UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by Registrantx
Filed by the Registrant x Filed by a Party other than the Registrant¨
Check the appropriate box:
x | Preliminary Proxy Statement |
¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
¨ | Definitive Proxy Statement |
¨ | Definitive Additional Materials |
¨ | Soliciting |
VAPOR CORP.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x | No fee required. |
¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
1) | Title of each class of securities to which transaction applies: | |||
2) | Aggregate number of securities to which transaction applies: | |||
3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 | |||
4) | Proposed maximum aggregate value of transaction: | |||
5) | Total fee paid: |
¨ | Fee paid previously with preliminary materials. |
¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
1) | Amount Previously Paid: | |||
2) | Form, Schedule or Registration Statement No.: | |||
3) | Filing Party: | |||
4) | Date Filed: |
Vapor Corp.
3001 Griffin Road
Dania Beach, Florida 33312
(888) 482-7671
To The Stockholders of Vapor Corp.:NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
WeJuly [__], 2016
Dear Fellow Stockholder:
You are pleased to invite youcordially invited to attend a Special Meeting of the stockholdersStockholders of Vapor Corp. (the “Company” “we,” “us,” or “our”), which willto be held at 10:00 A.M. Eastern Time on [Tuesday, March 1], 2016 at our corporate headquarters in Dania Beach, Florida, at the above address foron [Tuesday, August 2], 2016 at 2:00 p.m., local time. The attached notice and proxy statement describe the formal business to be transacted at the meeting.
You may vote your shares by regular mail, Internet, phone or in person at the Special Meeting. Whether or not you plan to attend the Special Meeting, it is important that your shares be represented and voted at the meeting. Therefore, you are urged to complete, sign, date and promptly return the enclosed proxy card in the enclosed postage-paid envelope. Returning your completed proxy card will ensure your representation at the Special Meeting. If you later decide to attend the Special Meeting and wish to change your vote, you may do so simply by voting in person at the meeting. Due to voting rules that may prevent your bank or broker from voting your uninstructed shares on a discretionary basis on non-routine matters, it is important that you cast your vote.
The Special Meeting is being held so that stockholders may consider and take action on the following purposes:proposals, which are more fully described in the Proxy Statement:
to approve an amendment to the |
to transact such other |
The affirmative voteBoard of Directors of Vapor Corp. has determined that the holders of a majority of the outstanding shares of our Common Stock willmatters to be required to approve an amendment to the Certificate of Incorporation to effect the Reverse Stock Split. The affirmative vote of a majority of the shares of Common Stock present in person or by proxyconsidered at the Special Meeting will be required to approve the Adjournment Proposal. The Board has unanimously determined that the Reverse Stock Split and the Adjournment Proposal are in the best interests of the CompanyVapor Corp. and its stockholders and has approved and authorizedstockholders. For the Reverse Stock Split andreasons set forth in the Adjournment Proposal.Proxy Statement, the Board of Directors unanimously recommends a vote “FOR” each matter to be considered.
The Board unanimously recommends that the stockholders vote “FOR” the Reverse Stock Split and the Adjournment Proposal.
The Company’s Board of Directors has fixed the close of business on [February 2],June 16, 2016 as the record date (the“Record Date”) for athe determination of the stockholders entitled to notice of, and to vote at, thisthe Special Meeting. Accordingly, only stockholders of record at the close of business on that date will be entitled to vote at the Special Meeting. A list of the stockholders of record as of the close of business on June 16, 2016 will be available for inspection by any of our stockholders for any purpose germane to the Special Meeting or any adjournment thereof.during normal business hours at our principal executive offices, 3001 Griffin Road, Dania Beach, Florida 33312, beginning on [August 2], 2016 and at the Special Meeting.
Important Notice Regarding the Availability of Proxy Materials for the Special Meeting of Stockholders to Bebe Held on [Tuesday, March 1][August 2], 2016:
We are mailing to many of our stockholders a2016. The Notice of Internet AvailabilitySpecial Meeting of Proxy Materials (which we refer to as a “Notice”), rather than mailing a full paper set of the materials. The Notice contains instructions on how to access our proxy materials on the Internet, as well as instructions on obtaining a paper copy of the proxy materials. This process is more environmentally friendly and reduces our costs to print and distribute these materials. All stockholders who do not receive such a Notice, including stockholders who have previously requested to receive a paper copy of the materials, will receive a full set of paper proxy materials by U.S. mail. An electronic version of theStockholders, Proxy Statement isand Proxy Card are available at:https://www.proxyvote.com.
