3001 Griffin Road
Dania Beach, Florida 33312
(888) 766-5351
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Jeffrey E. Holman, Chief Executive Officer
Vapor Corp.
3001 Griffin Road
Dania Beach, Florida 33312
(888) 766-5351
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Martin T. Schrier
Christopher J. Bellini
Cozen O’Connor
Southeast Financial Center
200 South Biscayne Blvd.
Miami, Florida 33131
(305) 704-5940

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of  “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

The information in this prospectus may change. We may not complete the exchange offer and issue these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer is not permitted.

Prospectus
Subject to Completion, dated December 1 1, 2015

Offer To Exchange
Units
for
Shares of Common Stock and
Exchange Warrants to Purchase Common Stock
of
Vapor Corp.

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 PM
NEW YORK CITY TIME, ON JANUARY 13, 2016, UNLESS EXTENDED
(SUCH DATE AND TIME, AS THE SAME MAY BE EXTENDED, THE
“EXPIRATION DATE”)

We are offering to issue shares of our common stock, par value $0.001 per share (the common stock being issued in the Exchange Offer being referred to as the “ Shares ”), and warrants (the “ Exchange Warrants ”) to purchase 64 shares of our common stock (the “ Warrant Shares ”), at an exercise price equal to 120% of the closing market price of our common stock on the Expiration Date in exchange for our Units (the “ Units ”), each consisting of one-fourth of a share of the Company’s Series A Convertible Preferred Stock (convertible into 10 shares of common stock), and 20 Series A Warrants (each exercisable into one share of common stock) in exchange for the valid tender prior to, and not withdrawn before, the Expiration Date. See “Description of Shares and Exchange Warrants Included in the Exchange Offer” and “General Terms of the Exchange Offer.”

In exchange for each Unit, a holder of a Unit will receive 128 Shares and an Exchange Warrant. The Exchange Warrants will: (i) be exercisable at an exercise price per share equal to 120% of the closing market price of our common stock on the Expiration Date; (ii) be exercisable for 64 Warrant Shares; and (iii) be exercisable for a period of five years.

We are making this offer upon the terms and subject to the conditions described in this prospectus and in the related Letter of Transmittal (which together, as they may be amended from time to time, constitute the “ Exchange Offer ”).

Our common stock is currently listed on The NASDAQ Capital Market under the symbol “VPCO” and the Units are currently listed on The NASDAQ Capital Market under the symbol “VPCOU.”

Neither the Securities and Exchange Commission, or SEC, nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

This prospectus is dated December 11, 2015.

Subject to applicable securities laws and the terms of the Exchange Offer, we reserve the right:

•

to waive any and all conditions to the Exchange Offer that may be waived by us;

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•

to extend the Exchange Offer;

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•

to terminate the Exchange Offer; or

​

•

to otherwise amend the Exchange Offer in any respect in compliance with applicable securities laws and stock exchange rules.

​

If the Exchange Offer is withdrawn or otherwise not completed, the consideration (the issuance of the Shares and Exchange Warrants) will not be made to holders of Units who have validly tendered their Units pursuant to the terms of the Exchange Offer, and the Units validly tendered pursuant to the terms of the Exchange Offer will be promptly returned to the tendering holders.

Only registered holders of Units are entitled to tender their Units in the Exchange Offer. Beneficial owners of Units that are held of record by a broker, bank or other nominee or custodian must instruct such nominee or custodian to tender their Units in the Exchange Offer on the beneficial owner’s behalf. A letter of instructions is included in the materials provided along with this prospectus, which may be used by a beneficial owner in this process to affect the tender of Units pursuant to the terms of the Exchange Offer. Holders who tender their Units will not be obligated to pay brokerage fees or commissions to the Exchange Agent or us. If a broker, bank or other nominee or custodian tenders Units on behalf of a holder, such broker, bank or other nominee or custodian may charge a fee for doing so. Holders who own Units through a broker, bank or other nominee or custodian should consult their broker, bank or other nominee or custodian to determine whether any charges will apply.

MARKET AND INDUSTRY DATA

In this prospectus, we rely on and refer to information and statistics regarding our industry. Where possible, we obtained this information and these statistics from third party sources, such as independent industry publications, government publications or reports by market research firms, including company research, trade interviews, and public filings with the SEC. Additionally, we have supplemented third party information where necessary with management estimates based on our review of internal surveys, information from our customers and vendors, trade and business organizations and other contacts in markets in which we operate, and our management’s knowledge and experience. However, these estimates are subject to change and are uncertain due to limits on the availability and reliability of primary sources of information and the voluntary nature of the data gathering process. As a result, you should be aware that industry data included in this prospectus, and estimates and beliefs based on that data, may not be reliable.

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Why are we making the Exchange Offer?

We are making the Exchange Offer in order to (i) preserve our working capital through the elimination of the potential cash payments related to the Series A Warrants included in the Units and (ii) avoid uncertainty regarding the Company’s capital structure due to volatility in the market price of our common stock. We believe that by allowing holders of Units to exchange Units for 128 Shares and one Exchange Warrant (exercisable for 64 Warrant Shares), the Company can potentially eliminate cash payment obligations arising pursuant to the Warrants, thus providing investors with greater certainty as to our capital structure and future liquidity. See “General Terms of the Exchange Offer.”

When does the Exchange Offer expire?

The Exchange Offer will expire on the Expiration Date at 5:00 p.m., New York City time, on January 13, 2016 unless the Exchange Offer is extended at our sole discretion. See “General Terms of the Exchange Offer.”

Can the Exchange Offer be extended?

Yes, we can extend the Exchange Offer. See “General Terms of the Exchange Offer — Extension, Termination or Amendment.”

What securities are subject to the Exchange Offer?

We are offering to issue Shares and Exchange Warrants to the holders of outstanding Units who tender such Units on or prior to the Expiration Date, upon the terms and subject to the conditions described in this prospectus and as permitted under the terms of the Exchange Offer. Our acceptance of the tendered Units for exchange and the closing of the Exchange Offer is subject to the conditions described under “General Terms of the Exchange Offer — Conditions of the Exchange Offer.”

On July 29, 2015, we closed the registered offering of 3,761,657 Units at $11.00 per Unit, for gross proceeds of  $41.4 million. Each Unit consists of one-fourth of a share of Series A Convertible Preferred Stock and 20 Series A Warrants. Each one-fourth share of Series A Convertible Preferred Stock will be convertible into 10 shares of common stock and each Series A Warrant were originally exercisable into one share of common stock at an initial exercise price of  $1.24 per share. The Units will automatically separate into the Series A Convertible Preferred Stock and Series A Warrants on January 23, 2016, provided that the Units will separate earlier if at any time after August 24, 2015, the closing price of Vapor’s common stock is greater than $2.48 per share for 10 consecutive trading days, the Units are delisted, or the Series A Warrants are exercised for cash (solely with respect to the Units that included the exercised Series A Warrants). Net proceeds to the Company, after deducting underwriting commissions and estimated offering expenses, were approximately $38.7 million. The Units are listed on The Nasdaq Capital Market under the ticker symbol “VPCOU.”

The Shares and Exchange Warrants issued in this Exchange Offer will be registered pursuant to this registration statement at the time the Shares and Exchange Warrants are issued. The Warrant Shares underlying the Exchange Warrants will be registered after the Exchange Warrants become exercisable.

What will I receive in the Exchange Offer?

If you validly tender your Units pursuant to the Exchange Offer, then, subject to the terms and conditions of the Exchange Offer, you will receive 128 Shares and one Exchange Warrant (exercisable for 64 Warrant Shares) for each Unit tendered. See “Description of Shares and Exchange Warrants Included in the Exchange Offer.” The Exchange Offer is subject to the conditions described under “General Terms of the Exchange Offer — Conditions of the Exchange Offer.”

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When are the Exchange Warrants exercisable into shares of common stock of the Company?

Subject to certain conditions, the Exchange Warrants will be exercisable into Warrant Shares at an exercise price per share equal to 120% of the closing market price of our common stock on the Expiration Date. The primary condition to the exercise of such Warrants is the approval (the “ Stockholder Approval ”) by the stockholders of the Company of an increase of the number of the Company’s authorized common stock to 750 million shares. Following the closing of the Exchange Offer, the holders of the Shares and the Exchange Warrants will beneficially own a majority of the issued and outstanding shares of our common stock.

See “Description of Shares and Exchange Warrants Included in the Exchange Offer” and “General Terms of the Exchange Offer.”

What percentage of the ownership of the Issuer will holders of Units receive if the Exchange Offer is completed?

Assuming all Units are tendered, then such holders of Units will receive an aggregate of 481.5 million Shares which would represent, in the aggregate, approximately 98% of our outstanding common stock immediately following the Exchange Offer, based on an aggregate of 492 million shares of our common stock immediately outstanding following the consummation of the Exchange Offer. If all of the Exchange Warrants were fully exercised, such Warrant Shares would represent, in the aggregate, approximately 33% of our common stock, based on an aggregate of 733 million shares outstanding.

Who may participate in the Exchange Offer?

All registered holders of outstanding Units as of the date of the commencement of the Exchange Offer may participate in the Exchange Offer.

Although we do not currently intend to do so, we may, at our discretion, extend the Offer at any time. We will have to extend the Offer if our Registration Statement has not been declared effective by the SEC. If we extend the Offer, we will continue to accept properly completed Election Forms and Withdrawal Forms until the new expiration date. We may also cancel the Offer upon certain events.

Are there any conditions to the Exchange Offer?

Yes. The Exchange Offer is conditioned on the closing conditions described under “General Terms of the Exchange Offer — Conditions of the Exchange Offer.” We will not be required, but we reserve the right, to accept any Units tendered pursuant to the Exchange Offer (or, alternatively, we may terminate the Exchange Offer) if any of the conditions of the Exchange Offer as described under “General Terms of the Exchange Offer — Conditions of the Exchange Offer” remain unsatisfied. The Exchange Offer is subject to a number of conditions with regard to events that could occur prior to the expiration of the Exchange Offer. These events include, among others:

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no lawsuit challenging the Exchange Offer;

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•

effectiveness with the SEC of our registration statement on Form S-4; and

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•

The NASDAQ Capital Market agreeing to list the Shares for trading.

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Prior to the consummation of the Exchange Offer, all conditions precedent to the closing of the Exchange Offer shall have been satisfied or waived by the holders in accordance with the terms of this prospectus and the Letters of Transmittal.

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Will the new securities be freely tradable?

The Shares received in the Exchange Offer will be freely tradable in the United States, unless you are an affiliate of the Company, as that term is defined in the Securities Act of 1933 (the “ Securities Act ”). Our common stock is listed on The NASDAQ Capital Market under the symbol “VPCO.” Our common stock may be delisted if we fail to maintain certain market capitalization thresholds or if our common stock fails to maintain a minimum trading price of  $1.00 per share over a consecutive 30-day trading period.

We do not intend to list the Exchange Warrants on The NASDAQ Capital Market or any national or regional securities exchange, and therefore no trading market for the Exchange Warrants will exist upon consummation of the Exchange Offer, and none is likely to develop. However, the Exchange Warrants will be registered pursuant to this registration statement at the time the Warrants are issued.

Promptly following the Stockholder Approval, we will file a registration statement to register the Warrant Shares received in the Exchange Offer. Following registration, the Warrant Shares will be freely tradable in the United States, unless you are an affiliate of the Company, and listed on The NASDAQ Capital Market under the symbol “VPCO.”

What risks should I consider in deciding whether or not to tender my Units in exchange for the issuance of the Shares and Exchange Warrants?

In deciding whether to participate in the Exchange Offer, you should carefully consider the discussion of the risks and uncertainties relating to the Exchange Offer, our Company and our industry described in the section entitled “Risk Factors,” beginning on page 9 of this prospectus.

What happens if I do not participate in the Exchange Offer?

If you currently hold Units and do not tender them pursuant to the Exchange Offer, then, following the expiration of the Exchange Offer, your Units will continue to be outstanding according to their terms unmodified. The Units will automatically separate into the Series A Convertible Preferred Stock and Series A Warrants on January 23, 2016, provided that the Units will separate earlier if at any time after August 24, 2015, the closing price of Vapor’s common stock is greater than $2.48 per share for 10 consecutive trading days, the Units are delisted, or the Series A Warrants are exercised for cash (solely with respect to the Units that included the exercised Series A Warrants). The Series A Convertible Preferred Stock is convertible into common stock.

How do I participate in the Exchange Offer?

To tender your Units pursuant to the terms of the Exchange Offer, you must deliver to the Exchange Agent, on or prior to the Expiration Date, such Units and the executed, completed and dated Letter of Transmittal and other required documents. The Expiration Date is no later than 5:00 p.m., New York City time, January 13, 2016, unless extended as described in this prospectus. See “General Terms of the Exchange Offer — Extension, Termination or Amendment.”

A holder of Units who desires to tender their Units pursuant to the Exchange Offer and is a DTC participant should transfer their Units electronically through DTC’s automatic tender offer program, subject to the terms and procedures of that system. See “General Terms of the Exchange Offer — Transfer of Units Through DTC’s Automated Tender Offer Program.”

HOLDERS THAT TRANSFER THROUGH DTC NEED NOT SUBMIT A PHYSICAL LETTER OF TRANSMITTAL TO THE EXCHANGE AGENT IF SUCH HOLDERS COMPLY WITH THE TRANSMITTAL PROCEDURES OF DTC.

A holder whose Units are held by a broker, dealer, commercial bank, trust company or other nominee must contact that nominee if that holder desires to tender its Units and instruct that nominee to tender such Units on the holder’s behalf.

May I withdraw my tender of Units?

Yes. You can withdraw the tender of your Units in connection with the Exchange Offer at any time before the Expiration Date. The Expiration Date is 5:00 p.m., New York City time, on January 13, 2016,

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unless extended as described in the Offer Documents and in this prospectus. See “General Terms of the Exchange Offer — Withdrawal of Exercise.”

What happens if the tender of my Units is not accepted in the Exchange Offer?

If we decide for any valid reason not to accept the tender of your Units in connection with the Exchange Offer, your Units will not be deemed to be tendered pursuant to the Exchange Offer and your Units will remain outstanding and unmodified, subject to their current terms. See “General Terms of the Exchange Offer — Withdrawal of Exercise.”

Do I need to do anything if I do not wish to tender my Units in the Exchange Offer?

No. If you do not properly tender your Units in connection with the Exchange Offer on or prior to the Expiration Date, then your Units will remain outstanding and unmodified, subject to their current terms.

If I choose to tender my Units in the Exchange Offer, do I have to tender all of my Units in full?

No. You may tender all of your Units in their entirety, a portion of your Units, or none of your Units in connection with the Exchange Offer. See “General Terms of the Exchange Offer.”

How will I be taxed under United States federal income tax laws upon the tender of my Units and the issuance of Shares and Exchange Warrants if I am a United States holder of Units?

We have not obtained and do not intend to obtain a ruling from the Internal Revenue Service (“ IRS ”) regarding the U.S. federal income tax consequences of your participation in the tender of Units in the Exchange Offer. You should consult with your own tax advisor with regard to the possibility of any federal, state, local or other tax consequences of this Exchange Offer. See “Certain United States Federal Income Tax Considerations”.

Has the Board of Directors adopted a position on the Exchange Offer?

Our board of directors, which we refer to as the “Board of Directors” or the “Board,” has approved the Exchange Offer. However, our directors do not make any recommendation as to whether you should tender your Units and receive Shares and Exchange Warrants pursuant to the Exchange Offer. You should consult your own financial, tax, legal and other advisors and must make your own decision as to whether to tender your Units and receive Shares and Exchange Warrants.

Who will pay the fees and expenses associated with the Exchange Offer?

We will bear all of our fees and expenses incurred in connection with consummating the Exchange Offer. No brokerage commissions are payable by the holders to the Exchange Agent or us. If your Units are held or will be held through a broker or other nominee on your behalf, your broker or other nominee may charge you a commission for doing so. You should consult with your broker or other nominee to determine whether any charges will apply. See “General Terms of the Exchange Offer.”

Who can answer questions concerning the Exchange Offer?

Requests for assistance in connection with the tender of your Units pursuant to the Exchange Offer may be directed to the Exchange Agent for the Exchange Offer, Okapi Partners, LLC, 1212 Avenue of the Americas, New York, New York 10036; phone: (212) 297-0720 or (877) 629-6355.

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3

4

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On July 29, 2015, the Company closed the registered offering of 3,761,657 Units at $11.00 per Unit, for gross proceeds of  $41.4 million. Each Unit consists of one-fourth of a share of Series A Convertible Preferred Stock and 20 Series A Warrants. Each one-fourth share of Series A Convertible Preferred Stock will be convertible into 10 shares of common stock and each Series A Warrant will be exercisable into one share of common stock at an initial exercise price of  $1.24 per share. The Units will automatically separate (the “ Unit Split ”) into the Series A Convertible Preferred Stock and Series A Warrants on January 23, 2016, provided that the Units will separate earlier if at any time after August 24, 2015, the closing price of Vapor’s common stock is greater than $2.48 per share for 10 consecutive trading days, the Units are delisted, or the Series A Warrants are exercised for cash (solely with respect to the Units that included the exercised Series A Warrants).

The Series A Warrant has a “cashless exercise” feature based on a Black Scholes valuation model that could create a potentially material adverse liability on the Company’s balance sheet if an insufficient number of shares of common stock were available to satisfy the warrant exercises. The Series A Warrants can be exercised for either (1) cash at $1.24 per share or (2) in a “cashless” exercise using a Black-Scholes valuation (BSV) of the warrant. If submitted for a cashless exercise, the warrant holder exchanges the warrant for the number of common shares equal to the BSV divided by the closing bid price of the common stock 2 days before exercise notice is submitted or, instead, the Company has the option of pay the BSV in cash to the warrant holder. As defined in the Series A Warrants, BSV is determined based on the Black Scholes Value of an option for one share of common stock of the Company at the date of the applicable Black Scholes payment or “cashless exercise,” as such Black Scholes Value is determined, calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the closing bid price of the common stock of the Company as of July 23, 2016 (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of the Series A Warrant as of the applicable Black Scholes Payment or Cashless Exercise, (iii) a strike price equal to the exercise price in effect at the time of the applicable Black Scholes payment or cashless exercise, (iv) an expected volatility equal to 135% and (v) a remaining term of such option equal to five years (regardless of the actual remaining term of the Series A Warrant). If all of our Series A Warrants were exercised simultaneously when our common stock traded below $0.17 per share, we would not have sufficient authorized common stock to fulfill our issuance obligations pursuant to the Series A Warrants and we could be required to use our cash to pay warrant holders.

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By undertaking the Exchange Offer, we are trying (1) to avoid further decreases to the price of our common stock and (2) to prevent the dilution that would result from the decrease in the price of our common stock and the resulting significant increase the number of shares issuable upon exercise of the Series A Warrants. The Company’s management believes the Exchange Offer would be in the best interest of the Company and it would (1) preserve needed working capital and (2) avoid uncertainty regarding our capital structure.

Our Board met telephonically on November 18, 2015 to discuss the potential Exchange Offer. Also participating in the meeting were Gina Hicks, the Chief Financial Officer, and representatives of the law firms of Cozen O’Connor and Nason, Yeager, Gerson, White & Lioce, P.A. At this meeting, Jeff Holman, the Chief Executive Officer, initially discussed the financial purposes for eliminating the Units and the reasons why the Exchange Offer would be the best means available at present to address the potential dilution and cash outlays associated with the Series A Warrants. Mr. Holman next presented the terms of engaging Cassel Salpeter & Co., LLC to act as financial advisor to the Board. The Board resolved to proceed with engaging Cassel Salpeter & Co., LLC on the terms as presented by management for such purpose.

On November 24, 2015, our Board met telephonically to discuss approving the proposed structure for the exchange of the Units and the SEC filings related to the Exchange Offer. Also participating in the meeting were Gina Hicks, the Chief Financial Officer, and representatives of the law firms of Cozen O’Connor and Nason, Yeager, Gerson, White & Lioce, P.A. Mr. Holman reviewed the current status of the proposed exchange transaction previously circulated to the Board, noting that the Company will file with the SEC a Tender Offer Statement on Schedule TO and related Offer Letter to all holders of Units to exchange Units for shares of common stock and warrants. The members of the Board asked questions of management and Cozen O’Connor on the Exchange Offer and the documents. The Board discussed the interests of the Company and its stockholders, the consequences of not pursuing the Exchange Offer and resolved to approve the final Exchange Offer terms and related documents reviewed at the meeting.

On December 8, 2015, our Board met telephonically to discuss the Exchange Offer and the SEC filings related to the Exchange Offer. Also participating in the meeting were Gina Hicks, the Chief Financial Officer, and representatives of the law firm of Cozen O’Connor. The current status of the proposed exchange transaction was discussed as well as the merits of the Exchange Offer and existing market conditions. The members of the Board asked questions of management and Cozen O’Connor on the Exchange Warrant, the Form S-4 and the related documents.

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There will be no public trading market for the Exchange Warrants, and your ability to sell such Exchange Warrants will be limited.

