Vapor Corp. Reports Third Quarter 2013 Results

                Vapor Corp. Reports Third Quarter 2013 Results

Efficient Deployment of Debt Financing Proceeds leads to Record Third Quarter
and Nine Month Sales

PR Newswire

DANIA BEACH, Fla., Oct. 21, 2013

DANIA BEACH, Fla., Oct. 21, 2013 /PRNewswire/ --Vapor Corp. (OTCQB:VPCO;
"Vapor", the "Company" or "we"), a leading U.S. based electronic cigarette
company whose brands include Krave®, Fifty-One®, VaporX®, Alternacig®, EZ
Smoker®, Green Puffer®, Americig®, Fumare™, Hookah Stix® and Smoke Star®,
today announced its financial and operating results for the quarter and nine
months ended September 30, 2013.

Financial Highlights for the third quarter ended September 30, 2013

  Net sales exceeded $6.4 million, an increase of approximately $2.6 million,
  or approximately 66.3% from the same quarter in the preceding year. During
  the third quarter of 2013, we utilized all of the approximately $1.6 million
  of gross proceeds from the indebtedness we incurred during the third quarter
  to purchase additional inventory, which enabled us to fulfill the existing
  back orders of approximately $1.5 million (above our normal level of
  approximately $0.5 million) at June 30, 2013 and additional new orders,
  which increased sales. At September 30, 2013 our back orders reverted to
  normal levels. The increase in sales is primarily attributable to our
  ability to immediately and efficiently deploy the gross proceeds from the
  indebtedness we incurred during the third quarter to optimize our inventory
  levels to satisfy increasing demand for our products, in particular
  increased sales to new and other existing distributors, wholesale customers
  and increased direct to consumer sales, net of decreased sales to an
  existing distributor.

  Cost of goods sold increased approximately 56.4% to approximately $3.9
  million as compared to approximately $2.5 million for the same quarter in
  the previous year, primarily resulting from increased sales volume, product
  mix and lower average cost per unit through higher volume purchases from
  suppliers.

  Gross margins increased to 38.9% from 35.1% in the same quarter in the prior
  year as a result of the above factors.

  Selling, general and administrative expenses for the quarter ended September
  30, 2013 decreased by approximately $0.1 million, or approximately 4.5% from
  the same quarter in the prior year primarily due to a decrease in
  professional and consulting fees as a result of decreased legal expenses
  attributable to the settlements and the stay of litigation matters.

  Advertising expenses decreased approximately 50.3% to approximately $0.4
  million for the quarter ended September 30, 2013 compared to approximately
  $0.8 million the same quarter in 2012. During the quarter ended September
  30, 2013, we decreased our Internet advertising, print advertising
  campaigns, and new television direct marketing campaign for our Alternacig®
  brand and continued various other advertising campaigns. We anticipate
  advertising expense will increase in the fourth quarter of 2013 as we
  re-launch the television direct marketing campaign for our Alternacig® brand
  and as we re-launch our flagship KRAVE brand.

  Operating income was $393,282 compared to operating losses of ($1,252,086)
  for the same quarter in the prior year.

  Interest expense for the quarter ended September 30, 2013 and 2012 was
  approximately $107,867 and $41,243 respectively. The increase was
  attributable to the senior convertible notes and the senior note we issued
  during 2012 the senior convertible note we issued in January 2013, the
  $425,000 senior convertible notes issued in July 2013, and the $750,000 term
  loan and the factoring facility entered into in August 2013.

  Income tax expense (benefit) for the quarter ended September 30, 2013 and
  2012 was $4,590 and ($474,319), respectively.

  Net income for the quarter ended September 30, 2013 was $280,827 compared to
  a net loss of ($819,010) for the quarter ended September 30, 2012, as a
  result of the items discussed above.