If You Planwww.proxyvote.com. Information contained on or connected to Attend
Please noteour website is not incorporated by reference into this Proxy Statement and should not be considered a part of this Proxy Statement or any other filing that space limitationswe make it necessary to limit attendance to stockholders. Registrationwith the U.S. Securities and seating will begin at 9:30 A.M. Shares can be voted at the meeting only if the holder is present in person or by valid proxy.Exchange Commission.
For admission to the meeting, each stockholder may be asked to present valid picture identification, such as a driver’s license or passport, and proof of stock ownership asOn behalf of the Record Date, such asBoard of Directors and the enclosed proxy card or a brokerage statement reflecting stock ownership. Cameras, recording devicesofficers and other electronic devices will not be permittedemployees of Vapor Corp., I would like to take this opportunity to thank our stockholders for their continued support of Vapor Corp. We look forward to seeing you at the meeting.
If you do not plan on attending the meeting, please vote your shares via the Internet, by phone or by signing and dating the enclosed proxy and return it in the business envelope provided. Your vote is very important.
By the Order of the Board of Directors: | |
/s/Jeffrey Holman | |
Jeffrey Holman | |
Chairman of the Board and Chief Executive Officer |
Dated: February [__], 2016
Whether or not you expect to attend in person, we urge you to vote your shares at your earliest convenience. This will ensure the presence of a quorum at the meeting. Promptly voting your shares via the Internet, by phone or by signing, dating, and returning the enclosed proxy card will save us the expenses and extra work of additional solicitation. An addressed envelope for which no postage is required if mailed in the United States is enclosed if you wish to vote by mail. Submitting your proxy now will not prevent you from voting your shares at the meeting if you desire to do so, as your proxy is revocable at your option.
Your vote is important, so please act today!
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS | |
PROXY STATEMENT | 1 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 5 |
PROPOSAL 1: AUTHORIZED SHARE INCREASE | 7 |
OTHER MATTERS | 10 |
APPENDIX A | A-1 |
Vapor Corp.
3001 Griffin Road
Dania Beach, Florida 33312
(888) 482-7671
SPECIAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
QUESTIONS AND ANSWERS REGARDING THE SPECIAL MEETING
Why am I receiving these materials?
These proxy materials are being sent to the holders of shares of the commonvoting stock of Vapor Corp., a Delaware corporation, which we refer to as“Vapor,” “Vapor” or the“Company,” “we,” “us,” or“our “Company,” in connection with the solicitation of proxies by our Board of Directors, which we refer to as the“Board “Board,” for use at the Special Meeting of Stockholders to be held at 10:2:00 A.M. Eastern Timep.m. on [Tuesday, March 1][August 2], 2016 at our corporate headquarters at the above address in Dania Beach, Florida. The proxy materials relating to the Special Meeting are first being mailed to stockholders entitled to vote at the meeting on or about February [__]July [19], 2016.
Why is the Company doing a reverse stock split?
The quantitative listing standards of The NASDAQ Stock Market, or NASDAQ, require, among other things, that listed companies maintain a minimum closing bid price of $1.00 per share and maintain a minimum value of listed securities of $35 million. The Company believes that the Reverse Stock Split will increase the stock price of shares of its common stock and increase the likelihood that the Company will meet the required NASDAQ requirements.
Why did I receive a notice in the mail regarding the Internet availability of the proxy materials instead of a paper copy of the full set of proxy materials?
We are pleased to be using the SEC rule that allows companies to furnish their proxy materials over the Internet. As a result, we are mailing to many of our stockholders a notice of the Internet availability of the proxy materials instead of a paper copy of the proxy materials. All stockholders receiving the notice will have the ability to access the proxy materials over the Internet and request to receive a paper copy of the proxy materials by mail. Instructions on how to access the proxy materials over the Internet or to request a paper copy may be found in the notice of the Internet availability of the proxy materials. In addition, the notice contains instructions on how you may request to access proxy materials in printed form by mail or electronically on an ongoing basis.
Why didn’t I receive a notice in the mail about the Internet availability of the proxy materials?
We are providing some of our stockholders, including stockholders who have previously requested to receive paper copies of the proxy materials, with paper copies of the proxy materials instead of a notice of the Internet availability of the proxy materials.
In addition, we are providing notice of the Internet availability of the proxy materials by e-mail to those stockholders who have previously elected delivery of the proxy materials electronically. Those stockholders should have received an e-mail containing a link to the website where those materials are available and a link to the proxy voting website.