There is no existing public market for the Exchange Warrants. No market for the Exchange Warrants may develop, and any market that develops may not persist. We cannot assure you as to the liquidity of any market that may develop for the Exchange Warrants, your ability to sell your Exchange Warrants or the price at which you would be able to sell your Exchange Warrants. We do not intend to apply for listing of the Exchange Warrants on any securities exchange or other market; however, the Exchange Warrants received in the Exchange Offer will be registered pursuant to this registration statement.

The Exchange Warrants will not be immediately exercisable and will not be exercisable until the Stockholder Approval has been obtained.

We do not currently have a sufficient number of authorized shares of common stock to fulfill our issuance obligations of Warrant Shares upon exercise of all of the Exchange Warrants. The Exchange Warrants, therefore, will not be exercisable until we have obtained the Stockholder Approval and amended our Certificate of Incorporation to increase our authorized common stock to permit full exercise of all of the Exchange Warrants. Although holders of the Shares and Exchange Warrants will beneficially own in excess of 50% of the issued and outstanding common stock immediately following the Settlement Date of the Exchange Offer, there can be no assurance that Stockholder Approval will be obtained.

The Warrant Shares underlying Exchange Warrants will not be registered until after the Stockholder Approval has been received and the Warrant Shares will have limited liquidity until registered.

Because the number of authorized shares of common stock is currently insufficient to fulfill our issuance obligations of Warrant Shares upon exercise of all of the Exchange Warrants, we are unable to register the Warrant Shares at this time. We will file a registration statement to register the Warrant Shares promptly following receipt of Stockholder Approval. Until the Warrant Shares are registered, the Warrant Shares may only be transferred pursuant to an exemption from registration and will have limited transferability and liquidity. There can be no assurance the registration statement registering the Warrant Shares will be declared effective by the SEC or as to the time period that will be required to obtain effectiveness.

As a holder of the Exchange Warrants, you will not be entitled to any rights with respect to our common stock, but you will be subject to all changes made with respect to our common stock.

If you hold only our Exchange Warrants, you will not be entitled to any rights with respect to our common stock (including, without limitation, voting rights and rights to receive any dividends or other distributions, if any, on our common stock), but you will be subject to all changes affecting our common stock. You will have rights with respect to our common stock only when we deliver shares of common stock to you upon exercise of your Exchange Warrants. For example, if an amendment is proposed to our certificate of incorporation or bylaws requiring stockholder approval and the record date for determining the stockholders of record entitled to vote on the amendment occurs prior to the delivery of common stock, if any, to you, you will not be entitled to vote on the amendment with respect to the shares of common stock that are subject to such delivery, although you will nevertheless be subject to any changes in the powers, preferences or special rights of our common stock.

Income tax consequences of participation in this Offer to Exercise.

We have not obtained and do not intend to obtain a ruling from the Internal Revenue Service, or IRS, regarding the U.S. federal income tax consequences of the tender of Units pursuant to the Exchange Offer. You should consult with your own tax advisor with regard to the possibility of any federal, state, local or other tax consequences of this Exchange Offer. See “Certain United States Federal Income Tax Considerations”.

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Risks Related to our Business

We have incurred losses in the past and cannot assure you that we will achieve and/or maintain profitable operations or liquidity absent obtaining successful completion of this Exchange Offer.

For the nine months ended September 30, 2015 and 2014, we had operating losses of approximately $8.6 million and $6.5 million, respectively. Our operating losses are primarily due to, among other reasons, the establishment of our business infrastructure and operations, stock-based compensation expenses and increases in our marketing expenditures. Additionally, Vapor did not anticipate the consumer shift from e-cigarettes to vaporizers which caused in part the large losses beginning in 2014. The Company reported a net loss allocable to common stockholders of  $11,159,250 for the nine months ended September 30, 2015 and had negative working capital of  $7,044,860 as of September 30, 2015. For the year ended December 31, 2014, we had a net loss of  $13,852,249 compared to net income of  $801,352 for the year ended December 31, 2013. Until the sale of the Units in July of 2015, the Company’s liquidity and capital resources had decreased significantly as a result of the net operating losses we incurred during the year ended December 31, 2014. We cannot assure you that we will be able to generate operating profits in the future on a sustainable basis or at all as we continue to expand our infrastructure, open additional retail stores, further develop our marketing efforts and otherwise implement our growth initiatives. Future working capital limitations could impinge on our day-to-day operations, thus contributing to continued operating losses.

The Company’s outstanding warrants sold as part of our July 29, 2015 public offering will separate from the Units on January 23, 2016. Each Series A Warrant may be exercised without cash for the Black Scholes value defined in the warrant agreement. The number of shares of common stock we issue in connection with the exercise of our warrants will be based on our common stock price as of the date of the exercise. The July 29, 2015 public offering underwriters required us to obtain stockholder approval to increase our authorized common shares to 500 million. The stockholders approved the authorized common share increase on October 16, 2015 and we filed an amendment to our Certificate of Incorporation on December 9, 2015 to reflect such increase. If all of our Series A Warrants were exercised simultaneously when our common stock traded below $0.17 per share, we would not have sufficient authorized common stock and we could be required to use our cash to pay warrant holders.

Because of changes in our industry, it is difficult to accurately predict our future sales and appropriately budget our expenses.

We acquired Smoke Anywhere, a distributor of electronic cigarettes, in November 2009 and Vaporin in March 2015. Smoke Anywhere commenced its business in 2008 and Vaporin commenced its operations in 2013. Because our industry is still evolving, it is difficult to accurately predict our future sales and appropriately budget our expenses. Additionally, our operations will be subject to risks inherent in the establishment of a developing new business as well as a new business model of deploying new vape stores, including, among other things, efficiently deploying our capital, costs or difficulties relating to the integration of the merger with Vaporin, developing our products, opening retail stores, developing and implementing our marketing campaigns and strategies and developing brand awareness and acceptance of our products. Our ability to generate future sales will be dependent on a number of factors, many of which are beyond our control, including the pricing of competing products, overall demand for our products, changes in consumer preferences, market competition and government regulation. We will continue to expand our retail stores and incur related operational expenditures in anticipation of future sales growth. If our sales do not increase as anticipated, we could incur significant losses due to our higher infrastructure expense levels if we are not able to decrease our advertising and operating expenses in a timely manner to offset any shortfall in future sales.

The recent development of electronic cigarettes has not allowed the medical profession to study the long-term health effects of electronic cigarette use.

Because electronic cigarettes were recently developed the medical profession has not had a sufficient period of time to study the long-term health effects of electronic cigarette use. Currently, therefore, there is no way of knowing whether or not electronic cigarettes are safe for their intended use. If the medical profession were to determine conclusively that electronic cigarette usage poses long-term health risks,

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electronic cigarette usage could decline, which could have a material adverse effect on our business, results of operations and financial condition.

Our business, results of operations and financial condition could be adversely affected if our products are taxed like other tobacco products or if we are required to collect and remit sales tax on certain of our Internet sales.

Presently the sale of electronic cigarettes is not subject to federal, state and local excise taxes like the sale of conventional cigarettes or other tobacco products, all of which have faced significant increases in the amount of taxes collected on their sales. Should federal, state and local governments and or other taxing authorities impose excise taxes similar to those levied against conventional cigarettes and tobacco products on our products, it may have a material adverse effect on the demand for our products, as consumers may be unwilling to pay the increased costs for our products.

We may be unable to establish the systems and processes needed to track and submit the excise and sales taxes we collect through Internet sales, which would limit our ability to market our products through our websites which would have a material adverse effect on our business, results of operations and financial condition. A number of states including New York, North Carolina, Texas and California have begun collecting sales taxes on Internet sales where companies have used independent contractors in those states to solicit sales from residents of that state. The requirement to collect, track and remit sales taxes based on independent affiliate sales may require us to increase our prices, which may affect demand for our products or conversely reduce our net profit margin, either of which would have a material adverse effect on our business, results of operations and financial condition.

The market for electronic cigarettes is a niche market, subject to a great deal of uncertainty and is still evolving.

Vaporizers and electronic cigarettes, having recently been introduced to market, are at an early stage of development, represent a niche market and are evolving rapidly and are characterized by an increasing number of market entrants. Our future sales and any future profits are substantially dependent upon the widespread acceptance and use of electronic cigarettes. Rapid growth in the use of, and interest in, electronic cigarettes is recent, and may not continue on a lasting basis. The demand and market acceptance for these products is subject to a high level of uncertainty. Therefore, we are subject to all of the business risks associated with a new enterprise in a niche market, including risks of unforeseen capital requirements, failure of widespread market acceptance of electronic cigarettes, in general or, specifically our products, failure to establish business relationships and competitive disadvantages as against larger and more established competitors.

Because we face intense competition from big tobacco companies and other competitors, our failure to compete effectively could have a material adverse effect on our business, results of operations and financial condition.

Competition in the electronic cigarette industry is intense. The nature of our competitors is varied as the market is highly fragmented and the barriers to entry into the business are low.

We compete primarily on the basis of product quality, brand recognition, brand loyalty, service, marketing, advertising and price. We are subject to highly competitive conditions in all aspects of our business. The competitive environment and our competitive position can be significantly influenced by weak economic conditions, erosion of consumer confidence, competitors’ introduction of low-priced products or innovative products, cigarette excise taxes, higher absolute prices and larger gaps between price categories, and product regulation that diminishes the ability to differentiate tobacco products.

Our principal competitors are “big tobacco”, U.S. cigarette manufacturers of both conventional tobacco cigarettes and electronic cigarettes like Altria Group, Inc., Lorillard, Inc. and Reynolds American Inc. We compete against “big tobacco” which offers not only conventional tobacco cigarettes and electronic cigarettes but also smokeless tobacco products such as “snus” (a form of moist ground smokeless tobacco that is usually sold in sachet form that resembles small tea bags), chewing tobacco and snuff. Furthermore, we believe that “big tobacco” will devote more attention and resources to developing and offering electronic cigarettes (including vaporizers) as the market grows. Because of their well-established sales and distribution channels, marketing expertise and significant financial and marketing resources, “big tobacco”

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is better positioned than small competitors like us to capture a larger share of the electronic cigarette market. We also compete against numerous other smaller manufacturers or importers of cigarettes. There can be no assurance that we will be able to compete successfully against any of our competitors, some of whom have far greater resources, capital, experience, market penetration, sales and distribution channels than us. If our major competitors were, for example, to significantly increase the level of price discounts offered to consumers, we could respond by offering price discounts, which could have a materially adverse effect on our business, results of operations and financial condition.

Sales of conventional tobacco cigarettes have been declining, which could have a material adverse effect on our business.

The overall U.S. market for conventional tobacco cigarettes has generally been declining in terms of volume of sales, as a result of restrictions on advertising and promotions, funding of smoking prevention campaigns, increases in regulation and excise taxes, a decline in the social acceptability of smoking, and other factors, and such sales are expected to continue to decline. In September 2014, CVS, a leading national drug store chain ceased selling tobacco products. If other national drug store chains also decide to cease selling tobacco products, cigarette sales could decline further. While the sales of vaporizers have been increasing over the last several years, the vaporizer and electronic cigarettes market is only developing and is a fraction of the size of the conventional tobacco cigarette market. A continual decline in cigarette sales may adversely affect the growth of the vaporizer and electronic cigarette market, which could have a material adverse effect on our business, results of operations and financial condition.

If we are subject to further intellectual property litigation or if the present suit (see “Legal Proceedings” contained in this prospectus) becomes actively litigated, we may incur substantial additional costs which will adversely affect our results of operations.

The cost to prosecute infringements of our intellectual property or the cost to defend our products against patent infringement or other intellectual property litigation by others could be substantial. We cannot assure you that:

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pending and future patent applications will result in issued patents;

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patents we own or which are licensed by us will not be challenged by competitors;

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the patents will be found to be valid or sufficiently broad to protect our technology or provide us with a competitive advantage; and

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we will be successful in defending against current and future patent infringement claims asserted against our products as described in the next risk factor.

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Both the patent application process and the process of managing patent disputes can be time consuming and expensive. In addition, changes in the U.S. patent laws could prevent or limit us from filing patent applications or patent claims to protect our products and/or technologies or limit the exclusivity periods that are available to patent holders. In September 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law and includes a number of significant changes to U.S. patent law, including the transition from a “first-to-invent” system to a “first-to-file” system and changes to the way issued patents are challenged. These changes may favor larger and more established companies that have more resources than we do to devote to patent application filing and prosecution. The U.S. Patent and Trademark Office issued new regulations effective March 16, 2013 to administer the Leahy-Smith Act. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will ultimately have on the cost of prosecuting our patent applications, our ability to obtain patents based on our discoveries and our ability to enforce or defend our issued patents. However, it is possible that in order to adequately protect our patents under the “first-to-file” system, we will have to allocate significant additional resources to the establishment and maintenance of a new patent application process designed to be more streamlined and competitive in the context of the new “first-to-file” system, which would divert valuable resources from other areas of our business. In addition to pursuing patents on our technology, we have taken steps to protect our intellectual property and proprietary technology by entering into confidentiality agreements and intellectual property assignment agreements with our employees, consultants, and corporate partners. Such agreements may not be enforceable or may not provide meaningful protection for our trade secrets or other proprietary

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information in the event of unauthorized use or disclosure or other breaches of the agreements, and we may not be able to prevent such unauthorized disclosure. Monitoring unauthorized disclosure is difficult, and we do not know whether the steps we have taken to prevent such disclosure are, or will be, adequate.

If a third party asserts that we are infringing on its intellectual property, whether successful or not, it could subject us to costly and time-consuming litigation or require us to obtain expensive licenses, and our business may be adversely affected.

Although we have filed patent applications, we do not own any patents relating to our vaporizers and electronic cigarettes. The vaporizer and electronic cigarette industry is nascent and third parties may claim patent rights over one or more types of vaporizers and electronic cigarettes. For example, Ruyan Investment (Holdings) Limited, which we refer to as “Ruyan”, a Chinese company, has made certain public claims as to their ownership of patents relating to our products and has filed a number of separate lawsuits against us. We and Ruyan settled the first lawsuit, and another lawsuit has been stayed along with other patent infringement lawsuits filed by Ruyan against other defendants pending the results of an inter parties reexamination requested by one of the defendants in the other lawsuits. Additionally, in 2014, Fontem Ventures, B.V. and Fontem Holdings 1 B.V. (the successors to Ruyan) filed three separate lawsuits against the Company alleging that we infringed on their patents. All of the above referenced cases filed by Fontem have been consolidated. The parties are currently in preliminary settlement discussions with mediation and pre-trial dates are upcoming. For a description of Fontem’s lawsuits against us, please see the section titled “ Legal Proceedings ” contained in this prospectus. Fontem’s lawsuits as well as any other third party lawsuits alleging our infringement of patents, trade secrets or other intellectual property rights could cause us to do one or more of the following:

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stop selling products or using technology that contains the allegedly infringing intellectual property;

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incur significant legal expenses;

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cause our management to divert substantial time to our defenses;

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pay substantial damages to the party whose intellectual property rights we may be found to be infringing;

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indemnify distributors and customers;

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redesign those products that contain the allegedly infringing intellectual property; or

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attempt to obtain a license to the relevant intellectual property from third parties, which may not be available to us on reasonable terms or at all.

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Third party lawsuits alleging our infringement of patents, trade secrets or other intellectual property rights could have a material adverse effect on our business, results of operations and financial condition.

If we cannot protect our intellectual property rights, we may be unable to compete with competitors developing similar technologies.

We believe that patents, trademarks, trade secrets and other intellectual property we use and are developing are important to sustaining and growing our business. We utilize third party manufacturers to manufacture our products in China, where the validity, enforceability and scope of protection available under intellectual property laws are uncertain and still evolving. Implementation and enforcement of Chinese intellectual property-related laws have historically been deficient, ineffective and hampered by corruption and local protectionism. Accordingly, we may not be able to adequately protect our intellectual property in China, which could have a material adverse effect on our business, results of operations and financial condition. Furthermore, policing unauthorized use of our intellectual property in China and elsewhere is difficult and expensive, and we may need to resort to litigation to enforce or defend our intellectual property or to determine the enforceability, scope and validity of our proprietary rights or those of others. Such litigation and an adverse determination in any such litigation, if any, could result in substantial costs and diversion of resources and management attention, which could harm our business and competitive position.

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If vaporizers continue to face intense media attention and public pressure, our operations may be adversely affected.

Since the introduction of electronic cigarettes and vaporizers, certain members of the media, politicians, government regulators and advocate groups, including independent medical physicians, have called for an outright ban of all electronic cigarettes and vaporizers, pending regulatory review and a demonstration of safety. A partial or outright ban would have a material adverse effect on our business, results of operations and financial condition and we may have to shut down our operations in the locations implemented any such ban.

If we fail to retain our key personnel, we may not be able to achieve our anticipated level of growth and our business could suffer.

Our future depends, in part, on our ability to attract and retain key personnel and the continued contributions of our executive officers, each of whom may be difficult to replace. In particular, Jeffrey Holman, our Chief Executive Officer, Gregory Brauser, our President, Gina Hicks, our Chief Financial Officer, and Christopher Santi, our Chief Operating Officer, are important to the management of our business and operations and the development of our strategic direction. The loss of the services of any of these officers and the process to replace any key personnel would involve significant time and expense and may significantly delay or prevent the achievement of our business objectives.

We may experience product liability claims in our business, which could adversely affect our business.

The tobacco industry in general has historically been subject to frequent product liability claims. As a result, we may experience product liability claims from the marketing and sale of electronic cigarettes. Any product liability claim brought against us, with or without merit, could result in:

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liabilities that substantially exceed our product liability insurance, which we would then be required to pay from other sources, if available;

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an increase of our product liability insurance rates or the inability to maintain insurance coverage in the future on acceptable terms, or at all;

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damage to our reputation and the reputation of our products, resulting in lower sales;

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regulatory investigations that could require costly recalls or product modifications;

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litigation costs; and

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the diversion of management’s attention from managing our business.

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Any one or more of the foregoing could have a material adverse effect on our business, results of operations and financial condition.

If we experience product recalls, we may incur significant and unexpected costs and our business reputation could be adversely affected.

We may be exposed to product recalls and adverse public relations if our products are alleged to cause illness or injury, or if we are alleged to have violated governmental regulations. A product recall could result in substantial and unexpected expenditures and could harm our reputation, which could have a material adverse effect on our business, results of operations and financial condition. In addition, a product recall may require significant management time and attention and may adversely impact on the value of our brands. Product recalls may lead to greater scrutiny by federal or state regulatory agencies and increased litigation, which could have a material adverse effect on our business, results of operations and financial condition.

If we experience a high amount of product exchanges, returns and warranty claims, our business will be adversely affected.

If we are unable to maintain an acceptable degree of quality control of our products, we will incur costs associated with the exchange and return of our products as well as servicing our customers for warranty claims. In addition, customers may require us to take back unsold products which we may be unable to resell. Any of the foregoing on a significant scale may have a material adverse effect on our business, results of operations and financial condition.

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If the economy declines, such decline may adversely affect the demand for our products.

Vaporizers and electronic cigarettes may be regarded by users as a novelty item and expendable as such demand for our products may be extra sensitive to economic conditions. When economic conditions are prosperous, discretionary spending typically increases; conversely, when economic conditions are unfavorable, discretionary spending often declines. Any significant decline in economic conditions that affects consumer spending could have a material adverse effect on our business, results of operations and financial condition.

Generating foreign sales will result in additional costs and expenses and may expose us to a variety of risks.

Generating sales of our products in foreign jurisdictions will require us to incur additional costs and expenses. Furthermore, our entry into foreign jurisdictions may expose us to various risks, which differ in each jurisdiction, and any of such risks may have a material adverse effect on our business, financial condition and results of operations. Such risks include the degree of competition, fluctuations in currency exchange rates, difficulty and costs relating to compliance with different commercial, legal, regulatory and tax regimes and political and economic instability.

Our future growth and profitability will depend in large part upon the effectiveness of our marketing and advertising expenditures.

Our future growth and profitability will depend in large part upon our media performance, including our ability to:

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create greater awareness of our products and stores;

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identify the most effective and efficient level of spending in each market and specific media vehicle;

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determine the appropriate creative message and media mix for advertising, marketing, and promotional expenditures; and

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effectively manage marketing costs (including creative and media).

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Our planned marketing expenditures may not result in increased revenue. If our media performance is not effective, our future results of operations and financial condition will be adversely affected.

If we are unable to promote and maintain our brands, our results of operations will be adversely affected.

We believe that establishing and maintaining the brand identities of our products is a critical aspect of attracting and expanding a large customer base. Promotion and enhancement of our brands will depend largely on our success in continuing to provide high quality products. If our customers and end users do not perceive our products to be of high quality, or if we introduce new products or enter into new business ventures that are not favorably received by our customers and end users, we will risk diluting our brand identities and decreasing their attractiveness to existing and potential customers.

Moreover, in order to attract and retain customers and to promote and maintain our brand equity in response to competitive pressures, we may have to increase substantially our financial commitment to creating and maintaining a distinct brand loyalty among our customers. If we incur significant expenses in an attempt to promote and maintain our brands, our business, results of operations and financial condition could be adversely affected.

If we cannot manage our vape stores as we grow, we may incur substantial operating losses and adversely affect our financial condition.

