Successful Close of $41.4 Million Launches “The Vape Store”
Retail Expansion
One of the leading U.S. based distributors and retailers of
e-cigs, e-liquids, e-hookahs and personal vaporizers, Vapor Corp. recently
closed on a $41.4 million capital raise (NASDAQ: VAPO) (NASDAQ: VPCOU). The
newly traded 3.76 million units consist of one-fourth of a share of Series A
preferred stock and 20 Series A warrants, offering an intriguing investment
opportunity.
“Following the completion of our recent public offering, we
are extraordinarily well funded and well-positioned to execute against our
business plan swiftly and judiciously,” said Jeff Holman, CEO of Vapor Corp.
“This significant infusion of capital will allow us to accelerate our retail
expansion through a combination of new store launches and a roll up, in the
form of purchasing existing, profitable vape store locations. The current
retail environment is highly fragmented and ripe for consolidation. “
Vapor Corp. designs, markets, and distributes electronic
cigarettes and accessories and has a broad array of products already available in
the company’s portfolio, including the most popular disposable electronic
cigarette in the industry, KRAVE®, which uses proprietary technology to offer
consumers a product that looks and feels like a real cigarette, but without
ash, flame, odor, tar, or second-hand smoke, Vapor Corp. has an established
retail presence which will enable the company to expand quickly through both
traditional and emerging channels. They have a commitment to innovation
demonstrated by the early adoption of patent-pending biometric fingerprint
locking system and the first-ever Mechanical Vaping Lock (MVL), important
adaptations to help prevent minors from using the products.
E-cig sales in the U.S. more than doubled between 2012 and
2013 to over $630 million and Wells Fargo analysts put subsequent
year-over-year growth at 47 percent for the overall e-cig market. Euromonitor
data indicates equivalent growth for the space last year, with estimates of 40
to 50 percent growth to as high as $3 billion domestically and $5 billion internationally
during 2014. Wells Fargo has even predicted that the e-cig market will outstrip
traditional cigarettes by as early as 2024. Combined UBS and Wells Fargo data
indicates that the U.S. e-cig market will likely be worth around $10 billion
within the next two years alone. These estimates confirm projections out
earlier this year by BIS Research, which put the overall industry as being on
track to hit upwards of $25 billion by 2025, growing at a 22.36 percent
compounded annual growth rate. This is explosive growth by almost anyone’s
standards.
Even more compelling is the underlying structure of the deal
which holds intriguing profit possibilities. Initially priced at $11, each unit
contains one-fourth of a share of Series A preferred stock which is convertible
into 10 shares of common stock and 20 Series A warrantsexercisable at $1.24 per
share. However the warrants were valued at the offering utilizing the
Black-Scholes valuation method. Black-Scholes is a mathematical model used by
the financial industry to value derivative securities such as options and
warrants. This model places the intrinsic value of just the 20 warrants at
$21.80. Digging further into SEC filings reveals that even if the price of the
unit declines the unit holders are entitled to more shares in exchange for
their warrants virtually guaranteeing them a substantial profit
(https://www.sec.gov/Archives/edgar/data/844856/000149315215003079/ex4-2.htm).
The track record of Dawson James in this arena is
exceptional. The firm recently underwrote a similarly structured highly
successful offering, Great Basin Scientific (NASDAQ: GBSN) (NASDAQ: GBSNU),
which has nearly doubled since March.
Vapor Corp. now has the kind of capital momentum needed to
execute its expansion strategy and, given the structure of the deal, investors
have even more compelling reasons to own the units.
To learn more please visit www.vapor-corp.com
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