How can I access the proxy materials over the Internet?
Your notice of the Internet availability of the proxy materials, proxy card or voting instruction card will contain instructions on how to:
View our proxy materials for the Special Meeting on the Internet; and |
Instruct us to send our future proxy materials to you electronically by e-mail. |
Our proxy materials are also available atwww.proxyvote.com.
Your notice of the Internet availability of the proxy materials, proxy card or voting instruction card will contain instructions on how you may request to access proxy materials electronically on an ongoing basis. Choosing to access your future proxy materials electronically will help us conserve natural resources and reduce the costs of distributing our proxy materials. If you choose to access future proxy materials electronically, you will receive an e-mail with instructions containing a link to the website where those materials are available and a link to the proxy voting website. Your election to access proxy materials by e-mail will remain in effect until you terminate it.
1 |
How may I obtain a paper copy of the proxy materials?
Stockholders receiving a notice of the Internet availability of the proxy materials will find instructions about how to obtain a paper copy of the proxy materials on their notice. Stockholders receiving notice of the Internet availability of the proxy materials by e-mail will find instructions about how to obtain a paper copy of the proxy materials as part of that e-mail. All stockholders who do not receive a notice or an e-mail will receive a paper copy of the proxy materials by mail.
Who is entitled to vote?
Our Board has fixed the close of business on [February 2],June 16, 2016 as the Record Daterecord date for a determination of stockholders entitled to notice of, and to vote at, this Special Meeting or any adjournment thereof. On the Record Date,record date, there were [58,881,575]approximately 224.2 million shares of our common stock (“Common Stock”) outstanding. Each share of Common StockVapor common stock represents one vote that may be voted on each matter that may come before the Special Meeting. As of the Record Date,record date, Vapor had issued no other outstanding securities with voting rights.preferred stock which is entitled to vote.
What is the difference between holding shares as a record holder and as a beneficial owner?
If your shares are registered in your name with our transfer agent, Equity Stock Transfer, LLC, you are the “record holder” of those shares. If you are a record holder, these proxy materials have been provided directly to you by Vapor.
If your shares are held in a stock brokerage account, a bank or other holder of record, you are considered the “beneficial owner” of those shares held in “street name.” If your shares are held in street name, these proxy materials have been forwarded to you by that organization. As the beneficial owner, you have the right to instruct this organization on how to vote your shares.
Who may attend the Special Meeting?meeting?
Record holders and beneficial owners may attend the Special Meeting. If your shares are held in street name, you will need to bring a copy of a brokerage statement or other documentation reflecting your stock ownership as of the Record Date.record date. Please see below for instructions on how to vote at the Special Meeting if your shares are held in street name.
How do I vote?
Whether you hold shares directly as the stockholder of record or through a broker, trustee or other nominee as the beneficial owner, you may direct how your shares are voted without attending the Special Meeting. There are three ways to vote by proxy:
(1) Vote by Internet. By following the instructions on the notice, proxy card or voting instruction card.
1. | Vote by Internet. By following the instructions on the notice, proxy card or voting instruction card. |
Vote by phone. Stockholders of record may vote by phone by calling 1 (800) 690-6903. Stockholders who are beneficial owners of their shares may vote by phone by calling the number specified on the voting instruction card provided by their broker, trustee or nominee. |
(2) Vote by phone. Stockholders of record may vote by phone by calling 1 (800) 690-6903. Stockholders who are beneficial owners of their shares may vote by phone by calling the number specified on the voting instruction card provided by their broker, trustee or nominee.
(3) Vote by mail. Stockholders of record may vote by mail by completing, signing and dating their proxy card or voting instruction card and mailing it in the accompanying pre-addressed envelope.
3. | Vote by mail. Stockholders of record may vote by mail by completing, signing and dating their proxy card or voting instruction card and mailing it in the accompanying pre-addressed envelope. |
If you vote by Internet or phone, please DO NOT mail your proxy card.
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What constitutes a quorum?
To carry on the business of the Special Meeting, we must have a quorum. A quorum is present when a majority of the outstanding shares of Common Stockstock entitled to vote, as of the Record Date,record date, are represented in person or by proxy. Shares owned by Vapor are not considered outstanding or considered to be present at the Special Meeting. Broker non-votes (because there are routine matters presented at the Special Meeting) and abstentions are counted as present for the purpose of determining the existence of a quorum.
What happens if Vapor is unable to obtain a quorum?