Our business model is focusing on expanding the number of vape stores beyond the 21 we presently operate. As we expand the number of vape stores and their location, it will be more difficult to manage them and our promotional costs will increase. None of our senior managers has experience in operating a significant number of retail stores in different locations. If we expand our vape stores beyond our capabilities, we may be materially and adversely affected.

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We rely on the efforts of third party agents to generate sales of our products, and loss of any such agents may be time consuming to replace.

We rely on the efforts of independent distributors to purchase and distribute our products to wholesalers and retailers. No single distributor currently accounts for a material percentage of our sales and we believe that should any of these relationships terminate we would be able to find suitable replacements and do so on a timely basis. However, any loss of distributors or our ability to timely replace any given distributor could have a material adverse effect on our business, financial condition and results of operations.

We rely, in part, on the efforts of independent salespersons who sell our products to distributors and major retailers and Internet sales affiliates to generate sales of products. No single independent salesperson or Internet affiliate currently accounts for a material percentage of our sales and we believe that should any of these relationships terminate we would be able to find suitable replacements and do so on a timely basis. However, any loss of independent sales persons or Internet sales affiliates or our ability to timely replace any one of them could have a material adverse effect on our business, financial condition and results of operations.

If we are unable to adapt to trends in our industry, our results of operations will be adversely affected.

We may not be able to adapt as the vaporizer and electronic cigarette industry and customer demand evolve, whether attributable to regulatory constraints or requirements, a lack of financial resources or our failure to respond in a timely and/or effective manner to new technologies, customer preferences, changing market conditions or new developments in our industry. Any of the failures to adapt for the reasons cited herein or otherwise could make our products obsolete and would have a material adverse effect on our business, financial condition and results of operations.

If our third party manufacturers produce unacceptable or defective products or do not provide products in a timely manner, our business will be adversely affected.

We depend on third party manufacturers for our electronic cigarettes, vaporizers and accessories. Our customers associate certain characteristics of our products including the weight, feel, draw, unique flavor, packaging and other attributes of our products to the brands we market, distribute and sell. Any interruption in supply, consistency of our products may adversely impact our ability to deliver our products to our wholesalers, distributors and customers and otherwise harm our relationships and reputation with customers, and have a materially adverse effect on our business, results of operations and financial condition.

Although we believe that several alternative sources for the components, chemical constituents and manufacturing services necessary for the production of our products are available, any failure to obtain any of the foregoing would have a material adverse effect on our business, results of operations and financial condition.

Because we rely on Chinese manufacturers to produce our products, we are subject to potential adverse safety and other issues.

The majority of our manufacturers are based in China. Certain Chinese factories and the products they export have recently been the source of safety concerns and recalls, which is generally attributed to lax regulatory, quality control and safety standards. Should Chinese factories continue to draw public criticism for exporting unsafe products, whether those products relate to our products or not we may be adversely affected by the stigma associated with Chinese production, which could have a material adverse effect on our business, results of operations and financial condition.

We expect that new products and/or brands we develop will expose us to risks that may be difficult to identify until such products and/or brands are commercially available.

We are currently developing, and in the future will continue to develop, new products and brands, the risks of which will be difficult to ascertain until these products and/or brands are commercially available. For example, we are developing new formulations, packaging and distribution channels. Any negative events or results that may arise as we develop new products or brands may adversely affect our business, financial condition and results of operations.

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If we are unable to manage our anticipated future growth, our business and results of operations could suffer materially.

Our business has grown rapidly during our limited operating history. Our future operating results depend to a large extent on our ability to successfully manage our anticipated growth. To manage our anticipated growth, including that arising from our recent merger with Vaporin, we believe we must effectively, among other things:

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hire, train, and manage additional employees;

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expand our marketing and distribution capabilities;

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increase our product development activities;

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add additional qualified finance and accounting personnel; and

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implement and improve our administrative, financial and operational systems, procedures and controls.

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We are increasing our investment in marketing and distribution channels and other functions to grow our business. We are likely to incur the costs associated with these increased investments earlier than some of the anticipated benefits and the return on these investments, if any, may be lower, may develop more slowly than we expect or may not materialize.

If we are unable to manage our growth effectively, we may not be able to take advantage of market opportunities or develop new products, and we may fail to satisfy product requirements, maintain product quality, execute our business plan or respond to competitive pressures, any of which could have a material adverse effect on our business, results of operations and financial condition.

We face competition from foreign importers who do not comply with government regulation which may result in the loss of customers and result in adverse effects to our results of operations.

We face competition from foreign sellers of electronic cigarettes and vaporizers that may illegally ship their products into the United States for direct delivery to customers. These market participants will not have the added cost and expense of complying with U.S. regulations and taxes and as a result will be able to offer their product at a more competitive price than us and potentially capture market share. Moreover, should we be unable to sell certain of our products during any regulatory approval process we have no assurances that we will be able to recapture those customers that we lost to our foreign domiciled competitors during any “blackout” periods, during which we are not permitted to sell our products. This competitive disadvantage may have a material adverse effect on our business, results of operations and our financial condition.

Information technology system failures or interruptions or breaches of our network security may interrupt our operations, subject us to increased operating costs and expose us to litigation.

At present we generate a portion of our sales through e-commerce sales on our websites. We manage our websites and e-commerce platform internally and as a result any compromise of our security or misappropriation of proprietary information could have a material adverse effect on our business, financial condition and results of operations. We rely on encryption and authentication technology licensed from third parties to provide the security and authentication necessary to effect secure Internet transmission of confidential information, such as credit and other proprietary information. Despite our implementation of security measures, all of our technology systems are vulnerable to damage, disability or failures due to hacking or physical theft, fire, power loss, telecommunications failure or other catastrophic events, as well as from internal and external security breaches, denial of service attacks, viruses, worms and other disruptive problems caused by hackers. If our technology systems were to fail, and we were unable to recover in a timely way, we could experience an interruption in our operations. Furthermore, if unauthorized access to or use of our systems were to occur, data related to our proprietary information and personal information of customers could be compromised. The occurrence of any of these incidents could have a material adverse effect on our business, financial condition and results of operations. To the extent that some of our reporting systems require or rely on manual processes, it could increase the risk of a breach. We may be

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required to expend significant capital and other resources to protect against security breaches or to minimize problems caused by security breaches. To the extent that our activities or the activities of others involve the storage and transmission of proprietary information, security breaches could damage our reputation and expose us to a risk of loss and/or litigation. Our security measures may not prevent security breaches. Our failure to prevent these security breaches may result in consumer distrust, expose us to litigation either of which would adversely affect our business, results of operations and financial condition.

Our results of operations could be adversely affected by currency exchange rates and currency devaluations.

Our functional currency is the U.S. dollar; substantially all of our purchases and sales are currently generated in U.S. dollars. However, our manufacturers and suppliers are located in China. The Chinese currency, the renminbi, has appreciated significantly against the U.S. dollar in recent years. Fluctuations in exchange rates between our respective currencies could result in higher production and supply costs to us which would have a material adverse effect on our results of operations if we are not willing or able to pass those costs on to our customers.

If we are unable to successfully integrate Vaporin and the acquisition of nine retail business operations, our future results of operations and financial condition may be materially and adversely affected.

We face a number of risks from our recently completed merger with Vaporin and the acquisition of retail business operations. The success of the merger and the acquisition of retail businesses depends, in large part, on our ability to realize the benefits from combining the businesses of Vapor and Vaporin, by reducing duplicative costs, maintaining customer relationships, successful management of existing and acquired retail store operations and not losing sales. To realize the anticipated benefits of the merger, we must successfully integrate the businesses of Vapor and Vaporin and continue to integrate their management teams and employees. This integration has been and will continue to be complex and time-consuming.

Potential difficulties we may encounter include, among others:

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unanticipated issues in integrating logistics, information, communications and other systems;

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integrating personnel from the companies while maintaining focus on providing a consistent, high quality level of service;

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integrating the systems in a seamless manner that minimizes any adverse impact on, suppliers, customers, employees and others;

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performance shortfalls as a result of the diversion of management’s attention from day-to-day operations caused by activities surrounding the completion of the merger and integration of the companies’ operations;

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potential unknown liabilities, liabilities that are significantly larger than anticipated, unforeseen expenses or delays associated with the merger, business acquisitions and the integration process;

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unanticipated changes in applicable laws and regulations;

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dealing with different corporate cultures; and

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complexities associated with managing the larger, combined business with expanding geographic locations.

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Some of these factors are outside of our control.

The Company has not completed a merger or acquisition comparable in size or scope to the Vaporin merger. Our failure to successfully integrate the operations of Vapor and Vaporin, and the acquired business operations, or otherwise to realize any of the anticipated benefits of the merger and acquisitions could cause an interruption of, or a loss of momentum in, the activities of the Company and could adversely affect its results of operations. The integration process maybe more difficult, costly or time-consuming than anticipated, which could cause our stock price to decline.

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As a result of the Vaporin merger and the acquisitions of retail businesses, we have recorded significant amounts of goodwill on our balance sheet, which could result in significant future impairment charges and negatively affect the Company’s future financial condition, results of operations and stock price.

Applicable acquisition accounting rules require that to the extent that the purchase price paid by us in the merger exceeds the net fair value of the Vaporin tangible and intangible assets and liabilities, Vapor will record such goodwill on its consolidated balance sheet. Goodwill is not amortized, but is tested for impairment at least annually. In testing goodwill for impairment, we will be required to analyze its future estimated operating results and cash flows. If the future operating results and cash flows of the Company do not improve in comparison to its performance in 2014, Vapor may incur significant impairment charges in the future. Any impairment charges will directly be treated as an expense and negatively affect the Company’s future financial results. Announcement of such impairment charges may also significantly reduce the price of Vapor’s common stock.

Risks Related to Government Regulation

Changes in laws, regulations and other requirements could adversely affect our business, results of operations or financial condition.

In addition to the anticipated regulation of our business by the FDA, our business, results of operations or financial condition could be adversely affected by new or future legal requirements imposed by legislative or regulatory initiatives, including, but not limited to, those relating to health care, public health and welfare and environmental matters. For example, in recent years, states and many local and municipal governments and agencies, as well as private businesses, have adopted legislation, regulations or policies which prohibit, restrict, or discourage smoking; smoking in public buildings and facilities, stores, restaurants and bars; and smoking on airline flights and in the workplace. At present, it is not clear if electronic cigarettes, which omit no smoke or noxious odors, are subject to such restrictions. Furthermore, some states and localities prohibit and others are prohibiting the sales of electronic cigarettes and vaporizers to minors. Other similar laws and regulations are currently under consideration and may be enacted by state and local governments in the future. If electronic cigarettes and vaporizers are subject to restrictions on smoking in public and other places, our business, operating results and financial condition could be materially and adversely affected. New legislation or regulations may result in increased costs directly for our compliance or indirectly to the extent such requirements increase the prices of goods and services because of increased costs or reduced availability. We cannot predict whether such legislative or regulatory initiatives will result in significant changes to existing laws and regulations and/or whether any changes in such laws or regulations will have a material adverse effect on our business and localities, results of operations or financial condition.

Restrictions on the public use of vaporizers and electronic cigarettes may reduce the attractiveness and demand for our products.

Certain states, cities, businesses, providers of transportation and public venues in the U.S. have already banned the use of vaporizers and electronic cigarettes, while others are considering banning their use. If the use of vaporizers and electronic cigarettes are banned anywhere the use of traditional tobacco burning cigarettes is banned, our products may lose their appeal as an alternative to traditional tobacco burning cigarettes, which may reduce the demand for our products and, thus, have a material adverse effect on our business, results of operations and financial condition.

Limitation by states on sales of vaporizers and electronic cigarettes may have a material adverse effect on our ability to sell our products.

On February 15, 2010, in response to a civil investigative demand from the Office of the Attorney General of the State of Maine, we voluntarily executed an assurance of discontinuance with the State of Maine, which prohibits us from selling electronic cigarettes in the State of Maine until such time as we obtain a retail tobacco license in the state. While suspending sales to residents of Maine is not material to our operations, other electronic cigarette companies have entered into similar agreements with other states, such as the State of Oregon. If one or more states from which we generate or anticipate generating significant sales bring actions to prevent us from selling our products unless we obtain certain licenses,

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approvals or permits and if we are not able to obtain the necessary licenses, approvals or permits for financial reasons or otherwise and/or any such license, approval or permit is determined to be overly burdensome to us then we may be required to cease sales and distribution of our products to those states, which would have a material adverse effect on our business, results of operations and financial condition.

The FDA has issued an import alert which has limited our ability to import certain of our products.

As a result of FDA import alert 66-41 (which allows the detention of unapproved drugs promoted in the U.S.), the U.S. Customs has from time to time temporarily and in some instances indefinitely detained products sent to us by our Chinese suppliers. If the FDA modifies the import alert from its current form which allows U.S. Customs discretion to release our products to us, to a mandatory and definitive hold we will no longer be able to ensure a supply of saleable product, which will have a material adverse effect on our business, results of operations and financial condition. We believe that FDA import alert will become less relevant to us as and when the FDA regulates electronic cigarettes and vaporizers under the Tobacco Control Act.

The application of the Prevent All Cigarette Trafficking Act and/or the Federal Cigarette Labeling and Advertising Act to vaporizers and/or electronic cigarettes would have a material adverse effect on our business.

At present, neither the Prevent All Cigarette Trafficking Act (which prohibits the use of the U.S. Postal Service to mail most tobacco products and which amends the Jenkins Act, which would require individuals and businesses that make interstate sales of cigarettes or smokeless tobacco to comply with state tax laws) nor the Federal Cigarette Labeling and Advertising Act (which governs how cigarettes can be advertised and marketed) apply to vaporizers and/or electronic cigarettes. The application of either or both of these federal laws to either vaporizers and/or electronic cigarettes could result in additional expenses, could prohibit us from selling products through the Internet and require us to change our advertising and labeling and method of marketing our products, any of which would have a material adverse effect on our business, results of operations and financial condition.

We have been named as defendants in litigation brought under California Proposition 65 which, if resolved adversely to us, could have a material adverse impact on our financial condition.

On June 22, 2015, the Center for Environment Health, as plaintiff, filed suit against a number of defendants including us, our wholly-owned subsidiary, the Vape Store, Inc., Vaporin and another wholly-owned subsidiary, Vaporin Florida, Inc. The lawsuit was filed in the Superior Court of the State of California, County of Alameda. The suit seeks relief under California Proposition 65 which makes it unlawful for businesses to knowingly and intentionally expose individuals in California to chemicals known to cause birth defects or other harm without providing clear and reasonable warnings. All of the defendants are alleged to have sold products containing significant quantities of nicotine in violation of Proposition 65. The plaintiff is seeking a civil penalty against these defendants in the amount of  $2,500 per day for each violation of Proposition 65, together with attorneys’ fees and costs.

The Company and its subsidiaries engaged counsel and intend to vigorously defend the allegations. Discovery commenced in November 2015. The Company believes that all of the products sold by Vapor Corp. have always contained an appropriate warning or no warning was required. The Vape Store, Inc. operates vape stores located in the states of Florida and Georgia, and has not, to the best of its current knowledge, sold any products into the State of California. We cannot assure you that we will prevail in this litigation. If the case is resolved adversely to us and we are the subject of substantial civil penalties, it could have a material adverse impact on our financial condition. Even if the litigation is dismissed or ultimately resolved in our favor, the cost of litigating could be substantial and adversely affect our financial condition.

We may face the same governmental actions aimed at conventional cigarettes and other tobacco products.

The tobacco industry expects significant regulatory developments to take place over the next few years, driven principally by the World Health Organization’s Framework Convention on Tobacco Control, or the FCTC. The FCTC is the first international public health treaty on tobacco, and its objective is to establish a global agenda for tobacco regulation with the purpose of reducing initiation of tobacco use and encouraging cessation. Regulatory initiatives that have been proposed, introduced or enacted include:

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the levying of substantial and increasing tax and duty charges;

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restrictions or bans on advertising, marketing and sponsorship;

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the display of larger health warnings, graphic health warnings and other labeling requirements;

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restrictions on packaging design, including the use of colors and generic packaging;

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restrictions or bans on the display of tobacco product packaging at the point of sale, and restrictions or bans on cigarette vending machines;

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requirements regarding testing, disclosure and performance standards for tar, nicotine, carbon monoxide and other smoke constituents levels;

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requirements regarding testing, disclosure and use of tobacco product ingredients;

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increased restrictions on smoking in public and work places and, in some instances, in private places and outdoors;

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elimination of duty free allowances for travelers; and

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encouraging litigation against tobacco companies.

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If vaporizers and/or electronic cigarettes are subject to one or more significant regulatory initiates enacted under the FCTC, our business, results of operations and financial condition could be materially and adversely affected.

Risks Related to Our Securities

The market price of our common stock has been and may continue to be volatile.

The market price of our common stock has been volatile, and fluctuates widely in price in response to various factors, which are beyond our control. The price of our common stock is not necessarily indicative of our operating performance or long-term business prospects. In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock. Factors such as the following could cause the market price of our common stock to fluctuate substantially:

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our quarterly operating and financial results;

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government regulation of our industry;

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the introduction of new products by our competitors;

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conditions in the electronic cigarette and tobacco industries;

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developments concerning proprietary rights; or

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litigation or public concern about the safety of our products.

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The stock market in general experiences from time to time extreme price and volume fluctuations. Periodic and/or continuous market fluctuations could result in extreme volatility in the price of our common stock, which could cause a decline in the value of our common stock. Price volatility may be worse if the trading volume of our common stock is low.

The volatility in our common stock price may subject us to securities litigation.

The market for our common stock is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities to us and could divert our management’s attention and resources from managing our operations and business.

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Future sales of our common stock may depress our stock price.

As of December 7, 2015, we had approximately 10.3 million shares of our common stock outstanding and restricted stock units, and warrants, and options that are exercisable into approximately 96.5 million shares of our common stock. Approximately 7.4 million of our outstanding shares are eligible for resale without restrictions. If any significant number of these shares are sold, such sales could have a depressive effect on the market price of our stock. The remaining shares are eligible, and some of the shares underlying the restricted stock units, and warrants and options upon issuance, will be eligible to be offered from time to time in the public market pursuant to registration statements we have filed and Rule 144 of the Securities Act of 1933, which we refer to as the “Securities Act”, and any such sale of these shares may have a depressive effect as well. We are unable to predict the effect, if any, that the sale of shares, or the availability of shares for future sale, will have on the market price of the shares prevailing from time to time. Sales of substantial amounts of shares in the public market, or the perception that such sales could occur, could depress prevailing market prices for the shares. Such sales may also make it more difficult for us to sell equity securities or equity-related securities in the future at a time and price, which we deem appropriate.

If our common continues to stock trade at prices below $1.00, we may not be able to maintain our Nasdaq listing.

On September 14, 2015, Vapor received a deficiency letter from the Nasdaq Listing Qualifications department (the “Staff”) notifying the Company that for the last 30 consecutive business days the Company’s common stock had closed below the minimum $1.00 per share bid price requirement for continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has been provided an initial period of 180 calendar days, or until March 12, 2016, to regain compliance with the bid price requirement. If, at any time before March 12, 2016, the closing bid price for the Company’s common stock is $1.00 or more for a minimum of 10 consecutive business days, the Staff will provide written notification to the Company that it has regained compliance with the bid price requirement. If the Company does not regain compliance with the bid price requirement by March 12, 2016, the Company may be eligible for an additional 180 calendar day compliance period provided that it meets the continued listing requirement for the market value of publicly held shares and all other initial listing standards, with the exception of the bid price requirement, and provides the Staff with written notice of its intention to cure the deficiency. If the Company does not regain compliance by March 12, 2016 or the termination of any subsequent compliance period, if applicable, the Staff will provide written notification to the Company that its common stock may be delisted.

However, if our common stock is delisted from Nasdaq, trading in our common stock could be conducted on the OTCQB or in what is commonly referred to as the “pink sheets.” If this occurs, a stockholder will find it more difficult to dispose of our common stock or to obtain accurate quotations as to the price of our common stock. Lack of any active trading market would have an adverse effect on a stockholder’s ability to liquidate an investment in our common stock easily and quickly at a price acceptable to the stockholder. It might also contribute to volatility in the market price of our common stock and could adversely affect our ability to raise additional equity or debt financing on acceptable terms or at all.

If Nasdaq were to delist our common stock from its exchange, your ability to make transactions in our common stock would be limited and may subject us to additional trading restrictions.

Should we fail to satisfy the continued listing requirements of Nasdaq, such as the minimum closing bid price requirement, our common stock may be delisted from Nasdaq. If Nasdaq delists our common stock, it is probable it will delist our Units (assuming that when our listing application is submitted to Nasdaq, such listing application is accepted), which will cause the Units to separate. Such a delisting would likely have a negative effect on the price of our common stock and would impair your ability to sell or purchase our common stock when you wish to do so. In the event of a delisting, we would take actions to restore our compliance with Nasdaq’s listing requirements, but we can provide no assurance that any such action taken by us would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq’s listing requirements.

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If the Nasdaq Capital Market does not maintain the listing of our securities for trading on its exchange, we could face significant material adverse consequences, including:

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a limited availability of market quotations for our securities;

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reduced liquidity with respect to our securities;

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our shares of common stock will be a “penny stock”, which will require brokers trading in our shares of common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our shares of common stock;

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a limited amount of news and analyst coverage for our company; and

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decreased ability to issue additional securities or obtain additional financing in the future.

