.01 SHARE WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC AND 60,185,344 60,176,303 DILUTED SOURCE Vapor Corp. Website: http://www.vapor-corp.com Contact: Investors: Howard Gostfrand, President, American Capital Ventures, 305.918.7000, email@example.com
Vapor Corp. Reports Full Year 2012 Results
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