If a quorum is not present to transact business at the Special Meeting or if we do not receive sufficient votes in favor of the proposalsproposal by the date of the Special Meeting, the persons named as proxieschairperson of the meeting may propose one or more adjournments of the Special Meeting to permit solicitation of proxies.
What is a broker non-vote?
If your shares are held in street name, you must instruct the organization who holds your shares how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any non-routine proposal. This vote is called a “broker non-vote.” Broker non-votes do not count as a vote “FOR” or “AGAINST” any of the proposals. Because ProposalsProposal 1 and 2 requirerequires a majority of our outstanding shares to vote “FOR” approval, a broker non-vote will adversely affect these proposals.that proposal.
If you are the stockholder of record, and you sign and return a proxy card without giving specific voting instructions, then the proxy holders will vote your shares in the manner recommended by our Board on all matters presented in this Proxy Statement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the meeting. If your shares are held in street name and you do not provide specific voting instructions to the organization that holds your shares, the organization may generally vote at its discretion on routine matters, but not on non-routine matters. If you sign your vote instruction form but do not provide instructions on how your broker should vote, your broker will vote your shares as recommended by our Board on any non-routine matter. See the note below and the following question and answer.
What if I abstain from voting?Is Proposal 1 “routine” or “non-routine”?
Proposal 1 is non-routine.
How are abstentions treated?
Abstentions with respect to a proposal are counted foronly have an effect on the purposesoutcome of establishing a quorum. Since the Reverse Stock Splitany matter being voted on that requires the affirmative vote ofapproval based on our total voting stock outstanding. Because Proposal 1 requires a majority of our outstanding shares of Common Stock and since, pursuant to the Company’s bylaws, the Adjournment Proposal must be approved by the majority of the shares of Common Stock present at the meeting, a properly executed proxy card marked ABSTAIN with respect to any proposal at the Special Meeting will have the same effect as voting AGAINST that proposal.
What effect does a broker non-vote have?
Brokers and other intermediaries, holding shares of Common Stock in street name for their customers, are generally required to vote such shares in“FOR” approval, abstentions will adversely affect the manner directed by their customers. If their customers do not give any direction, brokers may vote such shares on routine matters but not on non-routine matters. Our management believes that the Reverse Stock Split and the Adjournment Proposal are routine matters. Consequently, if customers do not give any direction, brokers will be permitted to vote shares of Common Stock at the Special Meeting in relation to these matters. However, we encourage you to submit your voting instructions to your broker to ensure your shares of Common Stock are voted at the Special Meeting.
Any shares of Common Stock represented at the Special Meeting but not voted (whether by abstention, broker non-vote or otherwise) with respect to the proposals to approve the Reverse Stock Split or the Adjournment Proposal will have the same effect as a vote AGAINSTsuch proposal.
How many votes are needed for each proposalProposal 1 to pass, is broker discretionary voting allowed and what is the effect of an abstention?abstentions?
Proposals | Vote Required | Broker Discretionary Vote Allowed | Effect of Abstentions on the Proposal | ||||||
| |||||||||
1. To | Majority of the | No | Vote against |
3 |
What are the voting procedures?
In voting by proxy with regard to the proposals, you may vote in favorTable of each proposal or against each proposal, or in favor of some proposals and against others, or you may abstain from voting on any of these proposals. You should specify your respective choices on the accompanying proxy card or your vote instruction form.Contents
Is my proxy revocable?
You may revoke your proxy and reclaim your right to vote up to and including the day of the Special Meeting by giving written notice to the Corporate Secretary of Vapor, by delivering a proxy card dated after the date of the proxy or by voting in person at the Special Meeting. All written notices of revocation and other communications with respect to revocations of proxies should be addressed to: Vapor Corp., 3001 Griffin Road, Dania Beach, Florida 33312, Attention: Corporate Secretary.
Who is paying for the expenses involved in preparing and mailing this proxy statement?
All of the expenses involved in preparing, assembling and mailing these proxy materials and all costs of soliciting proxies will be paid by Vapor. In addition to the solicitation by mail, proxies may be solicited by our officers and regular employees by telephone or in person. Such persons will receive no compensation for their services other than their regular salaries. Arrangements will also be made with brokerage houses and other custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of the shares held of
record by such persons, and we may reimburse such persons for reasonable out of pocket expenses incurred by them in so doing. We have engaged Okapi Partners, LLC as proxy solicitor at an estimated expense of $8,000.$12,000.
What happens if additional matters are presented at the Special Meeting?