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Therefore, it may be difficult for investor to sell any shares if they desire or need to sell them.

If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results. As a result, we could become subject to sanctions or investigations by regulatory authorities and/or stockholder litigation, which could harm our business and have an adverse effect on our stock price.

As a public reporting company, we are required to comply with the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the SEC, including periodic reports, disclosures and more complex accounting rules. As directed by Section 404 of Sarbanes-Oxley, the SEC adopted rules requiring public companies to include a report of management on a company’s internal control over financial reporting in their Annual Report on Form 10-K. Based on current rules, we are required to report under Section 404(a) of Sarbanes-Oxley regarding the effectiveness of our internal control over financial reporting. If we determine that we have material weaknesses, it may be necessary to make restatements of our consolidated financial statements and investors will not be able to rely on the completeness and accuracy of the financial information contained in our filings with the SEC and this could potentially subject us to sanctions or investigations by the SEC or other regulatory authorities or stockholder litigation.

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September 2015. Subsequent to September 30, 2015 the Company acquired six retail stores, four in Georgia, one in Tennessee and one in Alabama.

Online:    We believe that increasing use of online sales channels by our customers will affect our revenue and financial performance. The Company launched multi-channel web affiliate programs and continues to develop relationships with affiliate run vape-deal sites. We have added over a thousand items to our online product offerings.

Inventory Management:    Our revenue trends are affected by an evolving product acceptance and consumer demand. The transition to vaporizers and e-liquids products have impacted our wholesale and online sales and our financial performance. We are creating and offering new products to our wholesale and retail customers. Evolving product development and technology impacts our licensing and intellectual properties spending. We expect the transition to vaporizer and advanced technology products to continue and impact our operating results in the future.

Increased Competition:    National competitors’ launches of branded e-cigarette products during 2015 and 2014, have made it more difficult to compete on prices and to secure business. We expect increased e-cigarette product supply and downward pressure on prices to continue and impact our operating results in the future.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations set forth below under the headings “Results of Operations” and “Liquidity and Capital Resources” have been prepared in accordance with accounting principles generally accepted in the United States of America (“ GAAP ”) and should be read in conjunction with our consolidated financial statements and notes thereto contained herein. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our critical accounting policies and estimates, including identifiable intangible assets and goodwill, stock-based compensation, derivative liabilities and long-lived assets. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. If the Company’s current business strategy is not successful and the expected synergies resulting from the Company’s acquisition of Vaporin are not achieved, the Company may be required to take a partial or full impairment charge against its goodwill or other long-lived assets which arose from our recent merger transaction. Actual results may differ from these estimates under different assumptions and conditions.

While all accounting policies impact the financial statements, certain policies may be viewed as critical. Critical accounting policies are those that are both most important to the portrayal of financial condition and results of operations and that require management’s most subjective or complex judgments and estimates. Our management believes the policies that fall within this category are the policies on accounting for identifiable intangible assets and goodwill, stock-based compensation, derivative liabilities and long-lived assets.

On July 7, 2015, the Company filed an amendment to its Certificate of Incorporation to effectuate a one-for-five reverse stock split to its common stock and to increase its authorized common stock to 150,000,000 shares. The amendments were effective on July 8, 2015. All warrant, option, common stock shares and per share information included in the consolidated financial statements included in this prospectus gives effect to the 1 for 5 reverse split of the Company’s common stock effectuated on July 8, 2015.

Derivative Instruments

The Company accounts for free-standing derivative instruments and hybrid instruments that contain embedded derivative features in accordance with ASC Topic No. 815, “Derivative Instruments and Hedging Activities,” (“ ASC 815 ”) as well as related interpretations of this topic. In accordance with this topic, derivative instruments and hybrid instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that

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are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. The Company determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, giving consideration to all of the rights and obligations of each instrument.

The Company estimates fair values of derivative instruments and hybrid instruments using various techniques (and combinations thereof) that are considered to be consistent with the objective of measuring fair values. In selecting the appropriate technique, the Company considers, among other factors, the nature of the instrument, the market risks that it embodies and the expected means of settlement. For complex instruments, we utilize custom Monte Carlo simulation models. For less complex instruments, such as free-standing warrants, the Company generally uses the Binomial Lattice model or the Black-Scholes-Merton valuation model, adjusted for the effect of dilution, because it embodies all of the requisite assumptions (including trading volatility, estimated terms, dilution and risk free rates) necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques (such as the Binomial Lattice model or the Black-Scholes-Merton valuation model) are highly volatile and sensitive to changes in the trading market price of the Company’s common stock. Since derivative financial instruments are initially and subsequently carried at fair values, the Company’s net income (loss) going forward will reflect the volatility in these estimates and assumption changes. Under ASC 815, increases in the trading price of the Company’s common stock and increases in fair value during a given financial quarter result in the application of non-cash derivative expense. Conversely, decreases in the trading price of the Company’s common stock and decreases in trading fair value during a given financial quarter result in the application of non-cash derivative income.

Liquidity

The Company reported a net losses allocable to common stockholders of  $11,159,250 and $13,852,249 for the nine months ended September 30, 2015 and the year ended December 31, 2014, respectively. The Company had negative working capital of  $7,044,860 as of September 30, 2015. The Company expects to continue incurring losses before the impact of changes in fair value of derivatives for the foreseeable future and may need to raise additional capital to pursue its retail store expansion, satisfy warrant obligations, and to continue as a going concern. Management believes that the Company has access to capital resources through possible public or private equity offerings, debt financings, or other means. However, the Company’s outstanding warrants sold as part of our July 29, 2015 public offering will separate from the Series A Units on January 23, 2016. Each warrant may exercise without cash for the Black Scholes value defined in the warrant agreement. The number of shares common stock we issue in connection with the exercise of our warrants will be based on our common stock price as of the date of the exercise. The July 29, 2015 public offering underwriters required the Company to obtain stockholder approval to increase our authorized common shares to 500 million. The stockholders approved the increase in the Company’s authorized shares on October 16, 2015. If all of the warrants were exercised simultaneously at a time when the trading price of the Company’s common stock was below $0.17 per share, then the Company would not have sufficient authorized common stock to satisfy all the warrant exercises and it could be required to use cash to pay warrant holders. Since the Company cannot predict the future stock price and when the warrant holders will exercise warrants and sell the underlying common shares, management cannot predict if the Company will have sufficient cash resources to satisfy its obligation to the current warrant holders.

Results of Operations for the Nine Months ended September 30, 2015 Compared to the Nine Months ended September 30, 2014 and for the Year Ended December 31, 2014 Compared to the Year Ended December 31, 2013.

The Company’s retail sales for the nine months ended September 30, 2015 were generated from the operations of fourteen retail stores and one retail kiosk. Net retail sales for the nine months ended September 30, 2015 and 2014 were $2,486,516 and $0, respectively. The retail sales growth for the nine month period 2015 compared to the similar period in 2014 was primarily due to nine retail stores acquired from the March 4, 2015 Merger, and two stores opened in August and three stores acquired in September 2015. The Company opened nine retail kiosks in October 2014. As a result of the Company’s management focusing retail efforts on retail store expansion, eight of the nine retail kiosk were closed by May 2015.

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Wholesale and online sales, net of returns and allowances, for the nine months ended September 30, 2015 and 2014 were $4,872,553 and $13,547,792, respectively, a decrease of  $8,675,239 or approximately 64%. Wholesale and online sales, net of returns and allowances for the years ended December 31, 2014 and 2013 were $15,279,860 and $25,990,227, respectively, a decrease of  $10,710,369 or approximately 41.2%. The decreases in net sales are attributable to the continued decline in demand of our distributor e-cigarette category inventory, and returns of e-cigarette products and the termination of our television direct marketing campaigns for our Alternacig ® and VaporX ® brands in June 2015 which negatively impacted sales from our on-line channels. Wholesale sales were also unfavorably impacted by new national competitors’ launches of their own branded products during 2015 and 2014. In addition, sales decreased due to certain wholesale and distribution customers selling off their current inventory of electronic cigarette products and so they can transition to e-vapor products. We anticipate that the demand for e-vapor products will continue to increase, as users want products that have more advanced technology with higher performance and longer battery life. As a result, we have changed our product mix to include more e-vapor products, including premium USA made e-liquids, and have introduced innovative displays for our e-vapor products to expand our customer base.

Retail cost of goods sold for the nine months ended September 30, 2015 and 2014 were $948,432 and $0 respectively. The increase is attributed to the growth of sales generated from retail stores acquired and operated in 2015.

Wholesale and online cost of goods sold for the nine months ended September 30, 2015 and 2014 were $4,215,138 and $10,400,943, respectively, a decrease of  $6,185,806, or 59%. The decrease is primarily due to reduced wholesale and online revenue. Wholesale and online cost of goods sold for the years ended December 31, 2014 and 2013 was $14,497,254 and $16,300,333, respectively, a decrease of  $1,803,077, or approximately 11.1%. The decrease is primarily due to the overall decrease in sales, offset by write-downs of $1,834,619 in 2014 for obsolete and slow moving inventory that primarily consisted of e-cigarettes.

Selling, general and administrative expenses for the nine months ended September 30, 2015 and 2014 were $9,852,329 and $7,838,380, respectively, an increase of  $2,013,949 or approximately 26%. The increase was attributable to additional costs generated by the operations of the fourteen retail stores and eight retail kiosks during the nine months ended September 30, 2015. Payroll and employee related costs of  $4,027,120 and $2,069,234, respectively, for the nine months ended September 30, 2015 and 2014 increased by $1,957,886 due to headcount growth for the retail locations and severance packages for key employees. Depreciation and amortization expense increased by $334,138 to $349,301 from $15,163 for the nine months ended September 30, 2015 and 2014. Professional fees increased $264,232 to $2,352,163 from $2,087,931 in the nine months ended September 30, 2015 and 2014, respectively.

Selling, general and administrative expenses for the years ended December 31, 2014 and 2013 were $11,126,759 and $6,464,969, respectively, an increase of  $4,661,790 or approximately 72.1%. The increase is primarily attributable to increases in non-cash stock compensation expense of  $1,631,340 primarily attributable to the consulting agreement with Knight Global Services, professional fees of  $3,281,388 due to implementing the corporate actions we agreed to take in connection with the private placement of common stock we completed in October 2013, including registering the shares for resale with the SEC, reincorporating in the State of Delaware from the State of Nevada, effecting the 1-for-5 reverse stock split of our common stock and up-listing to The Nasdaq Capital Market, costs of  $576,138 incurred in connection with the initiation and termination of the previously contemplated acquisition of International Vapor Group, Inc.’s online, wholesale and retail operations, consulting and recruiting fees of  $882,590 related to the development of the Emagine Vapor™ retail kiosk and store distribution channel, and costs incurred in connection with the merger of Vaporin, Inc. We also incurred additional filing and listing fees related to our up-listing to The Nasdaq Capital Market, business insurance due to the increases in coverage limits and increases in travel due to increased presence at trade shows and conferences, net of decreased personnel costs attributable to decreased payroll net of the accrued severance related to the resignation of our former Chief Executive Officer, merchant card processing fees due to lower transaction volumes.

Retail kiosk closing costs were $719,972 for the nine months ended September 30, 2015. A loss on the disposal of assets of  $478,729 was recognized from the closure of seven mall kiosks during 2015 and $241,243 of exit costs were incurred for non-cancellable leases and license obligations in the nine months ended September 30, 2015.

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Advertising expense was approximately $273,663 and $1,815,450 for the nine months ended September 30, 2015 and 2014, respectively, a decrease of  $1,541,787 or approximately 85%. The expense reduction was due the suspension of internet advertising and television direct marketing campaign for our Alternacig ® and VaporX ® brands, and reductions in print advertising programs, participation at trade shows, and other advertising campaigns.

Advertising expense for the years ended December 31, 2014 and 2013 was $2,374,329 and $2,264,807, respectively, an increase of  $109,522 or 4.8%. During the year ended December 31, 2014, we decreased our Internet advertising and television direct marketing campaign for our Alternacig brand, increased our print advertising programs, participation at trade shows, initiated several new marketing campaigns in which we sponsored several music concerts and we continued various other advertising campaigns.

Net other income and expenses of  $35,559,236 for the nine months ended September 30, 2015 include a $47,405,025 non-cash gain from the change in the fair value of derivatives, $5,279,003 of costs associated with the underwriting of our July 29, 2015 public offering, stock base expense of  $3,871,309 incurred in connection with the Waiver agreement, $977,938 of amortization of deferred debt discounts and financing costs, and $1,544,044 of loss on debt extinguishment, interest expense of  $181,994, offset by $8,499 of interest income. The decrease in the trading price of the Company’s common stock at September 30, 2015 directly decreased the trading fair value of derivatives resulting in a non-cash gain of  $47,405,205 from the change in the fair value of derivatives for the nine months ended September 30, 2015. Net other income and expenses of  $65,723 for the nine months ended September 30, 2014 included interest expense.

Net other expenses for the years ended December 31, 2014 and 2013 was $366,433 and $683,558, respectively, a decrease of  $317,125. Included in other expense is interest expense which was $348,975 and $383,981, for the years ended December 31, 2014 and 2013 respectively, a decrease of  $35,006 or 9.1%. The decrease in interest expense was attributable to lower amounts of outstanding debt throughout 2014 compared to 2013. In addition, the Company incurred an induced conversion expense during the year ended December 31, 2013 of  $299,577 related to the reduction in the conversion price for the $350,000 Senior Convertible Notes and $75,000 Senior Convertible Notes in order to induce the holders to convert the notes. Such inducement did not reoccur in 2014.

Income tax expense for the nine months ended September 30, 2015 and 2014 was $0 and $767,333, respectively. Income tax expense (benefit) for the years ended December 31, 2014 and 2013 was an expense of  $767,333 and a tax benefit of  $524,791, respectively, an increase of  $1,292,124 or 246.2%. The Company determined, based on the weight of the available evidence, that a valuation allowance of  $5,695,446 (or 100% of the Company’s net deferred tax assets) is required at December 31, 2014, which is the cause of the significant increase in income tax expense compared to the year ended December 31, 2013. At December 31, 2013, the Company had determined that a valuation allowance against its net deferred tax assets was not necessary and recorded an income tax benefit.

A non-cash deemed dividend of  $38,068,021 was recognized in connection with the public offering of Series A Unit preferred stock and warrants on July 29, 2015. No non-cash dividend were deemed or recognized in 2014 or 2013.

Liquidity and Capital Resources

Our net cash used in operating activities of  $10,621,161 for the nine months ended September 30, 2015 resulted from our net income of  $26,908,771 offset by non-cash adjustments of  $37,891,854 plus $361,922 generated from changes in operating assets and liabilities. Our net cash used in operating activities of $4,698,822 for the nine months ended September 30, 2014 resulted from our net loss of  $7,340,038 and non-cash adjustments of  $2,026,088 plus $615,128 generated from changes in operating assets and liabilities.

Our net cash used in operating activities was $6,290,997 and $4,120,152 for the years ended December 31, 2014 and 2013, respectively, an increase of  $2,170,845. Our net cash used in operating activities for the year ended December 31, 2014 resulted primarily from our net losses, purchases of new inventories to meet future customer demand, and changes in accounts receivable, prepaid expenses, accounts payable, accrued expenses and due from merchant credit card processor, which are attributable to our efforts to accommodate anticipated future sales growth.

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The net cash used in investing activities of  $65,596 for the nine months ended September 30, 2015 is due to acquisition of retail stores of  $454,393, purchases of property and equipment of  $194,766 and $20,000 of tradenames, offset by the collection of a $467,095 loan receivable and $136,468 of cash received in connection with the March 4, 2015 merger with Vaporin. The net cash used in investing activities of $613,278 for the nine months ended September 30, 2014 is due to a loan receivable of  $512,207 and $101,071 of property and equipment purchase.

The net cash used in investing activities was $1,077,505 and $14,779 for the years ended December 31, 2014 and 2013, respectively. Our net cash used in investing activities for the year ended December 31, 2014 resulted primarily from entering into loans receivable with International Vapor Group, Inc. and Vaporin and for purchases of property and equipment utilized in connection with the opening of eight retail kiosks.

The cash provided by financing activities of  $40,785,676 for the nine months ended September 30, 2015 is due to proceeds of  $41,378,227 from the July 29, 2015 public offering of Series A Units, net proceeds of  $2,941,960 from a private placement of common stock and warrants less $196,250 of offering costs, net proceeds of  $1,662,500 from the issuance of convertible debenture, and $350,000 of loan proceeds from Vaporin offset by the debt repayments of  $1,750,000 of convertible debentures, and $1,250,000 of senior notes payables to related parties. $1,000,000 of notes payable to related party, $567,000 of convertible notes payable, $750,000 of a term loan payable, and $33,761 of a capital lease obligation. The cash provided by financing activities of  $414,549 for the nine months ended September 30, 2014 is due to proceeds of $1,000,000 from the issuance of a note payable to a related party, and proceeds from the exercise of stock options offset the debt repayments of  $478,847 of term loan payable and payment of  $109,104 offering costs.

The net cash provided by financing activities was $1,269,481 and $10,528,737 for the years ended December 31, 2014 and 2013, respectively, a decrease of  $9,259,256. The financing activities for the year ended December 31, 2014 include the proceed from the Company’s sale of  $1,250,000 Senior Convertible Notes entered into in November 2014, $1,000,000 Loan Payable to Related Party entered into in December 2014, and the $1,000,000 Term Loan entered into in September 2014 and proceeds from the exercise of stock options net of principal repayments under the $750,000 and $1,000,000 Term Loans and principle repayments of capital lease obligations.

In the ordinary course of our business, we enter into purchase orders for components and finished goods, which may or may not require vendor deposits and may or may not be cancellable by either party. At September 30, 2015 and December 31, 2014 and December 31, 2013, we had $392,161, $319,563 and $782,363 in vendor deposits, respectively, which are included in prepaid expenses and vendor deposits on the consolidated balance sheets included elsewhere in this report. At September 30, 2015 and December 31, 2014, we do not have any material financial guarantees or other contractual commitments with these vendors that are reasonably likely to have an adverse effect on liquidity.

Our cash balances are kept liquid to support our growing acquisition and infrastructure needs for operational expansion. The majority of our cash is concentrated in one large financial institution, Fifth Third Bank.

The Company reported a net loss allocable to common stockholders of  $11,159,250 for the nine months ended September 30, 2015 and had negative working capital of  $7,044,860 as of September 30, 2015. As of December 8, 2015 the Company had approximately $28 million of cash. The Company expects to continue incurring losses before the impact of changes in the fair value of derivatives for the foreseeable future and may need to raise additional capital to pursue its retail store expansion, satisfy convertible equity obligations, and to continue as a going concern. In order to continue expanding retail operations and satisfy convertible equity obligations, the Company may need to raise additional funds through public or private equity offerings, debt financings, or other means. Management believes that the Company has access to capital resources through possible public or private equity offerings, debt financings, or other means, but there can be no assurance that additional funds will be available. The Company currently anticipates that its cash and cash equivalents will be sufficient to support operations for at least twelve months subject to warrant obligations discussed in the following paragraph.

The Company’s outstanding warrants sold as part of our July 29, 2015 public offering will separate from the Units on January 23, 2016. Each Series A Warrant may be exercised without cash payment for the

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Black Scholes value defined in the warrant agreement. The number of shares of common stock we issue in connection with the exercise of our warrants will be based on our common stock price as of the date of the exercise. The July 29, 2015 public offering underwriters required us to obtain stockholder approval to increase our authorized common shares to 500 million. The stockholders approved the common share increase on October 16, 2015. If all of our Series A Warrants were exercised simultaneously when our common stock traded below $0.17 per share, we would not have sufficient authorized common stock and we could be required to use our cash to pay warrant holders. The Exchange Offer will preserve our working capital through the elimination of the potential cash payments related to the Series A Warrants included in the Units and help avoid uncertainty regarding the Company’s capital structure due to volatility in the market price of our common stock. Because we cannot predict the success of the Exchange Offer or our future stock, we cannot predict if the Company will have sufficient cash resources to satisfy our obligation to the current Series A Warrant holders.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Seasonality

We do not consider our business to be seasonal.

Inflation and Changing Prices

Neither inflation nor changing prices for the nine months ended September 30, 2015 had a material impact on our operations.

Non-GAAP — Financial Measure

The following discussion and analysis includes both financial measures in accordance with GAAP, as well as a non-GAAP financial measure. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternative to, net income, operating income, and cash flow from operating activities, liquidity or any other financial measures. Non-GAAP financial measures may not be indicative of the historical operating results of the Company nor are they intended to be predictive of potential future financial results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP.

