Vapor Corp. Reports Improved First Quarter 2013 Results Net Sales up 31.1% Year-Over-Year and Generates Operating Income

DANIA BEACH, Fla., May 15, 2013 /PRNewswire/ -- Vapor Corp. (OTCQB: VPCO; "Vapor" or 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 results for the first quarter ended March 31, 2013.

Financial Highlights for the first quarter ended March 31, 2013

Net sales were approximately $6.4 million, an increase of $1.5 million, or approximately 31.1% from the same quarter in the preceding year. The increase in sales is primarily attributable to sales to new and existing distributors, wholesale customers and increased direct to consumer sales.

Cost of goods sold rose 40.4% to $3.7 million as compared to the same quarter in the previous year, primarily resulting from increased sales volume as well as a change in product mix to higher distributor and wholesaler sales, which have lower gross margins than our direct sales to consumers.

Gross Margins decreased to 41.7% from 45.6% in the same quarter in the prior year as a result of the above factors.

Selling, general and administrative expenses for the three months ended March 31, 2013 increased to $1.6 million, up 7.4% from the same quarter in the prior year primarily due to  increases in variable selling expenses attributable to the increase in sales.

Advertising expense decreased 12.5% to $0.9 million for the three months ended March 31, 2013 compared to the same period in 2012.  During the three months ended March 31, 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.

Operating income was $194,644 compared to operating losses of $258,358 for the same quarter in the prior year.

Interest expense for the three months ended March 31, 2013 and 2012 was $66,510 and $0 respectively. The increase was attributable to the senior convertible notes and the senior note issued by the Company during 2012 and the senior convertible note issued by the Company in January 2013.

Income tax expense (benefit) for the three months ended March 31, 2013 and 2012 was $4,590 and ($75,642), respectively.

Net income (loss) for the three months ended March 31, 2013 and 2012 was $123,544 and ($182,716), respectively, as a result of the items discussed above.

Kevin Frija, Chief Executive Officer of Vapor Corp, commented, "The first quarter of 2013 was marked by continued sales growth, a return to profitability and an increase in working capital. These financial results are very encouraging; especially as we embark on the continued expansion of our soft tip filters and Krave King Product line."

Looking ahead, Mr. Frija stated, "Demand for our products remains strong and interest in our Krave King is expanding.  We remain committed to investing in the long-term growth of the company and its brands as well as gaining greater brand awareness among the vaping community and investors. Quality, value and thoughtful innovation and improvements in product, such as our soft-tip filters, set us apart from the competition and allows us to get more products into the hands of more customers, and leads to more repeat customers."

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.

Investor Contact:
Howard Gostfrand
President
American Capital Ventures
305.918.7000
info@amcapventures.com

VAPOR CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS












March 31,

 2013


December 31,

2012




(Unaudited)




ASSETS


CURRENT ASSETS:


Cash


$

279,900


$

176,409


Due from merchant credit card processor, net of reserve for chargebacks of $15,000 and $15,000,

   respectively



 

849,685



 

1,031,476


Accounts receivable, net of allowance of $70,000 and $61,000, respectively



987,281



748,580


Inventories



1,734,069



1,670,007


Prepaid expenses



523,969


465,860


Income tax receivable



43,225


47,815


Deferred tax asset, net



222,130


222,130


TOTAL CURRENT ASSETS



4,640,259



4,362,277










Property and equipment, net of accumulated depreciation of $19,557 and $16,595, respectively



30,285



25,190


Other assets



12,000



12,000










TOTAL ASSETS


$

4,682,544


$

4,399,467










LIABILITIES AND STOCKHOLDERS' DEFICIENCY









CURRENT LIABILITIES:








Accounts payable


$

3,237,164


$

3,208,595


Accrued expenses



359,315



350,151


Senior convertible note payable, net of debt discount of $84,677 and $0, respectively



415,323



-


Current portion of senior convertible note payable to stockholder



152,778



-


Customer deposits



78,553



477,695


TOTAL CURRENT LIABILITIES



4,243,133



4,036,441










LONG-TERM DEBT:








Senior convertible notes payable to related parties, net of debt discount of $3,174 and $3,530,   

   respectively



 

346,826



 

346,470


Senior convertible note  payable to stockholder



347,222



-


Senior note payable to stockholder



-



500,000


TOTAL LONG-TERM DEBT



694,048



846,470


TOTAL LIABILITIES



4,937,181



4,882,911










COMMITMENTS AND CONTINGENCIES (Note 6)
















STOCKHOLDERS' DEFICIENCY:








Preferred stock, $.001 par value, 1,000,000 shares authorized, none issued



-



-


Common stock, $.001 par value, 250,000,000 shares authorized, 60,235,344 and 60,185,344 shares

   issued and outstanding, respectively



 

60,235



 

60,185


Additional paid-in capital



1,742,590



1,637,377


Accumulated deficit



(2,057,462)



(2,181,006)


TOTAL STOCKHOLDERS' DEFICIENCY



(254,637)



(483,444)










TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY


$

4,682,544


$

4,399,467










 

VAPOR CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)









For The Three Months Ended

March 31,



2013


2012







SALES, NET

$

6,360,749


$

4,850,524


Cost of goods sold


3,708,806



2,640,700


GROSS PROFIT


2,651,943



2,209,824









EXPENSES:







Selling, general and administrative


1,606,098



1,494,913


Advertising


851,201



973,269


Total operating expenses


2,457,299



2,468,182


Operating income (loss)


194,644



(258,358)


Other expense:







Interest expense


66,510



-


Total other expense


66,510



-


INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT)


128,134



 

(258,358)


Income tax expense (benefit)


4,590



(75,642)


NET INCOME (LOSS)

$

123,544


$

(182,716)


BASIC NET INCOME (LOSS) PER COMMON SHARE

 

$

0.00


 

$

 

(0.00)


DILUTED NET INCOME (LOSS) PER COMMON SHARE

$

0.00


$

(0.00)


WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC


 

60,194,233



 

60,185,344


WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – DILUTED


61,353,339



60,185,344









 

SOURCE Vapor Corp.



RELATED LINKS
http://www.vapor-corp.com

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