Financial Highlights for the nine months ended September 30, 2013

  Net sales were approximately $19 million an increase of $2.1 million or
  approximately 12.6% as compared with the same period in the previous year.
  During the third quarter of 2013, we utilized all of the approximately $1.6
  million of gross proceeds from the indebtedness we incurred during the third
  quarter to purchase additional inventory, which enabled us to fulfill the
  existing back orders of approximately $1.5 million (above our normal level
  of approximately $0.5 million) at June 30, 2013 and additional new orders,
  which increased sales. At September 30, 2013 our back orders reverted to
  normal levels. The increase in sales is primarily attributable to our
  ability to immediately and efficiently deploy the gross proceeds from the
  indebtedness we incurred during the third quarter to optimize our inventory
  levels to satisfy increased demand for our products, in particular increased
  sales to new and other existing distributors, wholesale customers and
  increased direct to consumer sales. The sales increase was achieved even
  though we had decreased sales to a distributor. During the nine months ended
  September 30, 2012 we initiated sales to a new distributor. Sales, net to
  that distributor for the nine months ended September 30, 2013 and 2012 were
  $1,596,964 and $4,093,086, respectively, a decrease of $2,496,122 or 61%.

  Cost of goods sold increased 6.0% to approximately $11.3 million as compared
  to approximately $10.7 million for the nine month period in the previous
  year, primarily resulting from higher sales volume as well as a change in
  product mix and lower average cost per unit through higher volume purchases
  from suppliers.

  Gross margins increased to 40.1% from 36.5% in the same nine month period in
  the prior year as a result of the above factors.

  Selling, general and administrative expenses for the nine months ended
  September 30, 2013 decreased by approximately $230,000 or 4.5% to
  approximately $4.8 million from approximately $5.1 million in the same nine
  month period in the prior year primarily due to a decrease in professional
  and consulting fees as a result of decreases in legal fees due to the
  settlements and the stay of litigation matters.

  Advertising expense decreased 24.5% to approximately $2.2 million for the
  nine months ended September 30, 2013 compared to approximately $2.9 million
  for the same period in 2012. During the nine months ended September 30,
  2013, we decreased our Internet advertising and print advertising campaigns,
  and increased our new television direct marketing campaign for our
  Alternacig® brand and continued various other advertising campaigns. We
  anticipate advertising expense will increase in the fourth quarter of 2013
  as we re-launch the television direct marketing campaign for our Alternacig®
  brand and as we re-launch our flagship KRAVE brand.

  Operating income was $614,765 compared to operating losses of $1,786,674 for
  the same nine-month period in the prior year.

  Interest expense for the nine months ended September 30, 2013 and 2012 was
  $251,276 and $43,072 respectively. The increase was attributable to the
  senior convertible notes and the senior note we issued during 2012, the
  senior convertible note we issued in January 2013, the $425,000 senior
  convertible notes issued in July 2013, and the $750,000 term loan and the
  factoring facility entered into in August 2013.

  Income tax expense (benefit) for the nine months ended September 30, 2013
  and 2012 was $13,770 and ($634,285), respectively.

  Net income for the nine months ended September 30, 2013 was $349,721
  compared to a net loss of ($1,195,461) for the none months ended September
  30, 2012 as a result of the items discussed above.

Kevin Frija, Chief Executive Officer of Vapor Corp, commented, "During the
quarter, we achieved record third quarter sales. We did this by utilizing the
proceeds from new debt financing we obtained to purchase additional inventory,
allowing us to fulfill our back orders as well as ship additional new orders.
Additionally, we strengthened our balance sheet, increased our working capital
and we had a profitable quarter."

Looking ahead, Mr. Frija stated, "We have some great new products launching in
the 4^th quarter, for both our VaporX® line of personal vaporizers and our
VaporX® Hookah Stix® brand of hookah flavored e-cigarettes, two new and fast
growing segments of the personal vaporizer market. Most exciting is our
branding update for our KRAVE brand which received great reviews at our recent
showing at the NACS trade show in Atlanta. These improvements are expected to
help our already successful brand gain incremental shelf space and market
share. "

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" 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 Vapor's subsequent filings with the U.S.
Securities and Exchange Commission. These forward-looking statements are made
as of the date of this press release, and Vapor assumes no obligation to
update the forward-looking statements or to update the reasons why actual
results could differ from those projected in the forward-looking statements.