We believe that the Company’s management and stockholders benefit from referring to the following non-GAAP financial measure in planning, forecasting, and analyzing future periods. Our management uses this non-GAAP financial measure in evaluating its financial and operational decision making and as a means of evaluating period to period comparison. The Company’s management uses and relies on the following non-GAAP financial measure:

We define Adjusted EBITDA as net loss allocable to common stockholders before interest expense, income taxes, depreciation and amortization, stock-based compensation, non-cash change in fair value of derivatives, non-recurring acquisition costs, offering restructuring, or other expenses, loss on debt extinguishment, loss on sale or abandonment of assets, and goodwill impairment, if any. The Company’s management believes Adjusted EBITDA is an important measure of our operating performance because it allows management, investors and analysts to evaluate and assess our core operating results from period to period after removing the impact of acquisition and offering related costs, debt extinguishment, and other items of a non-operating nature that effect comparability. Our management recognizes that Adjusted EBITDA has inherent limitations because of the excluded items.

We have included a reconciliation of our non-GAAP financial measure to the most comparable financial measure calculated in accordance with GAAP. We believe that providing the non-GAAP financial measure, together with the reconciliation to GAAP, helps investors make comparisons between the Company and other companies. In making any comparisons to other companies, investors need to be aware

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that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measures and the corresponding GAAP measure provided by each company under applicable SEC rules. The following table presents a reconciliation of adjusted EBITDA to unaudited income (loss) from operations allocable to common stockholders, a GAAP financial measure:

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retention “atmosphere” created by the stores. We are also expanding our web presence and customer direct phone center operations that work closely to drive consumer sales. Our distribution sales continue to be a significant part of our operations and we anticipate regrowth as we have adjusted towards vaporizers in addition to our e-cigarette brands.

Vaporizers and Electronic Cigarettes

“Vaporizers” and “electronic cigarettes,” or “e-cigarettes,” are battery-powered products that enable users to inhale nicotine vapor without smoke, tar, ash, or carbon monoxide. Electronic cigarettes look like traditional cigarettes and, regardless of their construction are comprised of three functional components:

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a mouthpiece, which is a small plastic cartridge that contains a liquid nicotine solution;

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the heating element that vaporizes the liquid nicotine so that it can be inhaled; and

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the electronics, which include: a lithium-ion battery, an airflow sensor, a microchip controller and an LED, which illuminates to indicate use.

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When a user draws air through the electronic cigarette and/or vaporizer, the air flow is detected by a sensor, which activates a heating element that vaporizes the solution stored in the mouthpiece/cartridge, the solution is then vaporized and it is this vapor that is inhaled by the user. The cartridge contains either a nicotine solution or a nicotine free solution, either of which may be flavored.

Our Vaporizers and Electronic Cigarettes

Vaporizers feature a tank or chamber, a heating element and a battery. The vaporizer user fills the tank with e-liquid or the chamber with dry herb or leaf. The vaporizer battery can be recharged and the tank and chamber can be refilled.

We also offer disposable electronic cigarettes in multiple sizes, puff counts, styles, flavors and nicotine strengths; rechargeable electronic cigarettes that use replaceable cartridges (also known as “atomizers or cartomizers”), and rechargeable vaporizers for use with either electronic cigarette solution (“e-liquid”) or dry herbs or leaf. Disposable electronic cigarettes feature a one-piece construction that houses all the components and is utilized until the nicotine or nicotine free solution is depleted. Rechargeable electronic cigarettes feature a rechargeable battery and replaceable cartridge (also known as an “atomizer or cartomizer”). The atomizers or cartomizers are changed when the solution is depleted from use.

Our Brands

We sell our vaporizers, electronic cigarettes and e-liquids under several different brands, including Emagine Vapor™, Krave ® , Fifty-One ® (also known as Smoke 51), Vapor X ® , Stix ® and Alternacig ® brands. We also design and develop private label brands for our distribution customers. Our in-house engineering and graphic design team’s work to provide aesthetically pleasing, technologically advanced affordable vaporizers and e-cigarette options. We are in the process of preparing to commercialize additional brands which we intend to market to new customers and demographics.

Our Improvements and Product Development

We have developed and trademarked or are preparing to commercialize additional products. We include product development expenses as part of our operating expenses. We currently own no patents which are material to our business. We have a number of patent applications pending in the United States including those described below. There is no assurance that we will be awarded patents for of any of these pending patent applications.

Flavor Profiles

We are developing new flavor profiles that are distinct to our brands. We believe that as the vaporizer and electronic cigarette industry matures, users of vaporizers and electronic cigarettes will develop, if they have not already, preferences for the product based not only on their quality, ability to successfully deliver nicotine, battery capacity, and vapor volume they generate, but on taste and flavor, like smokers do with their preferred brand of conventional tobacco cigarettes.

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Soft Tip Filters

We have a patent pending for a soft-tip electronic cigarette filter, which more closely resembles the tactile experience of a conventional tobacco cigarette in a user’s mouth. To date electronic cigarettes have been made of metal and hard plastic and do not offer users the same malleable feel as the cellulose filters of conventional tobacco cigarettes.

Electronic Cigarette Air Flow Sensor Patent

We have a patent pending on a new configuration for the airflow sensors currently used in electronic cigarettes. The new configuration will allow the battery to be sealed to enhance the reliability and performance of the electronic cigarette. There is no assurance that we will be awarded a patent for this configuration.

Vaporizer Biometric Fingerprint Lock Sensor Patent

We have a patent pending for a biometric fingerprint lock sensor that can be used in vaporizers. The biometric fingerprint lock sensor will allow the owner of the vaporizer to keep the device locked and turned off unless the authorized user unlocks the device via fingerprint scan, protecting the device from use by another individual. This technology may be used to protect against minors being able to turn on the device and will also deem the devices unusable in the event the device is lost or stolen. There is no assurance that we will be awarded a patent for this technology.

Our Kits and Accessories

Our vaporizer and electronic cigarettes are available in kits that contain everything a user needs to begin enjoying their “vaping” experience. In addition to kits we sell replacement parts including batteries, refill cartridges or cartomizers that contain the liquid solution, atomizers, tanks and e-liquids. Our refill cartridges and e-liquids are available in various assorted flavors and nicotine levels (including 0.0% nicotine). In addition to our electronic cigarette and vaporizer products we sell an assortment of accessories, including various types of chargers (including USB chargers), carrying cases and lanyards.

The Market for Vaporizers and Electronic Cigarettes

We market our vaporizers and electronic cigarettes as an alternative to traditional tobacco cigarettes and cigars. We offer our products in multiple nicotine strengths, flavors and puff counts. Because vaporizers and electronic cigarettes offer a “smoking” experience without the burning of tobacco leaf, vaporizers and electronic cigarettes offer users the ability to satisfy their nicotine cravings without smoke, tar, ash or carbon monoxide. In many cases vaporizers and electronic cigarettes may be used where tobacco-burning cigarettes may not. Vaporizers and electronic cigarettes may be used in some instances where for regulatory or safety reasons tobacco burning cigarettes may not be used. However, certain states, cities, businesses, providers of transportation and public venues in the U.S. have already banned the use of vaporizers and electronic cigarettes, while others are considering banning the use of vaporizers and electronic cigarettes. We cannot provide any assurances that the use of vaporizers and electronic cigarettes will be permitted in places where traditional tobacco burning cigarette use is banned. See the Risk Factor on page 20.

According to the U.S. Centers for Disease Control and Prevention, in 2013, an estimated 42.1 million people, or 17.8% of adults, in the United States smoke cigarettes. In 2013, about 17.8% of adults who smoke traditional tobacco cigarettes had used electronic cigarettes, up from about 10% in 2010, according to the U.S. Centers for Disease Control and Prevention. Annual sales of electronic cigarettes in the United States were estimated to increase to $1.7 billion in 2014 from $1 billion in 2013. Annual sales of traditional tobacco cigarettes, according to industry estimates, were $80 billion in 2012.

Advertising

Currently, we advertise our products primarily on the Internet, through trade magazine ads and through point of sale materials and displays at retail locations. We also attempt to build brand awareness through innovative social media marketing activities, price promotions, in-store and on premise promotions, slotting fees (i.e., fees payable based on the number of stores at which our products are carried and sold),

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public relations and trade show participation. Our advertising expense as a percentage of sales for the years ended December 31, 2014 and 2013 has been approximately 15.5% and 8.8%, respectively; for the nine months ended September 30, 2015, this decreased to 3.7%. We intend to continue to strategically expand our advertising activities in 2015 to gain editorial coverage for our brands. Some of our competitors promote their brands through print media and television commercials, and through celebrity endorsements, and have substantial resources to devote to such efforts. We believe that our and our competitors’ efforts have helped increase our sales, our product acceptance and general industry awareness.

Distribution and Sales

We offer our vaporizers and electronic cigarettes and related products through our vape stores, our websites, a retail kiosk, retail channels through our direct sales force, and through third party wholesalers, retailers and value-added resellers. Retailers of our products include small-box discount retailers, big-box retailers, gas stations, drug stores, convenience stores, tobacco shops and kiosk locations in shopping malls throughout the United States. We previously offered our vaporizers and electronic cigarettes and related products through our direct response television marketing efforts.

Vapor sells directly to consumers through twenty company owned retail vape stores. Our management believes that consumers are shifting towards vape shops for an enhanced experience. This enhanced experienced is derived from the greater variety of products at the stores, the knowledgeable staff and the social atmosphere. Vapor anticipates a significant portion of future revenue will come from the retail stores.

We also offer our products online through our websites including www.vapor-corp.com . The contents of this website are not incorporated by reference into this prospectus. Our strategy is to increase our online sales by expanding our presence through additional Vapor websites and enhancing the overall online experience for consumers.

When first introduced to the U.S. market, electronic cigarettes were predominantly sold online. In the past year, brick and mortar sales of electronic cigarettes and vaporizers have eclipsed the on-line sales volumes in the U.S. market. Tobacco products, most notably cigarettes are currently sold in approximately 400,000 retail locations. We believe that future growth of vaporizers and electronic cigarettes is dependent on either higher volume, lower margin sales channels, like the broad based distribution network through which cigarettes are sold or through Company-owned stores. Thus, we are focusing on growing our retail distribution reach by opening retail stores and entering into distribution agreements with large and established value added resellers. We currently have established relationships with several large retailers and national chains and in connection therewith we have agreed to pay slotting fees based on the number of stores our products will be carried in. These existing relationships are “at-will” meaning that either party may terminate the relationship for any reason or no reason at all. We believe that these higher volume lower margin opportunities are critical towards broadening the reach and appeal of vaporizers and electronic cigarettes and we believe that as vaporizers and electronic cigarettes become more widely known and available, the market for our products will grow. In 2015, we have closed eight of our nine kiosks and are focusing on acquiring and developing the vape stores in Florida and the Southeast. In addition, we are in the process of launching a franchise program, although we cannot assure you this program will be successful.

Distribution of our Products in Canada

Under our private label production and supply agreement with Spike Marks Inc./Casa Cubana, or “Spikes”, we agreed to produce and supply Spikes with such quantities of our electronic cigarettes bearing their trademark and other brand attributes for resale within Canada. For the years ended December 31, 2014 and 2013, we had sales for distribution in Canada of  $2,912,525 and $3,847,310, respectively. The last sales order received from Spikes was in February 2015. In April 2015, we received a notice from Spikes that we had breached the agreement and a subsequent notice of termination. Although we refute Spike’s allegations and believe we are owed money by them, there is no assurance that we will not be required to pay them money nor recover any of the amounts we believe we are due in accordance with the agreement. We are currently selling our products to another distributor in Canada under an oral agreement.

Business Strategy

We believe and are seeing in our current stores that there is a large consumer demand centered on the vaporizer products and the “atmosphere” created by the vape stores. Additionally, our business strategy

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leverages our ability to design market and develop multiple vaporizer and e-cigarette brands and to bring those brands to market through our multiple distribution channels.

We believe we were among the first distributors of vaporizers and electronic cigarettes in the U.S. Thus, we believe that our reputation and our experience in the electronic cigarette industry, both from a development, customer service and production perspective give us an advantage in attracting customers, specifically re-sellers who require ongoing support, reliable and consistent supply chains and mechanisms in place for supporting broad based distributors and big box retailers.

Moreover, we believe that our history with our suppliers, including the volume of products we source, gives us an advantage over other market participants as it relates to favorable pricing, priority as to inventory supply and delivery and first access to new products, including first access to next generation electronic cigarette products and technology.

Our goal is to achieve a position of sustainable leadership in the vaporizer industry. Our strategy consists of the following key elements:

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continue to expand the footprint of the vape stores;

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develop new brands and engineer product offerings;

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continue to shift our product focus from e-cigarettes to vaporizers;

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seek potential franchisees for the vape stores;

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invest in and leverage our new and existing brands through marketing and advertising;

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increase our presence in national and regional retailers;

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expand our brand awareness and online web presence;

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develop continuity programs for our end user customers;

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expanding into new potential markets;

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scale our distribution through strategic resale partnerships; and

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align our product offerings and cost with market demand.

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As discussed above, we compete against “big tobacco”, U.S. cigarette manufacturers of both conventional tobacco cigarettes and electronic cigarettes like Altria Group, Inc., Lorillard, Inc. and Reynolds American, Inc. We compete against “big tobacco” who offers not only conventional tobacco cigarettes and electronic cigarettes but also smokeless tobacco products such as “snus” (a form of moist ground smokeless tobacco that is usually sold in sachet form that resembles small tea bags), chewing tobacco and snuff. “Big tobacco” has nearly limitless resources, global distribution networks in place and a customer base that is fiercely loyal to their brands. Furthermore, we believe that “big tobacco” will devote more attention and resources to developing and offering electronic cigarettes as the market for electronic cigarettes grows. Because of their well-established sales and distribution channels, marketing expertise and significant resources, “big tobacco” is better positioned than small competitors like us to capture a larger share of the electronic cigarette market.

Manufacturing

We have no manufacturing capabilities and do not intend to develop any manufacturing capabilities. Third party manufacturers manufacture our products to meet our design specifications. We depend on third party manufacturers for our vaporizers, electronic cigarettes and accessories. Our customers associate certain characteristics of our products including the weight, feel, draw, unique flavor, packaging and other attributes of our products to the brands we market, distribute and sell. Any interruption in supply and or consistency of our products may harm our relationships and reputation with customers, and have a material adverse effect on our business, results of operations and financial condition. In order to minimize the risk of supply interruption, we currently utilize several third party manufacturers to manufacture our products to our specifications.

We currently utilize approximately 13 different manufacturers, all of which are based in China. We contract with our manufacturers on a purchase order basis. We do not have any output or requirements contracts with any of our manufacturers. Our manufacturers provide us with finished products, which we hold in inventory for distribution, sale and use. Certain Chinese factories and the products they export have recently been the source of safety concerns and recalls, which is generally attributed to lax regulatory, quality control and safety standards. Should Chinese factories continue to draw public criticism for exporting unsafe products, whether those products relate to our products or not, we may be adversely affected by the stigma associated with Chinese production, which could have a material adverse effect on our business, results of operations and financial condition.

Although we believe that several alternative sources for our products are available, any failure to obtain the components, chemical constituents and manufacturing services necessary for the production of our products would have a material adverse effect on our business, results of operations and financial condition.

Source and Availability of Raw Materials

We believe that an adequate supply of product and raw materials will be available to us as needed and from multiple sources and suppliers.

Intellectual Property

We have developed and trademarked or are preparing to commercialize additional products. We include product development expenses as part of our operating expenses. We currently own no patents which are material to our business. We have a number of patent applications pending in the United States including those described below. There is no assurance that we will be awarded patents for of any of these pending patent applications.

Soft Tip Filters

We have a patent pending for a soft-tip electronic cigarette filter, which more closely resembles the tactile experience of a conventional tobacco cigarette in a user’s mouth. To date electronic cigarettes have been made of metal and hard plastic and do not offer users the same malleable feel as the cellulose filters of conventional tobacco cigarettes.

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Electronic Cigarette Air Flow Sensor Patent

We have a patent pending on a new configuration for the air flow sensors currently used in electronic cigarettes. The new configuration will allow the battery to be sealed to enhance the reliability and performance of the electronic cigarette.

Vaporizer Biometric Fingerprint Lock Sensor Patent

We have a patent pending for a biometric fingerprint lock sensor that can be used in vaporizers. The biometric fingerprint lock sensor will allow the owner of the vaporizer to keep the device locked and turned off unless the authorized user unlocks the device via fingerprint scan, protecting the device from use by another individual. This technology may be used to protect against minors being able to turn on the device and will also deem the devices unusable in the event the device is lost or stolen.

Trademarks

We own trademarks on certain of our brands, including: Fifty-One ® , Krave ® , Vapor X ® , Alternacig ® , EZSMOKER ® , Green Puffer ® , Americig ® , Hookah Stix ® and Smoke Star ® brands. We have also filed additional trademarks, which have yet to be awarded.

Patent Litigation

We are a defendant in a certain patent lawsuit described in the section titled “ Legal Proceedings ” in this prospectus.

Such patent lawsuit as well as any other third party lawsuits alleging our infringement of patents, trade secrets or other intellectual property rights could force us to do one or more of the following:

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stop selling products or using technology that contains the allegedly infringing intellectual property;

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incur significant legal expenses;

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pay substantial damages to the party whose intellectual property rights we may be found to be infringing;

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redesign those products that contain the allegedly infringing intellectual property; or

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attempt to obtain a license to the relevant intellectual property from third parties, which may not be available to us on reasonable terms or at all.

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Third party lawsuits alleging our infringement of patents, trade secrets or other intellectual property rights could have a material adverse effect on our business, results of operations and financial condition.

We may be required to obtain licenses to patents or proprietary rights of others. We cannot assure you that any licenses required under any such patents or proprietary rights would be made available on terms acceptable to us or at all. If we do not obtain such licenses, we could encounter delays in product market introductions while we attempt to design around such patents, or could find that the development, manufacture, or sale of products requiring such licenses could be foreclosed. Litigation may be necessary to defend against claims of infringement asserted against us by others, or assert claims of infringement to enforce patents issued to us or exclusively licensed to us, to protect trade secrets or know-how possessed by us, or to determine the scope and validity of the proprietary rights of others. In addition, we may become involved in oppositions in foreign jurisdictions, reexaminations declared by the United States Patent and Trademark Office, or interference proceedings declared by the United States Patent and Trademark Office to determine the priority of inventions with respect to our patent applications or those of our licensors. Litigation, opposition, reexamination or interference proceedings could result in substantial costs to and diversion of effort by us, and may have a material adverse impact on us. In addition, we cannot assure you that our efforts to maintain or defend our patents will be successful.

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Government Regulation

Since a 2010 U.S. Court of Appeals decision, the FDA is permitted to regulate electronic cigarettes as “tobacco products” under the Family Smoking Prevention and the Tobacco Control Act. Under this decision, the FDA is not permitted to regulate electronic cigarettes as “drugs” or “devices” or a “combination product” under the Federal Food, Drug and Cosmetic Act unless they are marketed for therapeutic purposes. This is contrary to anti-smoking devices like nicotine patches, which undergo more extensive FDA regulation. Because Vapor does not market Vapor’s electronic cigarettes for therapeutic purposes, Vapor’s electronic cigarettes are subject to being classified as “tobacco products” under the Tobacco Control Act. The Tobacco Control Act grants the FDA broad authority over the manufacture, sale, marketing and packaging of tobacco products, although the FDA is prohibited from issuing regulations banning all cigarettes or all smokeless tobacco products, or requiring the reduction of nicotine yields of a tobacco product to zero.

On April 24, 2014, the FDA released proposed rules that would extend its regulatory authority to electronic cigarettes and certain other tobacco products under the Tobacco Control Act. The proposed rules would require that electronic cigarette manufacturers (i) register with the FDA and report electronic cigarette product and ingredient listings; (ii) market new electronic cigarette products only after FDA review; (iii) only make direct and implied claims of reduced risk if the FDA confirms that scientific evidence supports the claim and that marketing the electronic cigarette product will benefit public health as a whole; (iv) not distribute free samples; (v) implement minimum age and identification restrictions to prevent sales to individuals under age 18; (vi) include a health warning; and (vii) not sell electronic cigarettes in vending machines, unless in a facility that never admits youth. The proposed rules were subject to a 75-day public comment period, following which the FDA will finalize the proposed rules. It is not known how long this regulatory process to finalize and implement the rules may take. Accordingly, Vapor cannot predict the content of any final rules from the proposed rules or the impact they may have. See the risk factor on page 6 which also discusses possible additional FDA rulemaking.

In this regard, total compliance and related costs are not possible to predict and depend substantially on the future requirements imposed by the FDA under the Tobacco Control Act. Costs, however, could be substantial and could have a material adverse effect on Vapor’s business, results of operations and financial condition. In addition, failure to comply with the Tobacco Control Act and with FDA regulatory requirements could result in significant financial penalties and could have a material adverse effect on Vapor’s business, financial condition and results of operations and ability to market and sell Vapor’s products. At present, it is difficult to predict whether the Tobacco Control Act will impact Vapor to a greater degree than competitors in the industry, thus affecting Vapor’s competitive position.

State and local governments currently legislate and regulate tobacco products, including what is considered a tobacco product, how tobacco taxes are calculated and collected, to whom and by whom tobacco products can be sold and where tobacco products may or may not be smoked. State and local regulation of the e-cigarette market and the usage of e-cigarettes is beginning to accelerate.

As local regulations expand, vaporizers and electronic cigarettes may lose their appeal as an alternative to cigarettes, which may have the effect of reducing the demand for Vapor’s products and as a result have a material adverse effect on Vapor’s business, results of operations and financial condition.

