Vapor Corp. Reports Results for the Fourth Quarter and the Year Ended December 31, 2013

Vapor Corp. Reports Results for the Fourth Quarter and the Year Ended December
                                   31, 2013

Revenues of $26 million and net income of $801,352 for the year ended December
31, 2013

PR Newswire

DANIA BEACH, Fla., Feb. 26, 2014

DANIA BEACH, Fla., Feb. 26, 2014 /PRNewswire/ -- Vapor Corp. (OTCQB:VPCO;
"Vapor", the "Company"), 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 fourth quarter and year
ended December 31, 2013.

2013 Operational and Financial Highlights:

  oAchieved record revenues for the fourth quarter and year ended December
    31, 2013:

       oTotal revenues for the fourth quarter of 2013 grew 56% to $7 million
       oTotal revenues for the full year 2013 grew 22% to $26 million;

  oFamily Dollar stores across the U.S. started selling KRAVE® KING brand of
    disposable e-cigarette products;
  oVapor's products are now in more than 60,000 retail outlets in the U.S.
    and Canada;
  oCompleted a $10 million private placement of common stock that is being
    used to fund the Company's growth initiatives; and
  oEffected a 1-for-5 reverse stock split of the Company's common stock to
    satisfy the minimum bid price requirement in order to seek listing of the
    common stock on The NASDAQ Capital Market.

Jeffrey Holman, President of Vapor Corp., commented, "We significantly
expanded our retail footprint and marketing activities over the past year, as
we continued to experience increased customer demand across the U.S. and
Canada for our portfolio of e-cigarettes and vaporizers. This is mostly being
driven by a rapidly growing number of users of tobacco-burning cigarettes who
view e-cigarettes and vaping as a bona fide alternative to combustible
cigarettes.

"In December 2013, we increased our presence in the retail market by adding
6,600 Family Dollar stores nationwide that will carry our flagship brand of
disposable e-cigarettes, KRAVE® KING. The growing presence of our products in
large retailers and national chains is helping us establish our brands and
build a loyal customer base.

"Looking ahead, we plan to expand our retail footprint and increase our
marketing efforts. In order to help fund these activities, we raised $10
million in October 2013," concluded Mr. Holman.

Financial and Operating Results for the fourth quarter ended December 31, 2013

Net sales grew 56% to approximately $7.0 million in the fourth quarter of
2013, as compared with approximately $4.5 million during the same quarter last
year.

Cost of goods sold increased 96% to approximately $5.0 million as compared
with approximately $2.5 million for the same quarter in the previous year,
primarily resulting from increased sales volume.

Gross margins decreased to 30% as compared with 44% for the same period in
2012 as a result of increased private label sales, which have lower gross
margins.

Selling, general and administrative expenses for the quarter ended December
31, 2013 decreased by approximately 10% from the same quarter in the prior
year primarily due to a decrease in professional and consulting fees.

Advertising expenses decreased approximately 84% to $111,316 for the quarter
ended December 31, 2013, compared with $705,613 during the same quarter in
2012.

Operating income was $345,352, compared with an operating loss of ($510,892)
for the same quarter in the prior year.

Interest expense for the quarters ended December 31, 2013 and 2012 was
$132,705 and $46,275 respectively. The increase was attributable to the
interest and amortization of debt discount on the senior convertible notes and
the senior note issued during 2012, the senior convertible note issued in
January 2013, the $425,000 senior convertible notes issued in July 2013, and
the $750,000 term loan entered into in August 2013.

The Company incurred a non-cash induced conversion expense of $299,577 for the
quarter ended December 31, 2013 related to the conversion of senior
convertible notes into common stock in conjunction with completing the private
placement.

Income tax expense (benefit) for the quarters ended December 31, 2013 and 2012
was ($538,561) and $168,344, respectively.

Net income for the quarter ended December 31, 2013 was $451,631 compared with
a net loss of ($725,511) for the quarter ended December 31, 2012, as a result
of the items discussed above.

Financial and Operating Results for the Year ended December 31, 2013

Net sales grew 22% to approximately $26.0 million for the year ended December
31, 2013 as compared with approximately $21.4 million for the prior year. This
increase was mainly attributable to our ability to more efficiently meet
consumer demand for our products with optimized inventory and enhanced
distribution efforts.

Cost of goods sold increased 23% to approximately $16.3 million as compared
with approximately $13.2 million for the year ended December 31, 2012,
primarily due to the increase in sales volume and product mix.

Gross margins decreased slightly to 37.2% compared with 38.1% for the prior
year due to a change in the product mix.

Selling, general and administrative expenses for the year ended December 31,
2013 decreased by 6% to approximately $6.5 million from approximately $6.9
million for the prior year, primarily due to a decrease in professional and
consulting fees and merchant service and bank fees; net of increases in
compensation and insurance expenses, among others.

Advertising expenses decreased 36% to approximately $2.3 million for the year
ended December 31, 2013, compared with approximately $3.6 million for the
prior year.

Operating income was approximately $960,000 compared with an operating loss of
approximately $2.3 million for the prior year.

Interest expenses for the years ended December 31, 2013 and 2012 was $383,981
and $89,347 respectively. The increase was attributable to the interest and
amortization of debt discount on the senior convertible notes and the senior
note issued during 2012, the senior convertible note 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.

The Company incurred a non-cash induced conversion expense of $299,577 for the
year ended December 31, 2013 related to the conversion of senior convertible
notes into common stock in conjunction with completing the private placement.