VAPOR CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS
                                                 September 30,  December 31,

                                                 2013          2012
                                                 (Unaudited)
ASSETS
CURRENT ASSETS:
Cash                                             $ 303,097      $ 176,409
Due from merchant credit card processor, net of                  
reserve for chargebacks of $2,500 and $15,000,
                                                   206,565        1,031,476
respectively
Accounts receivable, net of allowance of           1,613,118      748,580
$115,000 and $61,000, respectively
Inventories                                        3,015,714      1,670,007
Prepaid expenses                                   897,950        465,860
Income tax receivable                              -              47,815
Deferred tax asset, net                            222,130        222,130
TOTAL CURRENT ASSETS                               6,258,574      4,362,277
Property and equipment, net of accumulated
depreciation of $24,711 and $16,595,               25,131         25,190
respectively
Other assets                                       55,474         12,000
TOTAL ASSETS                                     $ 6,339,179    $ 4,399,467
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Accounts payable                                 $ 2,616,535    $ 3,208,595
Accrued expenses                                   525,543        350,151
Term loan payable                                  660,539        -
Senior convertible note payable, net of debt       430,266        -
discount of $69,734 and $0, respectively
Senior convertible notes payable to related
parties, net of debt discount of $8,536 and $0,    416,464        -
respectively

                                                   166,667        -
Current portion of senior convertible note
payable to stockholder
Customer deposits                                  785,137        477,695
Income taxes payable                               13,770         -
TOTAL CURRENT LIABILITIES                          5,614,921      4,036,441
LONG-TERM DEBT:
Senior convertible notes payable to related
parties, net of debt discount of $2,462 and                      
$3,530,
                                                   347,538        346,470
respectively
Senior convertible note payable to stockholder     262,820        -
Senior note payable to stockholder                 -              500,000
TOTAL LONG-TERM DEBT                               610,358        846,470
TOTAL LIABILITIES                                  6,225,279      4,882,911
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, 60,372,344 and 60,185,344                     
shares
                                                   60,372         60,185
issued and outstanding, respectively
Additional paid-in capital                         1,884,813      1,637,377
Accumulated deficit                                (1,831,285)    (2,181,006)
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY)            113,900        (483,444)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $ 6,339,179    $ 4,399,467
(DEFICIENCY)



VAPOR CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)
                     For The Nine Months Ended    For The Three Months Ended

                     September 30,                September 30,
                     2013          2012           2013          2012
SALES, NET           $ 18,958,196  $ 16,844,097   $ 6,411,605   $ 3,855,568
Cost of goods sold     11,346,696    10,703,606     3,916,281     2,504,019
GROSS PROFIT           7,611,500     6,140,491      2,495,324     1,351,549
EXPENSES:
Selling, general       4,843,242     5,073,162      1,683,787     1,762,902
and administrative
Advertising            2,153,491     2,854,003      418,253       840,733
Total operating        6,996,733     7,927,165      2,102,040     2,603,635
expenses
Operating income       614,767       (1,786,674)    393,284       (1,252,086)
(loss)
Other expense:
Interest expense       251,276       43,072         107,867       41,243
Total other expense    251,276       43,072         107,867       41,243
INCOME (LOSS)
BEFORE INCOME TAX      363,491       (1,829,746)    285,417       (1,293,329)

EXPENSE (BENEFIT)
Income tax expense     13,770        (634,285)      4,590         (474,319)
(benefit)
NET INCOME (LOSS)    $ 349,721     $ (1,195,461)  $ 280,827     $ (819,010)
BASIC NET INCOME                                             
(LOSS) PER             0.01          (0.02)         0.00          (0.01)
                     $             $              $             $
COMMON SHARE
DILUTED NET INCOME
(LOSS) PER           $ 0.01        $ (0.02)       $ 0.00        $ (0.01)

COMMON SHARE
WEIGHTED AVERAGE
NUMBER OF
                                                               
COMMON
SHARESOUTSTANDING-    60,278,828    60,185,344     60,372,344    60,185,344

BASIC
WEIGHTED AVERAGE
NUMBER OF

COMMON                61,829,701    60,185,344     62,429,724    60,185,344
SHARESOUTSTANDING-

DILUTED



SOURCE Vapor Corp.

Website: http://www.vapor-corp.com
Contact: Harlan Press, 1-855-827-6759, harlan.press@vapor-corp.com
 
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