At present, neither the Prevent All Cigarette Trafficking Act (which prohibits the use of the U.S. Postal Service to mail most tobacco products, which would require individuals and businesses that make interstate sales of cigarettes or smokeless tobacco to comply with state tax laws) nor the Federal Cigarette Labeling and Advertising Act (which governs how cigarettes can be advertised and marketed) apply to electronic cigarettes. The application of either or both of these federal laws to vaporizers and electronic cigarettes would have a material adverse effect on Vapor’s business, results of operations and financial condition.

On July 1, 2015, the FDA published a document entitled “Advanced notice of proposed rulemaking” or the Advance. Through the Advance, the FDA solicited public comments on whether it should issue rules with respect to nicotine exposure warning and child-resistant packaging for e-liquids containing nicotine. Following public comment, the FDA may issue proposed rules in furtherance of the purposes outlined in the Advance and ultimately pass the rules as proposed or in modified form. We cannot predict whether if rules are passed it will have a material adverse effect on our future results of operations and financial conditions.

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Vapor expects that the tobacco industry will experience significant regulatory developments over the next few years, driven principally by the World Health Organization’s FCTC. The FCTC is the first international public health treaty on tobacco, and its objective is to establish a global agenda for tobacco regulation with the purpose of reducing initiation of tobacco use and encouraging cessation. Regulatory initiatives that have been proposed, introduced or enacted include:

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the levying of substantial and increasing tax and duty charges;

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restrictions or bans on advertising, marketing and sponsorship;

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the display of larger health warnings, graphic health warnings and other labelling requirements;

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restrictions on packaging design, including the use of colors and generic packaging;

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restrictions or bans on the display of tobacco product packaging at the point of sale, and restrictions or bans on cigarette vending machines;

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requirements regarding testing, disclosure and performance standards for tar, nicotine, carbon monoxide and other smoke constituents levels;

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requirements regarding testing, disclosure and use of tobacco product ingredients;

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increased restrictions on smoking in public and work places and, in some instances, in private places and outdoors;

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elimination of duty free allowances for travelers; and

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encouraging litigation against tobacco companies.

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If Vaporizers, electronic cigarettes, or e-liquids, are subject to one or more significant regulatory initiates enacted under the FCTC, Vapor’s business, results of operations and financial condition could be materially and adversely affected.

Employees

As of December 7, 2015, we had 129 full-time employees and 14 part-time employees, none of which are represented by a collective bargaining agreement. We believe that our employee relations are good.

Legal Proceedings

On June 22, 2012, Ruyan Investment (Holding) Limited (“Ruyan”) filed a second lawsuit against the Company alleging infringement of U.S. Patent No. 8,156,944 (the “’944 Patent”). Ruyan also filed separate cases for patent infringement against nine other defendants asserting infringement of the ’944 Patent. Ruyan’s second lawsuit against the Company known as Ruyan Investment (Holdings) Limited vs. Vapor Corp. CV-12-5466 is pending in the United States District Court for the Central District of California. All of these lawsuits have been consolidated for discovery and pre-trial purposes. The Company intends to vigorously defend against this lawsuit.

On February 25, 2013, Ruyan’s second patent infringement lawsuit against the Company as well as all of the other consolidated lawsuits were stayed as a result of the Court granting a stay in one of the consolidated lawsuits. The Court granted the motion to stay Ruyan’s separate lawsuits against the Company and the other defendants based on the filing of a request for inter partes reexamination of the ’944 Patent at the United States Patent and Trademark Office.

All reexamination proceedings of the ’944 Patent have been stayed by the United States Patent and Trademark Office Patent Trial and Appeal Board pending its approval of one or more of them. On March 5, 2014, Fontem Ventures, B.V. and Fontem Holdings 1 B.V. (the successors to Ruyan) filed a complaint against the Company alleging infringement of U.S. Patent No. 8,365,742, entitled “Aerosol Electronic Cigarette”, U.S. Patent No. 8,375,957, entitled “Electronic Cigarette”, U.S. Patent No. 8,393,331, entitled “Aerosol Electronic Cigarette” and U.S. Patent No. 8,490,628, entitled “Electronic Atomization Cigarette. On April 8, 2014, plaintiffs amended their complaint to add U.S. Patent No. 8,689,805, entitled “Electronic Cigarette.” The products accused of infringement by the plaintiff are various Krave, Fifty-one

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and Hookah Stix products and parts. Eight other companies were also sued in separate lawsuits alleging infringement of one or more of the patents listed above. The Company filed its Answer and Counterclaims on May 1, 2014. The Company intends to vigorously defend against this lawsuit.

On October 21, 2014, Fontem Ventures B.V. and Fontem Holdings 1 B.V. filed a complaint against the Company in the U.S. District Court for the Central District of California, captioned Fontem Ventures B.V., et al. v. Vapor Corp., No. 14-cv-8155. The complaint alleges infringement of United States Patent No. 8,863,752, entitled “Electronic Cigarette”. The products accused of infringement by plaintiffs are various Krave and Fifty-One products and parts On January 15, 2015, the Company filed its Answer and Counterclaims. The Company will vigorously defend itself against such allegations.

On December 2, 2014, Fontem Ventures B.V. and Fontem Holdings 1 B.V. filed a complaint against the Company in the U.S. District Court for the Central District of California, captioned Fontem Ventures B.V., et al. v. Vapor Corp., No. 14-cv-09267. The Complaint alleges infringement by the plaintiffs against the Company relating to various Krave, Vapor X and Fifty-One products and parts. Fontem amended its compliant on December 16, 2014, to allege infringement of United States Patent No. 8,910,641, entitled “Electronic Cigarette” against the same products. On January 15, 2015, the Company filed its Answer and Counterclaims. Fontem, by way of its expert, has stated it is currently seeking $1,982,504 in monetary damages for alleged past infringement. Fontem is also seeking to enjoin sales of Vapor’s accused products. All of the above referenced cases filed by Fontem have been consolidated. The parties are currently in settlement discussions with mediation and pre-trial dates upcoming. We cannot determine the potential amount due to Fontem at this time.

On June 22, 2015, the Center for Environment Health, as plaintiff, filed suit against a number of defendants including Vapor Corp., its wholly-owned subsidiary, the Vape Store, Inc., Vaporin and another wholly-owned subsidiary, Vaporin Florida, Inc. The lawsuit was filed in the Superior Court of the State of California, County of Alameda. The suit seeks relief under California Proposition 65 which makes it unlawful for businesses to knowingly and intentionally expose individuals in California to chemicals known to cause birth defects or other harm without providing clear and reasonable warnings. All of the defendants are alleged to have sold products containing significant quantities of nicotine without warnings in violation of Proposition 65. The plaintiff is seeking a civil penalty against these defendants in the amount of  $2,500 per day for each violation of Proposition 65, together with attorneys’ fees and costs. The Company and its subsidiaries engaged counsel and intend to vigorously defend the allegations. Discovery commenced in November 2015. The Company believes that all of the products sold by Vapor Corp. have always contained an appropriate warning or no warning was required. The Vape Store, Inc., operates vape stores located in the states of Florida and Georgia, and has not, to the best of its current knowledge, sold any products into the State of California.

Corporate and Available Information

The Company was originally incorporated under the name “Consolidated Mining International, Inc.” in 1985. On November 5, 2009, the Company acquired Smoke Anywhere a distributor of electronic cigarettes, in a reverse triangular merger. On January 7, 2010, the Company changed its name to “Vapor Corp.” The Company reincorporated in the State of Delaware from the State of Nevada effective on December 31, 2013. On March 3, 2015, the Company merged with Vaporin and was the surviving entity.

Our executive offices are located at 3001 Griffin Road, Dania Beach, Florida 33312, and our telephone number is (888) 766-5351. Our website is located at www.vapor-corp.com. We make available on our website, free of charge, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports, as soon as reasonably practicable after we electronically file such materials with, or furnish it to, the Securities and Exchange Commission. Our Securities and Exchange Commission reports can be accessed through the Investor Relations section of our internet website. The information found on our internet website is not part of this or any other report we file with or furnish to the Securities and Exchange Commission.

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Daniel MacLachlan has been a director since April 18, 2015. Mr. MacLachlan served as the Chief Financial Officer of The Best One, Inc., from October 2014 through early February 2015, facilitating its merger with IDI, Inc. (FKA, Tiger Media, Inc.) (NYSE MKT: IDI). Mr. MacLachlan served as Director of Finance and Chief Financial Officer for TransUnion Risk and Alternative Data Solutions, Inc., after it acquired substantially all the assets of TLO, LLC (“TLO”), a leading provider of data fusion technology-driven investigative products and solutions, in December 2013. Mr. MacLachlan was Chief Financial Officer of TLO since its inception in 2009. Mr. MacLachlan was appointed a director for his financial and accounting expertise.

Nikhil Raman was appointed as a director on July 7, 2015. Since November 6, 2014, Mr. Raman has been the Chief Executive Officer of usell.com, Inc. (OTCQB: USEL), a technology based company focused on creating an online marketplace for used cell phones. Mr. Raman has served as a director of usell.com since April 24, 2012. From January 27, 2012 until November 6, 2014, Mr. Raman served as the Chief Operating Officer of usell.com. After graduating from Harvard Business School, Mr. Raman founded and served as Manager of Ft. Knox Recycling, LLC doing business as EcoSquid. Mr. Raman also served as Chief Executive Officer of EcoSquid from its founding through its acquisition by usell.com in April 2012. From 2008 until 2010, Mr. Raman attended Harvard Business School. Mr. Raman was appointed as a director for his management and operations expertise.

Corporate Governance

Board Responsibilities

The Board oversees, counsels, and directs management in the long-term interest of Vapor and its stockholders. The Board’s responsibilities include establishing broad corporate policies and reviewing the overall performance of Vapor. The Board is not, however, involved in the operating details on a day-to-day basis.

Board Committees and Charters

The Board and its Committees meet throughout the year and act by written consent from time-to-time as appropriate. The Board delegates various responsibilities and authority to different Board Committees. Committees regularly report on their activities and actions to the Board.

The Board currently has and appoints the members of: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Each of these committees have a written charter which can be found on our corporate website at ir.vapor-corp.com/committee-charters .

The following table identifies the independent and non-independent current Board and committee members:

Director Independence

Our Board has determined that William Conway III, Nikhil Raman and Daniel MacLachlan are independent in accordance with standards under the Nasdaq Listing Rules. Our Board determined that as a result of being executive officers, Messrs. Jeffrey Holman and Gregory Brauser were not independent under the Nasdaq Listing Rules. Our Board has also determined that William Conway III, Nikhil Raman and Daniel MacLachlan are independent under the Nasdaq Listing Rules independence standards for Audit Committee members.

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Committees of the Board

Audit Committee

The Audit Committee, which currently consists of William Conway III, Nikhil Raman and Daniel MacLachlan, reviews Vapor’s financial reporting process on behalf of the Board and administers our engagement of the independent registered public accounting firm. The Audit Committee approves all audit and non-audit services, and reviews the independence of our independent registered public accounting firm.

Audit Committee Financial Expert

Our Board has determined that Daniel MacLachlan and Nikhil Raman both qualified as Audit Committee Financial Experts, as that term is defined by the rules of the SEC and in compliance with the Sarbanes-Oxley Act of 2002.

Compensation Committee

The function of the Compensation Committee is to determine the compensation of our executive officers. The Compensation Committee has the power to set performance targets for determining periodic bonuses payable to executive officers and may review and make recommendations with respect to stockholder proposals related to compensation matters. Additionally, the Compensation Committee is responsible for administering Vapor’s equity compensation plans including the Plan.

The members of the Compensation Committee are all independent directors within the meaning of applicable Nasdaq Listing Rules and all of the members are “non-employee directors” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, or the Exchange Act.

Nominating and Corporate Governance Committee

The responsibilities of the Nominating and Corporate Governance Committee include the identification of individuals qualified to become Board members, the selection of nominees to stand for election as directors, the oversight of the selection and composition of committees of the Board, establish procedures for the nomination process including procedures and the oversight of the evaluations of the Board and management. The Nominating and Corporate Governance Committee has not established a policy with regard to the consideration of any candidates recommended by stockholders since no stockholders have made any recommendations. If we receive any stockholder recommended nominations, the Nominating Committee will carefully review the recommendation(s) and consider such recommendation(s) in good faith.

Compensation Committee Interlocks and Insider Participation

None of the members of our compensation committee has ever been an officer or employee of the company. None of our executive officers serve, or have served during the last fiscal year, as a member of our Board, compensation committee or other Board committee performing equivalent functions of any entity that has one or more executive officers serving on our Board or on our compensation committee.

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Named Executive Officer Employment Agreements

The chart below summarizes the terms and conditions of employment agreements with our Named Executive Officers.

(1)

Mr. Harlan Press, a Named Executive Officer, resigned effective April 10, 2015. He will receive nine-months’ severance and accrued vacation in the amount of approximately $159,000.

​

(2)

Mr. James Martin, a Named Executive Officer, terminated effective September 10, 2015. He will receive six-months’ severance and accrued vacation in the amount of approximately $87,000.

​

(3)

On August 10, 2015, the Company entered into three-year Employment Agreements with Jeffrey Holman, the Company’s Chief Executive Officer, and Gregory Brauser, the Company’s President. Each of the Employment Agreements provide for an annual base salary of  $300,000 and a target bonus in an amount ranging from 20% to 200% of their base salaries subject to the Company meeting certain adjusted earnings before interest, taxes depreciation and amortization (“ Adjusted EBITDA ”) performance milestones. Adjusted EBITDA is defined in the Employment Agreements as earnings (loss) from continuing operations before interest expense, income taxes, collateral valuation adjustment, bad debt expense, one-time expenses, depreciation and amortization and amortization of stock compensation or Adjusted EBITDA defined in any filing of the Company with the SEC subsequent to the date of the Employment Agreements. Additionally, the Company approved and paid a bonus of  $100,000 to each of Mr. Holman and Mr. Brauser in August 2015. Messrs. Holman and Brauser are also entitled to receive severance payments, including 2 years of their then base salary and other benefits in the event of a change of control, termination by the Company without cause, termination for good reason by the executive or non-renewal by the Company.

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(4)

In accordance with his Employment Agreement, Mr. Santi received a 10-year option to purchase up to 4,000 shares of the Company’s common stock at an exercise price of  $6.25, vesting monthly at the rate of approximately 111 shares per month.

​

The Compensation Committee will have the discretion to award each of the Named Executive Officers a bonus based upon job performance or any other factors determined by the Compensation Committee.

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(1)

Good Reason is generally (with certain exceptions) defined as: (i) in the case of Holman and Brauser, (x) a material diminution in their authority, duties or responsibilities, (y) the Company failing to maintain an office in the stated area or (z) any other action or inaction that constitutes a material breach by the Company of the Employment Agreement; and (ii) in the case of Santi (w) a relocation of principal place of employment outside a stated area, (x) a material reduction in Base Salary, (y) the diminution of his duties, or (z) any other action or inaction that constitutes a material failure by Vapor to fulfill its obligations under the Employment Agreement. All of these events are subject to a 30-day cure period.

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(2)

Change of Control is generally defined (i) in the case of Holman and Brauser, as any Change of Control Event as defined in Treasury Regulation Section 1.409A-3(i)(5); and (ii) in the case of Santi, as (w) a sale of substantially all of the Company, (x) any “person” (as such term is defined under the Exchange Act) becomes the beneficial owners of over 50% of the Company’s voting power, (y) a change in the majority of the composition of the Board or (z) a transaction that results in over 50% of the Company’s voting power ceasing to hold a majority of the voting power post-transaction.

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Risk Assessment Regarding Compensation Policies and Practices as they Relate to Risk Management

Our compensation program for employees does not create incentives for excessive risk taking by our employees or involve risks that are reasonably likely to have a material adverse effect on us. Our compensation has the following risk-limiting characteristics:

•

Our base pay programs consist of competitive salary rates that represent a reasonable portion of total compensation and provide a reliable level of income on a regular basis, which decreases incentive on the part of our executives to take unnecessary or imprudent risks;

​

•

A portion of executive incentive compensation opportunity is tied to long-term incentive compensation that emphasizes sustained performance over time. This reduces any incentive to take risks that might increase short-term compensation at the expense of longer term company results;

​

•

Awards are not tied to formulas that could focus executives on specific short-term outcomes;

​

•

Equity awards may be recovered by us should a restatement of earnings occur upon which incentive compensation awards were based, or in the event of other wrongdoing by the recipient; and

​

•

Equity awards, generally, have multi-year vesting which aligns the long-term interests of our executives with those of our stockholders and, again, discourages the taking of short-term risk at the expense of long-term performance.

​

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(1)

These unvested options, at December 31, 2014, were fully vested as of the date of this prospectus.

​

(2)

Of the unvested options, 1 ∕ 2 vested on March 30, 2015 and 1 ∕ 2 will vest on March 30, 2016.

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(3)

The unvested options vested, or will vest, in 11 equal monthly increments beginning January 11, 2015.

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(4)

The vested options expired and were forfeited on October 1, 2015.

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Limitation on Liability and Indemnification Matters

Our certificate of incorporation, as amended, and bylaws provide that we will indemnify our directors and officers, and may indemnify our employees and other agents, to the fullest extent permitted by the Delaware General Corporation Law, which prohibits our certificate of incorporation from limiting the liability of our directors for the following:

•

any breach of the director’s duty of loyalty to the corporation or its stockholders;

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•

any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

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•

unlawful payments of dividends or unlawful stock repurchases or redemptions; or

​

•

any transaction from which the director derived an improper personal benefit.

​

If Delaware law is amended to authorize corporate action further eliminating or limiting the personal liability of a director, then the liability of our directors will be eliminated or limited to the fullest extent permitted by Delaware law, as so amended. Our certificate of incorporation does not eliminate a director’s duty of care and in appropriate circumstances, equitable remedies, such as injunctive or other forms of non-monetary relief, remain available under Delaware law. This provision also does not affect a director’s responsibilities under any other laws, such as the federal securities laws or other state or federal laws. Under our bylaws, we will also be empowered to purchase insurance on behalf of any person whom we are required or permitted to indemnify.

In addition to the indemnification required in our certificate of incorporation and bylaws, we have entered into indemnification agreements with each of our current directors and officers. These agreements provide indemnification for certain expenses and liabilities incurred in connection with any action, suit, proceeding, or alternative dispute resolution mechanism, or hearing, inquiry, or investigation that may lead to the foregoing, to which they are a party, or are threatened to be made a party, by reason of the fact that

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they are or were a director, officer, employee, agent, or fiduciary of our company, or any of our subsidiaries, by reason of any action or inaction by them while serving as an officer, director, agent, or fiduciary, or by reason of the fact that they were serving at our request as a director, officer, employee, agent, or fiduciary of another entity. In the case of an action or proceeding by, or in the right of, our company or any of our subsidiaries, no indemnification will be provided for any claim where a court determines that the indemnified party is prohibited from receiving indemnification. We believe that these bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain directors’ and officers’ liability insurance.

The limitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might benefit us and our stockholders. A stockholder’s investment may be harmed to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. Insofar as we may provide indemnification for liabilities arising under the Securities Act to our directors, officers, and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the Securities Exchange and Commission, such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. There is no pending litigation or proceeding naming any of our directors or officers as to which indemnification is being sought, nor are we aware of any pending or threatened litigation that may result in claims for indemnification by any director or officer.

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(3)

Harlan Press: A former executive officer. Includes 8,000 vested options and 620 shares underlying warrants.

​

(4)

Christopher Santi: An executive officer. Includes 10,000 restricted shares and 8,000 vested options.

​

(5)

Gregory Brauser: A director and executive officer. Does not include 20,772 shares of common stock underlying restricted stock units which have vested but have not been delivered.

​

(6)

James Martin: a former executive officer.

​

(7)

Gina Hicks: The chief financial officer.

​

(8)

William Conway III: A director.

​

(9)

Daniel MacLachlan: A director.

​

(10)

Nikhil Raman: A director.

​

(11)

Total D&O: Includes securities beneficially owned by executives who are not a Named Executive Officer.

​

(12)

Alpha Capital Anstalt: Does not include additional shares underlying warrants and convertible notes that cannot be exercised within 60 days due to a 4.99% blocker. Address is Lettstrasse 32, P.O. Box 1212, FL 9490, Vaduz Furstentum Liechtenstein c/o LH Financial Services Corp., 510 Madison Avenue, Ste. 1400, New York, New York 10022.

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Debentures: (i) mature December 22, 2015, (ii) accrue interest at 10% per year, (iii) are convertible into common stock at $2.50 per share and (iv) are secured by a second lien on substantially all of the Company’s assets. The Debentures, accrued interest, and prepayment penalties were repaid on July 31, 2015. The company Mr. Brauser jointly manages, received $105,035 of aggregated prepayment penalties and interest.

In November 2014 and March 2015, the Company had engaged in two private placements each of which precluded the Company from using capital or otherwise issuing shares of common stock or common stock equivalents below $10.00 and $5.10, respectively. In order to raise further capital in the June 2015 private placement, the Company was required to enter into agreements with prior investors (including Mr. Michael Brauser and Alpha Capital Anstalt, a 5% holder) modifying these covenants. In connection with these modifications, Mr. Brauser received 62,582 of common stock and 73,689 warrants, a company which Mr. Brauser jointly manages received 5,570 shares and 6,558 warrants and another company, Alpha Capital Anstalt, which acted as the lead investor in the November 2014 and March 2015 private placements, received 262,954 shares of common stock and 142,420 warrants.