Income tax benefit for the years ended December 31, 2013 and 2012 was $524,791
and $465,941, respectively.

Net income for the year ended December 31, 2013 increased by approximately
$2.7 million to $801,352, compared with a net loss of $1,920,972, as a result
of the items discussed above.

Conference Call Information
The Company's management team will host a conference call tomorrow, Thursday,
February 27, 2014 at 10:30 A.M. Eastern Time to discuss the Company's
historical financial and operating performance during the fourth quarter and
the year ended December 31, 2013. To listen to the call, please dial (888)
438-5519 (US Toll Free) or (719) 325-2402 (International) and enter the pin
number 3032957 at least five minutes before the scheduled start time.
Investors and other interested parties can also access the call in a "listen
only" mode via webcast at the Company's website, www.vapor-corp.com. Please
allow extra time prior to the call to visit the site and download any
necessary audio software.

A digital replay of the conference call will be available through March 13,
2014 at (877) 870-5176 (US Toll Free) or (858) 384-5517 (International), pin
number 3032957. The replay also will be available at the Company's website for
a limited time.

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, 2013 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.

Contacts:
Media:
Alison Crisci
KCSA Strategic Communications
acrisci@kcsa.com / (212)-896-1252

IR: Jeffrey Goldberger / Garth Russell
KCSA Strategic Communications
jgoldberger@kcsa.com / grussell@kcsa.com
(212)-896-1249 / (212)896-1250



VAPOR CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS
                             FOR THE YEARS ENDED        FOR THE THREE MONTHS
                                                        ENDED
                             DECEMBER 31,
                                                        DECEMBER 31,
                             2013        2012           2013        2012
SALES NET                    $          $  21,352,691 $         $  
                             25,990,228                 7,032,032   4,508,594
Cost of goods                16,300,333  13,225,008     4,953,637   2,521,402
sold
Gross Profit       9,689,895   8,127,683      2,078,395   1,987,192
EXPENSES:
Selling, general and         6,464,969   6,865,633      1,621,727   1,792,471
administrative
Advertising        2,264,807   3,559,616      111,316     705,613
Total operating expenses   8,729,776   10,425,249     1,733,043   2,498,084
Operating income (loss)      960,119     (2,297,566)    345,352     (510,892)
Other expense:
Induced conversion expense   299,577     -              299,577     -
Interest expense           383,981     89,347         132,705     46,275
Total other expenses         683,558     89,347         432,282     46,275
INCOME (LOSS) BEFORE INCOME
                             276,561     (2,386,913)    (86,930)    (557,167)
TAX EXPENSE (BENEFIT)
Income tax expense           (524,791)   (465,941)      (538,561)   168,344
(benefit)
NET INCOME (LOSS)            $         $ (1,920,972) $       $
                             801,352                    451,631     (725,511)
BASIC EARNINGS (LOSS) PER    $                     $      $  
                              0.06     $   (0.16)   0.03     (0.06)
COMMON SHARE
DILUTED EARNINGS (LOSS) PER  $                     $      $  
                              0.06     $   (0.16)   0.03     (0.06)
COMMON SHARE
WEIGHTED AVERAGE NUMBER OF

COMMON SHARES           12,818,487  12,037,597     15,081,780  12,037,597

OUTSTANDING –
BASIC
WEIGHTED AVERAGE NUMBER OF

COMMON SHARES           13,186,365  12,037,597     15,573,903  12,037,597

OUTSTANDING –
DILUTED



VAPOR CORP.

CONSOLIDATED BALANCE SHEETS
                                                   DECEMBER31,
                                                   2013          2012
ASSETS
CURRENT ASSETS:
Cash                                         $  6,570,215 $   176,409
Due from merchant credit card processors, net of
reserve for charge-backs of $2,500 and $15,000,    205,974       1,031,476
respectively
Accounts receivable, net of allowance of $256,833  1,802,781     748,580
and $61,000, respectively
Inventories                             3,321,898     1,670,007
Prepaid expenses and vendor deposits               1,201,040     465,860
Income tax receivable                     -             47,815
Deferred tax asset, net                    766,498       222,130
TOTAL CURRENT ASSETS                               13,868,406    4,362,277
Property and equipment, net of accumulated
depreciation of $27,879 and $16,595,               28,685        25,190
respectively
Other assets                              65,284        12,000
TOTAL ASSETS                                       $ 13,962,375  $ 4,399,467
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Accounts payable                     $  1,123,508 $ 3,208,595
Accrued expenses                     420,363       350,151
Term loan                                          478,847       -
Customer deposits                    182,266       477,695
Income taxes payable                      5,807         -
TOTAL CURRENT LIABILITIES                          2,210,791     4,036,441
LONG-TERM DEBT:
Senior convertible notes payable to related
parties, net of debt discount of $0 and $3,530,    -             346,470
respectively
Senior note payable to stockholder                -             500,000
TOTAL LONG-TERM DEBT                               -             846,470
TOTAL LIABILITIES                                  2,210,791     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, 50,000,000 shares
authorized 16,214,528 and 12,038,163 shares issued 16,214        12,038
and outstanding, respectively
Additional paid-in capital                       13,115,024    1,685,524
Accumulated deficit                     (1,379,654)   (2,181,006 )
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY)            11,751,584    (483,444 )
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY         $ 13,962,375  $ 4,399,467
(DEFICIENCY)



SOURCE Vapor Corp.

Website: http://www.vapor-corp.com
 
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