The Company issued shares of common stock in connection with a registered public offering on July 29, 2015. This effectively triggered the need to issue additional shares under the agreements with prior investors (including Mr. Michael Brauser and Alpha Capital Anstalt). Pursuant to the Rules of the Nasdaq Stock Market, the Company needed to seek stockholder approval before issuing a number of these shares and such approval was obtained on October 16, 2015. On August 18, 2015 and November 10, 2015, the Company issued shares of common stock to certain investors. Mr. Brauser received 269,360 of common stock, a company which Mr. Brauser jointly manages received 23,973 shares and another company, Alpha Capital Anstalt, which acted as the lead investor in the November 2014 and March 2015 private placements, received 673,398 shares of common stock.

On March 27, 2015, Harlan Press notified the Company of his intention to resign from the Company, effective April 10, 2015. Mr. Press previously served as Chief Financial Officer of the Company. In connection with the Company’s previously disclosed merger with Vaporin, Inc. in March 2015, Mr. Press was appointed Vice-President of Finance of the Company. Mr. Press received severance compensation and accrued vacation in accordance with his employment agreement in the total amount of  $159,810, which is divided into equal weekly payments that end on January 29, 2016.

The Company purchases, at rates comparable to market rates, e-liquids sold in its retail stores and wholesale operations, respectively from Liquid Science, Inc., a company in which Jeffrey Holman and Michael Brauser each have a 15% beneficial ownership interest. During 2015, the Company made in excess of 50% of its purchases of e-liquid from Liquid Science for its retail stores, which purchases equaled $355,927 in the aggregate.

On August 13, 2015, the Company entered into consulting agreements with each of GRQ Consultants, Inc. and Grander Holdings, Inc. GRQ Consultants, Inc. will primarily focus on investor relations and presenting the Company and its business plans, strategy and personnel to the financial community. Grander Holdings, Inc. will primarily assist the Company in further developing and executing its acquisitions strategy, focusing on the Company’s “The Vape Store” properties. Michael Brauser is the Chief Executive Officer of Grander Holdings, Inc. Pursuant to the agreements, each consultant will receive an initial fee of $50,000, payable immediately, and an additional $20,000 monthly throughout the 12-month term of each agreement.

Policies and Procedures for Related Party Transactions

We have adopted a policy that our executive officers, directors, nominees for election as a director, beneficial owners of more than 5% of any class of our common stock and any members of the immediate family of any of the foregoing persons are not permitted to enter into a related person transaction with us without the prior consent of our audit committee. Our audit committee will review and oversee all transactions with an executive officer, director, nominee for election as a director, beneficial owner of more than 5% of any class of our common stock or any member of the immediate family of any of the foregoing persons and such person would have a direct or indirect interest. In approving or rejecting any such transactions, our audit committee is to consider the material facts of the transaction, including, but not limited to, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction.

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GENERAL TERMS OF THE EXCHANGE OFFER

Purpose of the Exchange Offer

We are making the Exchange Offer in order to (1) preserve our working capital through the elimination of the potential cash payments related to the Series A Warrants included in the Units and (2) avoid uncertainty regarding the Company’s capital structure due to volatility in the market price of our common stock. We believe that by allowing holders of Units to exchange Units for 128 Shares and one Exchange Warrant (exercisable for 64 Warrant Shares), the Company can potentially eliminate cash payment obligations pursuant to the Warrant, thus providing investors and potential investors with greater certainty as to our capital structure and future liquidity.

You should read the discussion under the heading “Description of Shares and Exchange Warrants Included in the Exchange Offer” for more information about the Exchange Warrants.

Terms of the Exchange Offer

Upon the terms and subject to the conditions described in this prospectus and in the Letter of Transmittal, we are offering to issue 128 Shares and Exchange Warrants (exercisable for 64 Warrant Shares) to the holders of outstanding Units who validly tender their Units on or prior to the Expiration Date. All outstanding Units that are (i) not tendered prior to the Expiration Date; or (ii) tendered but withdrawn any time before the Expiration Date or, for any valid reason, not accepted by us, will continue to be outstanding according to their terms unmodified.

The Exchange Warrants issuable in the Exchange Offer: (i) are exercisable at an exercise price per share equal to 120% of the closing market price of our common stock on the Expiration Date; (ii) are exercisable for 64 Warrant Shares; (iii) are exercisable for a five-year period following the receipt of Stockholder Approval. See “Description of Shares and Exchange Warrants Included in the Exchange Offer.”

The Exchange Offer is conditioned on at least 90% of the Units being tendered and not withdrawn.

As of December 7, 2015, there are outstanding 3,761,657 Units subject to the Exchange Offer. This prospectus and the Letter of Transmittal are being sent to all registered holders of the outstanding Units. There will be no fixed record date for determining registered holders of the outstanding Units entitled to participate in the Exchange Offer.

The Exchange Agent will act as agent for the tendering holders of the Units for the purposes of receiving (i) the Units and (ii) the completed, signed and dated Letter of Transmittal and other required documents. We will issue the Shares and the Exchange Warrants promptly after the Expiration Date.

We intend to conduct the Exchange Offer in accordance with the applicable requirements of the Securities Act and the Exchange Act, and the rules and regulations promulgated by the SEC thereunder.

Expiration Time

The Exchange Offer will expire on the Expiration Date, which is at 5:00 p.m., New York City time, on January 13, 2016 unless extended by us at our sole discretion.

Extensions, Termination or Amendment

Subject to applicable law, we expressly reserve the right, at any time or at various times, and regardless of whether any events preventing satisfaction of the conditions to the Exchange Offer, to extend the period of time during which the Exchange Offer is open by giving oral (to be confirmed in writing) or written notice of such extension to the Exchange Agent and by making public disclosure by press release or other appropriate means of such extension to the extent required by law.

During any extension of the Exchange Offer, all Units previously tendered and not accepted by us will remain subject to the Exchange Offer and may, subject to the terms and conditions of the Exchange Offer, be accepted by us, and all Units previously tendered and accepted by us pursuant to the Exchange Offer will remain effective. In addition, we may waive conditions without extending the Exchange Offer in accordance with applicable law.

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If any of the conditions described below under “— Conditions to the Exchange Offer” have not been satisfied with respect to the Exchange Offer, we reserve the right, at our sole discretion:

•

to extend the Exchange Offer,

​

•

to delay accepting any Units tendered pursuant to the Exchange Offer,

​

•

to terminate the Exchange Offer, or

​

•

to otherwise amend the Exchange Offer in any respect in compliance with applicable securities laws and stock exchange rules.

​

Announcements

Any extension, termination or amendment of the Exchange Offer will be followed as promptly as practicable by announcement thereof, such announcement in the case of an extension to be issued no later than 9:00 a.m., New York City time, on the next business day following the previously scheduled Expiration Date. Without limiting the manner in which we may choose to make such announcement, we will not, unless otherwise required by law, have any obligation to publish, advertise or otherwise communicate any such announcement other than by making a release to an appropriate news agency or another means of announcement that we deem appropriate.

Acceptance of Tendered Units Pursuant to the Exchange Offer

If the conditions to the Exchange Offer are satisfied, or if we waive all of the conditions that have not been satisfied, we will accept, on the Expiration Date and after we receive completed and duly executed Letters of Transmittal or Agent’s Messages with respect to any and all of the Units tendered at such time, the tendered Units by notifying the Exchange Agent of our acceptance. The notice may be oral if we promptly confirm it in writing.

An “Agent’s Message” is a message transmitted by The Depository Trust Company (“ DTC ”), received by the Exchange Agent and forming part of the timely confirmation of a book entry transfer (“ Book-Entry Confirmation ”), which states that DTC has received an express acknowledgement from you that you have received this prospectus and agree to be bound by the terms of the Letter of Transmittal, and that we may enforce such agreement against you.

We expressly reserve the right, in our sole discretion, to delay acceptance of the Units tendered pursuant to the Exchange Offer, or to terminate the Exchange Offer and not accept the Units tendered pursuant to the Exchange Offer, (1) if any of the conditions to the Exchange Offer shall not have been satisfied or validly waived by us, or (2) in order to comply in whole or in part with any applicable law.

In all cases, the Shares and the Exchange Warrants will be issued only after timely receipt by the Exchange Agent of  (1) Book-Entry Confirmation of the Units into the Exchange Agent’s account at DTC, (2) the properly completed and duly executed Letter of Transmittal (or a facsimile thereof) or an Agent’s Message in lieu thereof, and (3) any other documents required by the Letter of Transmittal.

For purposes of the Exchange Offer, we will have accepted the Units tendered pursuant to the Exchange Offer, if, as and when we give oral or written notice to the Exchange Agent of our acceptance of such Units pursuant to the Exchange Offer. In all cases, the issuance of the Shares and the Exchange Warrants will be made by the deposit of such consideration with the Exchange Agent, which will act as your agent for the purposes of receiving such consideration from us, and delivering such consideration to you.

If, for any reason whatsoever, acceptance of any Units tendered or the issuance of the Shares and the Exchange Warrants is delayed or we extend the Exchange Offer or are unable to accept the tender of the Units pursuant to the Exchange Offer, then, without prejudice to our rights set forth herein, we may instruct the Exchange Agent to retain the Units tendered and such tender may not be withdrawn, subject to the limited circumstances described in “— Withdrawal of Tender” below.

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We will have the right, which may be waived, to reject the defective tender of Units pursuant to the Exchange Offer as invalid and ineffective. If we waive our rights to reject a defective tender, subject to the other terms and conditions set forth in the Exchange Offer and the Letter of Transmittal, you will be entitled to the Shares and the Exchange Warrants.

We will pay or cause to be paid all transfer taxes with respect to the tender of the Units pursuant to the Exchange Offer unless the box titled “Special Issuance Instructions” or the box titled “Special Delivery Instructions” on the Letter of Transmittal has been completed, as described in the instructions thereto.

Procedures for Participating in the Exchange Offer

General

In order to participate in the Exchange Offer, you must tender your Units as described below. It is your responsibility to tender your Units. We have the right to waive any defects. However, we are not required to waive defects and are not required to notify you of defects in your tender.

If you have any questions or need help in tendering your Units pursuant to the Exchange Offer, please contact the Exchange Agent whose addresses and telephone numbers are listed on the back cover page of this prospectus.

The method of tendering the Units and delivering the Letters of Transmittal and other required documents is at your election and risk. If delivery is by mail, we recommend that registered mail, properly insured, with return receipt requested, be used. In all cases, sufficient time should be allowed to assure timely delivery. No Units, Letters of Transmittal or other required documents should be sent to the Issuer.

Proper Participation in the Exchange

All Units are currently held in book-entry form through DTC. Except as set forth below with respect to DTC’s automated tender offer program procedures, for a holder of Units to tender their Units pursuant to the Exchange Offer, the Units and a properly completed and duly executed Letter of Transmittal (or a facsimile thereof), together with any signature guarantees and any other documents required by the Instructions to the Letter of Transmittal, or an Agent’s Message in lieu thereof, must be received by the Exchange Agent in accordance with the wire instructions specified in the Letter of Transmittal and at the address or facsimile number set forth on the back cover of this prospectus prior to the Expiration Date.

In all cases, the issuance of the Shares and the Exchange Warrants pursuant to the Exchange Offer will be made only after timely receipt by the Exchange Agent of:

•

a Book-Entry Confirmation with respect to the tender of Units;

​

•

the Letter of Transmittal (or a facsimile thereof) properly completed and duly executed, or an Agent’s Message in lieu thereof; and

​

•

any required signature guarantees and other documents required by the Letter of Transmittal.

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Book-Entry Transfer

The Exchange Agent has or will establish an account with respect to the Units at DTC for purposes of the Exchange Offer, and any financial institution that is a participant in the DTC system and whose name appears on a security position listing as the record owner of the Units may make book-entry delivery of Units by causing DTC to transfer the Units into the Exchange Agent’s account at DTC in accordance with DTC’s procedure for transfer. Although delivery of Units may be effected through book-entry transfer into the Exchange Agent’s account at DTC, either an Agent’s Message or a Letter of Transmittal (or a facsimile thereof) properly completed and duly executed, along with any required signature guarantees and any other required documents, must be transmitted to and received by the Exchange Agent in accordance with the wire instructions specified in the Letter of Transmittal and at one of the addresses set forth on the back cover of this prospectus prior to the Expiration Date.

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Tender of Units and Participation in the Exchange Offer Through DTC’s Automated Tender Offer Program

In lieu of physically completing and signing the Letter of Transmittal and delivering it to the Exchange Agent, DTC participants may electronically transmit their acceptance of the Exchange Offer through DTC’s automated tender offer program, for which the transaction will be eligible. In accordance with DTC’s automated tender offer program procedures, DTC will then verify the acceptance of the Exchange Offer and send an Agent’s Message to the Exchange Agent for its acceptance.

If a holder of Units transmits its acceptance through DTC’s automated tender offer program, delivery of such Units must be made to the Exchange Agent pursuant to the book-entry delivery procedures set forth herein. Unless such holder of Units tenders Units by book-entry delivery, we may, at our option, treat such exercise as defective for purposes of acceptance and the right to receive the Shares and the Exchange Warrants pursuant to the Exchange Offer. Delivery of documents to DTC (physically or by electronic means) does not constitute delivery to the Exchange Agent. If you desire to tender Units prior to the Expiration Date, you must allow sufficient time for completion of the DTC’s automated tender offer program procedures during the normal business hours of DTC on such date.

Procedures for Tendering Units Held Through a Custodian

If you are a beneficial owner of Units, but the holder of such Units is a custodial entity such as a bank, broker, dealer, trust company or other nominee, and you seek to tender your Units pursuant to the Exchange Offer, you must provide appropriate instructions to such holder of the Units in order to tender through DTC’s automated tender offer program with respect to such Units. Beneficial owners may be instructed to complete and deliver an instruction letter to such holder of Units for this purpose. We urge you to contact such person that holds Units for you if you wish to tender your Units pursuant to the Exchange Offer.

Signature Guarantees

Signatures on all Letters of Transmittal must be guaranteed by a recognized participant in the Securities Transfer Agents Medallion Program (a “ Medallion Signature Guarantor ”), unless the Letter of Transmittal is delivered, and any tendered Units thereby are delivered (i) by a registered holder of Units (or by a participant in DTC whose name appears on a security position listing as the owner of such Units) who has not completed either the box entitled “Special Delivery Instructions” or “Special Issuance Instructions” on the Letter of Transmittal or (ii) for the account of a member firm of a registered national securities exchange, a member of the Financial Industry Regulatory Authority or a commercial bank or trust company having an office or correspondent in the United States (each of the foregoing being referred to as an “ Eligible Institution ”). If the Units are registered in the name of a person other than the signer of the Letter of Transmittal, or if Units not accepted for exercise pursuant to the Exchange Offer are to be returned to a person other than such holder of Units, then the signatures on the Letters of Transmittal accompanying the delivery of the Units must be guaranteed by a Medallion Signature Guarantor as described above.

Determination of Validity of Exercise

All questions as to the validity, form, eligibility (including time of receipt) and acceptance of any tendered Units pursuant to this Exchange Offer and any of the procedures described above, and the form and validity (including time of receipt of notices of withdrawal) of all documents will be determined by us in our sole discretion, which determination will be final and binding, subject to the rights of our Unit holders to challenge such determination in a court of competent jurisdiction. We reserve the absolute right to reject any or all tenders of Units determined by us not to be in proper form, or if the acceptance of or tender of Units may, in the opinion of our counsel, be unlawful. We also reserve the right to waive any conditions to the Exchange Offer that we are legally permitted to waive.

Your tender of Units pursuant to the Exchange Offer will not be deemed to have been made until all defects or irregularities in your exercise have been cured or waived. Neither we, the Exchange Agent nor any other person or entity is under any duty to give notification of any defects or irregularities in any exercise or withdrawal of any exercise pursuant to the Exchange Offer, or will incur any liability for failure to give any such notification.

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Please send all materials related to the tender of your Units pursuant to the Exchange Offer to the Exchange Agent only and not to us.

Withdrawal of Tender and Participation in this Exchange Offer

Your right to withdraw the tender of any Units pursuant to the Exchange Offer will expire at the Expiration Date.

To be effective, a written or facsimile transmission notice of withdrawal of an tender of Units or a properly transmitted “Request Message” through DTC’s automated tender offer program system must:

•

be received by the Exchange Agent at one of the addresses specified on the back cover of this prospectus prior to the Expiration Date;

​

•

specify the name of the holder of the tendered Units to be withdrawn;

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•

contain the description of the Units to be withdrawn; and

​

•

be signed by the holder of the Units in the same manner as the original signature on the Letter of Transmittal or be accompanied by documents of transfer sufficient to have the trustee register the transfer of the Units into the name of the person withdrawing the tender of such Units.

​

If the tendered Units to be withdrawn have been delivered or otherwise identified to the Exchange Agent, a signed notice of withdrawal is effective immediately upon receipt by the Exchange Agent of written or facsimile transmission of the notice of withdrawal or revocation (or receipt of a Request Message) even if physical release is not yet effected. A withdrawal of tendered Units can only be accomplished in accordance with the foregoing procedures.

If you withdraw tendered Units, you will have the right to re-tender such Units on or prior to the Expiration Date in accordance with the procedures described above for tendering Units. If we amend or modify the terms of the Exchange Offer, or the information concerning the Exchange Offer, in a manner determined by us to constitute a material change to the holders of the Units, we will disseminate additional Exchange Offer materials and extend the period of the Exchange Offer, including any withdrawal rights, to the extent required by law and as we determine necessary. An extension of the Expiration Date will not affect a holder of Unit’s withdrawal rights, unless otherwise provided or as required by applicable law.

Return of Units

If we do not accept any Units in the Exchange Offer for any reason described in the terms and conditions of the Exchange Offer or if a greater number of Units are tendered than the holder of the Units desires to tender and exchange in the Exchange Offer or if the Units so tendered are withdrawn pursuant to the terms of the Exchange Offer, we will return such Units without expense to the holder. In the case of Units that are tendered by book-entry transfer into the Exchange Offer’s account at DTC according to the procedures described below, such Units will be credited to an account maintained with DTC. These actions will occur as promptly as practicable after the expiration or termination of the Exchange Offer.

Your Representations to Us

By signing or agreeing to be bound by the Letter of Transmittal and other required documents, you will represent to us that, among other things:

•

any Shares or Exchange Warrants that you receive will be acquired in the ordinary course of your business;

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•

you have no arrangement or understanding with any person to participate in the distribution of the Shares or Exchange Warrants;

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•

you are not our “affiliate,” as defined in Rule 405 under the Securities Act;

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if you are not a broker-dealer, you are not engaged in and do not intend to engage in the distribution of the Shares or Exchange Warrants; and

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•

if you are a broker-dealer, that you will receive Shares and Exchange Warrants for your own account in exchange for the tender of the Units that were acquired as a result of market-making activities or other trading activities and that you will deliver a prospectus in connection with any resale of such Shares or Exchange Warrants.

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Resales

Each broker-dealer that receives Shares and Exchange Warrants for its own account in exchange for the tender of Units, where such Units were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Shares and Exchange Warrants. See “Plan of Distribution.”

Conditions to the Exchange Offer

Notwithstanding any other provisions of the Exchange Offer, we will not be required to accept the tendered Units pursuant to the Exchange Offer or to issue the Shares and Exchange Warrants pursuant to the Exchange Offer, and may terminate, amend or extend the Exchange Offer or delay issuing the Shares and Exchange Warrants, if any of the following shall occur or exist or have not been satisfied, or have not been waived by us, prior to the Expiration Date:

•

no action or event shall have occurred, no action shall have been taken, and no statute, rule, regulation, judgment, order, stay, decree or injunction shall have been promulgated, enacted, entered or enforced applicable to the Exchange Offer or the exchange of Units for Shares and Exchange Warrants under the Exchange Offer by or before any court or governmental regulatory or administrative agency, authority or tribunal of competent jurisdiction, including, without limitation, taxing authorities, that challenges the making of the Offer or the exchange of Units for Shares and Exchange Warrants under the Exchange Offer or would reasonably be expected to, directly or indirectly, prohibit, prevent, restrict or delay consummation of, or would reasonably be expected to otherwise adversely affect in any material manner, the Exchange Offer or the exchange of Units for Shares and Exchange Warrants under the Exchange Offer;

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•

there shall not have occurred:

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•

any general suspension of or limitation on trading in securities on The NASDAQ Capital Market, whether or not mandatory,

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•

a declaration of a banking moratorium or any suspension of payments in respect of banks by federal or state authorities in the United States, whether or not mandatory,

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•

a commencement of a war, armed hostilities, a terrorist act or other national or international calamity directly or indirectly relating to the United States, or

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•

in the case of any of the foregoing existing at the time of the commencement of the Offer, a material acceleration or worsening thereof;

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at least 90% of the Units are tendered in the Offer; and

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•

effectiveness with the SEC of our registration statement on Form S-4.

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These conditions are for our benefit and may be asserted by us or may be waived by us, including any action or inaction by us giving rise to any condition, in whole or in part, at any time and from time to time at or prior to the Expiration Date, in our reasonable discretion. We may additionally terminate the Exchange Offer if any condition is not satisfied on or prior to the Expiration Date. If any of these events occur, subject to the termination rights described above, we may (i) return any tendered Units to you, (ii) extend the Exchange Offer and retain all tendered Units until the expiration of the extended Exchange Offer, or (iii) amend the Exchange Offer in any respect by giving oral or written notice of such amendment to the Exchange Agent and making public disclosure of such amendment to the extent required by law. Notwithstanding the foregoing, in no event may we terminate, amend or extend the Exchange Offer or delay issuing the Shares and Exchange Warrants if the occurrence, existence or nonsatisfaction of any of the foregoing resulted from our action or failure to act.

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We have not made a decision as to what circumstances would lead us to waive any condition, and any such waiver would depend on circumstances prevailing at the time of such waiver. Although we have no present plans or arrangements to do so, we reserve the right to amend, at any time, the terms of the Exchange Offer. We will give holders of Units notice of such amendments as may be required by applicable law.

Fees And Expenses

We will bear the expenses of soliciting the tender of the Units pursuant to the Exchange Offer. The principal solicitation is being made by mail; however, we may make additional solicitation by facsimile, email, telephone or in person by our officers and regular employees and those of our affiliates.

We have not retained any dealer-manager in connection with the Exchange Offer and will not make any payments to broker-dealers or others soliciting acceptances of the Exchange Offer. We will, however, pay the Exchange Agent and the Depositary reasonable and customary fees for their services and reimburse them for their related reasonable out-of-pocket expenses. We may also pay brokerage houses and other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding copies of this prospectus, Letter of Transmittal and related documents to the beneficial owners of the Units and in handling or forwarding Units tendered pursuant to the Exchange Offer.

We will pay cash expenses to be incurred in connection with the Exchange Offer. They include:

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SEC registration fees for the Shares and the Exchange Warrants,

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fees and expenses of the Exchange Agent and the Depositary,

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accounting, advisory and legal fees,

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printing costs, and

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related fees and expenses.

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If your Units are held or will be held through a broker or other nominee on your behalf, your broker or other nominee may charge you a commission for doing so.

Transfer Taxes

If you tender your Units pursuant to the Exchange Offer, you will not be required to pay any transfer taxes. We will pay all transfer taxes, if any, applicable to the tender of Units in the Exchange Offer. The tendering holder will, however, be required to pay any transfer taxes, whether imposed on the registered holder or any other person, if:

•

certificates representing the Shares or Exchange Warrants issued in exchange for the Units are to be delivered to, or are to be issued in the name of, any person other than the registered holder of the Units tendered,

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tendered Units are registered in the name of any person other than the person signing the Letter of Transmittal, or

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•

a transfer tax is imposed for any reason other than the issuance of Shares and Exchange Warrants in exchange for the tender of Units in the Exchange Offer.

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If satisfactory evidence of payment of any transfer taxes payable by an exercising holder is not submitted with the Letter of Transmittal, the amount of the transfer taxes will be billed directly to that exercising holder. The Exchange Agent will retain possession of the Shares and/or Exchange Warrants with a value equal to the amount of the transfer taxes due until it receives payment of the taxes.

Consequences of Failure to Tender

If you currently hold Units and do not exercise them in connection with the Exchange Offer, then, following the expiration of the Exchange Offer, your Units will continue to be outstanding according to their terms unmodified. The Units will automatically separate into the Series A Convertible Preferred Stock

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and Series A Warrants on January 23, 2016, provided that the Units will separate earlier if at any time after August 24, 2015, the closing price of Vapor’s common stock is greater than $2.48 per share for 10 consecutive trading days, the Units are delisted, or the Series A Warrants are exercised for cash (solely with respect to the Units that included the exercised Series A Warrants).

Other

Participation in the Exchange Offer is voluntary, and you should carefully consider whether to accept. You are urged to consult your financial, legal, and tax advisors in making your decision on what action to take.

In the future, we may at our discretion seek to acquire untendered Units in open market or privately negotiated transactions, through subsequent exchange offers or otherwise. We have no present plan to acquire any Units that do not participate in the Exchange.

Exchange Agent and Depositary

We have appointed Okapi Partners, LLC as the Exchange Agent for the Exchange Offer and Equity Stock Transfer, LLC as the Depositary for the Exchange Offer. You should direct questions, requests for assistance, and requested for additional copies of the prospectus and the Letter of Transmittal that may accompany this prospectus to the Exchange Agent addressed as follows:

Okapi Partners, LLC
1212 Avenue of the Americas
24th Floor
New York, NY 10036
   
Unit holders and banks and brokerage firms, please call:
Toll Free: (877) 629-6355
Main Phone: (212) 297-0720
You may also email your requests to info@okapipartners.com

The address of the Depositary is:

Equity Stock Transfer, LLC
Attention: Reorganization Department
237 West 37th Street, Suite 601
New York, New York 10018

Deliver to an address other than set forth above will not constitute a valid delivery.

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DESCRIPTION OF SHARES AND EXCHANGE WARRANTS
INCLUDED IN THE EXCHANGE OFFER

In exchange for the tender of the Units pursuant to the terms of the Exchange Offer, we will issue 128 Shares and Exchange Warrants in registered form under the Warrant Agreement between itself and Equity Stock Transfer, LLC, as the Warrant Agent. The material provisions of the Shares and the Exchange Warrants are set forth herein but are only a summary and are qualified in their entirety by the provisions of our Certificate of Incorporation, as amended, which was filed as Exhibit 3.1 to our Form 10-Q for the quarterly period ended September 30, 2015, filed on November 16, 2015, and the Certificate of Amendment to our Certificate of Incorporation and the Warrant Agreement, which have been filed as exhibits to the registration statement, of which this prospectus forms a part. Copies of these documents are also available to security holders of the Company and prospective investors upon request.

This Description of Shares and Exchange Warrants Included in the Exchange Offer is intended to be a useful overview of the material provisions of the Exchange Warrants. Since this Description of Shares and Exchange Warrants Included in the Exchange Offer is only a summary, you should refer to our Certificate of Incorporation, as amended, and the Exchange Warrant for a complete description of our obligations and your rights.

Common Stock

The holders of common stock are entitled to one vote per share on all matters submitted to a vote of stockholders, including the election of directors. There is no cumulative voting in the election of directors. In the event of our liquidation or dissolution, holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preferences of any outstanding shares of preferred stock. Holders of common stock have no preemptive rights and have no right to convert their common stock into any other securities and there are no redemption provisions applicable to our common stock.

The holders of common stock are entitled to any dividends that may be declared by the Board out of funds legally available for payment of dividends subject to the prior rights of holders of preferred stock and any contractual restrictions we have against the payment of dividends on common stock.

Exchange Warrants

The Exchange Warrants will be exercisable following Stockholder Approval and will expire on the fifth anniversary of the Stockholder Approval. Each Exchange Warrant is exercisable for 64 Warrant Shares. The Exchange Warrants are exercisable at an exercise price per share equal to 120% of the closing market price of our common stock on the Expiration Date, subject to adjustment. The exercise price is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting our common stock and the exercise price and number of Exchange Warrants held by a purchaser (or such Unit holder’s direct or indirect transferee) are subject to appropriate adjustment in the event of cash dividends or other distributions to holders of shares of our common stock.

There is no established public trading market for the Exchange Warrants, and we do not expect a market to develop. We do not intend to apply for listing the Exchange Warrants on any securities exchange or for quotation on The NASDAQ Capital Market. Without an active market, the liquidity of the Exchange Warrants will be limited. In addition, in the event our common stock price does not exceed the per share exercise price of the Exchange Warrants during the period when the Exchange Warrants are exercisable, the Exchange Warrants will not have any intrinsic value.

Holders of the Exchange Warrants may exercise their Exchange Warrants to purchase shares of our common stock on or before the expiration date by delivering an exercise notice, appropriately completed and duly signed, and payment of the exercise price for the number of Warrant Shares for which the Exchange Warrant is being exercised. In the event that the registration statement relating to the Warrant Shares is not effective, a holder of Exchange Warrants will have the right, in its sole discretion, to exercise its Exchange Warrants for a net number of Warrant Shares pursuant to the cashless exercise procedures specified in the Exchange Warrants. Warrants may be exercised in whole or in part, and any portion of a warrant not exercised prior to the termination date shall be and become void and of no value.

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The Warrant Shares underlying the Exchange Warrants will be registered pursuant to a separate registration statement after the Stockholder Approval is obtained. The absence of an effective registration statement or applicable exemption from registration does not alleviate our obligation to deliver common stock issuable upon exercise of the Exchange Warrants.

Upon the holder’s exercise of the Exchange Warrant, we will issue the Warrant Shares stock within three trading days of our receipt of notice of exercise and payment of the aggregate exercise price.

The shares of common stock issuable on exercise of the Exchange Warrants will be, when issued in accordance with the Exchange Warrants, duly and validly authorized, issued and fully paid and non-assessable. Following Stockholder Approval, we will authorize and reserve at least that number of shares of common stock equal to the number of shares of common stock issuable upon exercise of all outstanding Exchange Warrants.

If, at any time the warrant is outstanding, we consummate any fundamental transaction, as described in the Exchange Warrants and generally including any consolidation or merger into another corporation, the consummation of a transaction whereby another entity acquires more than 50% of our outstanding common stock, or sell all or substantially all of our assets, or other transaction in which our common stock is converted into or exchanged for other securities or other consideration, the holder of any Exchange Warrants will thereafter receive upon exercise of the Exchange Warrants, the securities or other consideration to which a holder of the number of shares of common stock then deliverable upon the exercise or conversion of such Exchange Warrants would have been entitled upon such consolidation or merger or other transaction.

The exercisability of the Exchange Warrants may be limited in certain circumstances if, upon exercise, the holder (together with the holder’s affiliates and any other persons or entities acting together with the holder as a group) would hold more than 4.99% of our total common stock issued and outstanding. The holder of the warrant has the ability, upon providing us not less than 61 days’ prior written notice, to increase or decrease the foregoing percentage, provided that the percentage cannot at any time exceed 4.99%. Following the six month anniversary of the closing of the Exchange Offer, in the absence of an effective registration statement relating to the common stock issuable upon exercise of the warrant, the holder will have the right to net-settle the warrant in cash.

Amendments and waivers of the terms of the Exchange Warrants require the written consent of the holders of Exchange Warrants representing at least a majority of the shares issuable upon the then outstanding Exchange Warrants, except that no such action may increase the exercise price of a warrant or decrease the number of shares or class of stock obtainable upon exercise of a warrant without the written consent of the holder, and except that so long as the original purchaser of the Exchange Warrants or its affiliates continue to hold Exchange Warrants that are then exercisable for a majority of the shares for which the Exchange Warrants are then exercisable, we must obtain the written consent of such holder or it affiliate, as applicable, for any such amendment or waiver. No amendment will be effective unless it applies to all of the Exchange Warrants then outstanding.

THE HOLDER OF EXCHANGE WARRANTS WILL NOT POSSESS ANY RIGHTS AS A STOCKHOLDER UNDER THAT WARRANT UNTIL THE HOLDER EXERCISES THE EXCHANGE WARRANT. THE EXCHANGE WARRANTS MAY BE TRANSFERRED INDEPENDENT OF THE COMMON STOCK WITH WHICH THEY WERE ISSUED, SUBJECT TO APPLICABLE LAWS.

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will be convertible into common stock immediately upon Early Separation. In the event of a Cash Warrant Exercise Trigger, the Preferred Stock will not be convertible until six-months after the date of the July Prospectus (unless an Early Separation occurs due to a Trading Separation Trigger or Delisting Trigger).

The Series A Convertible Preferred Stock will not be convertible by the holder of such preferred stock to the extent (and only to the extent) that the holder or any of its Affiliates would beneficially own in excess of 4.99% of the common stock of the Company. For purposes of the limitation described in this paragraph, beneficial ownership and all determinations and calculations are determined in accordance with Section 13(d) of the Exchange Act and the rule and regulations promulgated thereunder.

Pursuant to the Certificate of Designation for the Series A Convertible Preferred Stock, if the Company or any of its subsidiaries enter into a “Fundamental Transaction”, each share of Series A Convertible Preferred Stock shall be automatically converted into shares of common stock of the Company, subject to the beneficial ownership limitation discussed in the previous paragraph. A “Fundamental Transaction” includes, but is not limited to, (1) a consolidation, merger stock or share purchase or other business combination in which the stockholders of the Company immediately prior to such consolidation or merger hold less than 50% of the outstanding voting stock after such consolidation or merger, (2) sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its respective properties or assets, or (3) allowing any person to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding voting stock of the Company, or any person or group becomes a beneficial owner of 50% of the aggregate ordinary voting power represented by the issued and outstanding voting stock of the corporation.

The Series A Convertible Preferred Stock has no voting rights, except that the holders of 100% of the Series A Convertible Preferred Stock will be able to effect or validate any amendment, alteration or repeal of any of the provisions of the Certificate of Designation that materially and adversely affects the powers, preferences or special rights of the Series A Convertible Preferred Stock, whether by merger or consolidation or otherwise; provided , however , that in the event of an amendment to the terms of the Series A Convertible Preferred Stock, including by merger or consolidation, so long as the Series A Convertible Preferred Stock remains outstanding with the terms thereof materially unchanged, or the Series A Convertible Preferred Stock is converted into, preference securities of the surviving entity, or its ultimate parent, with such powers, preferences or special rights, taken as a whole, not materially less favorable to the holders of the Series A Convertible Preferred Stock than the powers, preferences or special rights of the Series A Convertible Preferred Stock, taken as a whole, the occurrence of such event will not be deemed to materially and adversely affect such powers, preferences or special rights of the Series A Convertible Preferred Stock, and in such case such holders shall not have any voting rights with respect to the occurrence of such events. An amendment to the terms of the Series A Convertible Preferred Stock only requires the vote of the holders of Series A Convertible Preferred Stock.

With respect to payment of dividends and distribution of assets upon liquidation or dissolution or winding up of the Company, the Series A Preferred Stock shall rank equal to the common stock of the Company. No sinking fund has been established for the retirement or redemption of the Convertible Preferred Stock. As such, the Series A Convertible Preferred Stock is not subject to any restriction on the repurchase or redemption of shares by the Company due to an arrearage in the payment of dividends or sinking fund installments.

The Series A Convertible Preferred Stock also has no liquidation rights or preemption rights, and there are no special classifications of our Board related to the Series A Convertible Preferred Stock.

Series A Warrants Included in the Units

We issued, as part of the Units, Series A Warrants to purchase shares of our common stock. The Series A Warrants will separate from the preferred stock and be exercisable upon the separation of the Units, provided that the Series A Warrants may be exercised for cash at any time after 30 days from the date of the July Prospectus, which exercise shall cause a Cash Warrant Exercise Trigger. The Series A Warrants will terminate on July 23, 2020 and have an exercise price of  $1.24 per share. The exercise price and number of shares of common stock issuable upon exercise is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting our common stock and the exercise price.

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Cashless Exercise Provision.    Holders may exercise Series A Warrants by paying the exercise price in cash or, in lieu of payment of the exercise price in cash by electing to receive a cash payment from us (subject to certain conditions not being met by the Company) equal to the Black Scholes Value (as defined below) of the number of shares the holder elects to exercise, which we refer to as the Black Scholes Payment; provided, that we have discretion as to whether to deliver the Black Scholes Payment or, subject to meeting certain conditions, to deliver a number of shares of our common stock determined according to the following formula, referred to as the Cashless Exercise.

Total Shares = (A x B) / C

Where:

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Total Shares is the number of shares of common stock to be issued upon a Cashless Exercise

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•

A is the total number of shares with respect to which the Series A Warrant is then being exercised.

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B is the Black Scholes Value (as defined below).

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C is the closing bid price of our common stock as of two trading days prior to the time of such exercise.

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As defined in the Series A Warrants, “Black Scholes Value” means the Black Scholes value of an option for one share of our common stock at the date of the applicable Black Scholes Payment or Cashless Exercise, as such Black Scholes value is determined, calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the closing bid price of the common stock as of the date of this prospectus, (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of the Series A Warrant as of the applicable Black Scholes Payment or Cashless Exercise, (iii) a strike price equal to the exercise price in effect at the time of the applicable Black Scholes Payment or Cashless Exercise, (iv) an expected volatility equal to 135% and (v) a remaining term of such option equal to five years (regardless of the actual remaining term of the Series A Warrant).

The shares of common stock issuable on exercise or exchange of the Series A Warrants will be duly and validly authorized and will be, when issued, delivered and paid for in accordance with the Series A Warrants, issued and fully paid and non-assessable. We will authorize and reserve at least that number of shares of common stock equal to the number of shares of common stock issuable upon exercise or exchange of all outstanding Series A Warrants.

The Series A Warrants will not be exercisable or exchangeable by the holder of such warrants to the extent (and only to the extent) that the holder or any of its Affiliates would beneficially own in excess of 4.99% of the common stock of the Company. For purposes of the limitation described in this paragraph, beneficial ownership and all determinations and calculations are determined in accordance with Section 13(d) of the Exchange Act and the rule and regulations promulgated thereunder.

If, at any time a Series A Warrant is outstanding, we consummate any fundamental transaction, as described in the Series A Warrants and generally including any consolidation or merger into another corporation, or the sale of all or substantially all of our assets, or other transaction in which our common stock is converted into or exchanged for other securities or other consideration, the holder of any Series A Warrants will thereafter receive, the securities or other consideration to which a holder of the number of shares of common stock then deliverable upon the exercise or exchange of such Series A Warrants would have been entitled upon such consolidation or merger or other transaction. Notwithstanding the foregoing, in connection with a fundamental transaction, at the request of a holder of Series A Warrants, we will be required to purchase the Series A Warrant from the holder by paying to the holder cash in an amount equal to the Black Scholes Value of the Series A Warrant, as described in such Series A Warrant.

The Series A Warrants have been issued in book-entry form under a warrant agent agreement between Equity Stock Transfer as warrant agent, and us, and were initially represented by one or more book-entry certificates deposited with Equity Stock Transfer.

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Warrants

As of the date of this prospectus, warrants for the issuance of 76.7 million shares of our common stock were outstanding, inclusive of Series A Warrants for the issuance of 75.2 million shares of our common stock, exercisable at a weighted average exercise price of  $1.33 per share, exercisable through various dates expiring through December 2020.

Section 203 of the Delaware General Corporation Law

We are subject to Section 203 of the Delaware General Corporation Law, or Section 203, which prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years after the date that such stockholder became an interested stockholder, with the following exceptions:

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before such date, our Board approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;

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•

upon closing of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least eighty-five percent (85%) of the voting stock of the corporation outstanding at the time the transaction began, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned by: (i) persons who are directors and also officers; and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

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•

on or after such date, the business combination is approved by our Board and authorized at an annual or special meeting of the stockholders, and not by written consent, by the affirmative vote of at least 66 2 ∕ 3 % of the outstanding voting stock that is not owned by the interested stockholder.

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In general, Section 203 defines business combination to include the following:

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any merger or consolidation involving the corporation and the interested stockholder;

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•

any sale, transfer, pledge or other disposition of ten percent (10%) or more of the assets of the corporation involving the interested stockholder;

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subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;

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any transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any class or series of the corporation beneficially owned by the interested stockholder; or

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the receipt by the interested stockholder of the benefit of any loss, advances, guarantees, pledges or other financial benefits by or through the corporation.

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In general, Section 203 defines an “interested stockholder” as an entity or person who, together with the person’s affiliates and associates, beneficially owns, or within three years prior to the time of determination of interested stockholder status did own, fifteen percent (15%) or more of the outstanding voting stock of the corporation.

Bylaw Provisions

Stockholder Action by Written Consent

Our Bylaws provide for action by our stockholders without a meeting with the written consent of stockholders holding the number of shares necessary to approve such action if it were taken at a meeting of stockholders.

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Special Stockholder Meetings

Under our Bylaws, the Chairman of our Board, our Chief Executive Officer and a majority of the number of total authorized directors (without regard to vacancies) may call a special meeting of stockholders. In addition, a special meeting may be called by the stockholders of the Company holding at least one-fourth of all shares entitled to vote at a meeting of stockholders. Our Bylaws establish that no business may be transacted at a special meeting otherwise than as specified in the notice of meeting provided in advance to stockholders, which must be delivered to stockholders between 10 and 60 days prior to the special meeting.

Any aspect of the foregoing, alone or together, could delay or prevent unsolicited takeovers and changes in control or changes in our management.

Listing

We list our common stock and the Units on The NASDAQ Capital Market under the trading symbols “VPCO” and “VPCOU,” respectively. The Exchange Warrants will not be listed on any trading market.

Limitation on Liability and Indemnification Matters

See the section of this prospectus entitled “Executive Compensation — Limitation on Liability and Indemnification Matters.”

Transfer agent and registrar

The transfer agent and registrar for our common stock, Units and Exchange Warrants is Equity Stock Transfer, LLC.

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See notes to unaudited condensed consolidated financial statements

F-2