Other than the items of business described in this Proxy Statement, we are not aware of any other business to be acted upon at the Special Meeting. If you submit a signed proxy card, the persons named as proxy holders, Messrs. Jeffrey Holman and Gregory Brauser,Christopher Santi, will have the discretion to vote your shares on any additional matters properly presented for a vote at the Special Meeting.
What is “householding” and how does it affect me?
Record holders who have the same address and last name will receive only one copy of their proxy materials, unless we are notified that one or more of these record holders wishes to continue receiving individual copies. This procedure will reduce our printing costs and postage fees. Stockholders who participate in householding will continue to receive separate proxy cards.
If you are eligible for householding, but you and other record holders with whom you share an address, receive multiple copies of these proxy materials, or if you hold Vapor stock in more than one account, and in either case you wish to receive only a single copy of each of these documents for your household, please contact our Corporate Secretary at: Vapor Corp., 3001 Griffin Road, Dania Beach, Florida 33312;33312, (888) 482-7671.
If you participate in householding and wish to receive a separate copy of these proxy materials, or if you do not wish to continue to participate in householding and prefer to receive separate copies of these documents in the future, please contact our Corporate Secretary as indicated above. Beneficial owners can request information about householding from their brokers, banks or other holders of record.
Do I Have Dissenters’ (Appraisal) Rights?have dissenters’ (appraisal) rights?
Appraisal rights are not available to Vapor stockholders with any of the proposalsproposal brought before the Special Meeting.
Interest of Officersofficers and Directorsdirectors in Mattersmatters to Be Acted Uponbe acted upon.
If any of the proposalsproposal described in this proxy statement areis approved, none of our officers and directors will receive any extra or special benefit not shared on a pro rata basis by all other holders of the Company’s securities.
The Board Recommendsrecommends that Stockholders Votestockholders vote “For” Proposals 1 and 2.Proposal No. 1.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors, executive officers, and persons who own more than 10% of our common stock to file initial reports of ownership and changes in ownership of our common stock and other equity securities with the SEC. These individuals are required by the regulations of the SEC to furnish us with copies of all Section 16(a) forms they file. Based solely on a review of the copies of the forms furnished to us, and written representations from reporting persons that no Forms 5 were required to report delinquent filings, we believe that all filing requirements applicable to our officers, directors and 10% beneficial owners were complied with during fiscal year 2015.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownershipnumber of shares of our Common Stock beneficially owned as of [February 2],June 30, 2016 for:
Except as indicateda group. Unless otherwise specified in footnotesthe notes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them, based on information provided to us by such stockholders. Unless otherwise indicated, the address for each director and executive officer listedperson is: c/o Vapor Corp., 3001 Griffin Road, Dania Beach, Florida 33312.
Name of Beneficial Owner | Number of Common Share Equivalents Beneficially Owned1 | Percentage of Common Share Equivalents Beneficially Owned1 | ||||||
Name of Executive Officers and Directors: | ||||||||
Jeffrey Holman2 | 232,221 | * | ||||||
Christopher Santi3 | 23,000 | * | ||||||
Gregory Brauser4 | 207,719 | * | ||||||
Gina Hicks5 | 0 | 0 | % | |||||
William Conway III6 | 0 | 0 | % | |||||
Daniel MacLachlan7 | 0 | 0 | % | |||||
Nikhil Raman8 | 0 | 0 | % | |||||
All Executive Officers and Directors as a Group(7 Persons) | 542,757 | * | ||||||
Other Five Percent Stockholder: | ||||||||
[None] | [ | ] | [_____ | ]% |
Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership (1) | Percent of Class (1) | |||||||
Directors and Named Executive Officers: | ||||||||||
Common Stock | Jeffrey Holman (2) | 3 | * | |||||||
Common Stock | Gina Hicks (3) | 0 | * | |||||||
Common Stock | Christopher Santi (4) | 3 | * | |||||||
Common Stock | Gregory Brauser (5) | 9 | * | |||||||
Common Stock | Clifford J. Friedman (6) | 0 | * | |||||||
Common Stock | Anthony Panariello, M.D. (7) | 0 | * | |||||||
Common Stock | All directors and executive officers as a group (6 persons) (8) | 15 | * | |||||||
5% Stockholders: | ||||||||||
Common Stock | Kevin Frija | 1,405,910,203 | 28.12 | % |
1 Applicable percentages are based on [58,881,575]* Less than 1%.
(1) | Applicable percentages are based on approximately 4.7 billion shares of Common Stock outstanding as of June 30, 2016, adjusted as required by rules of the SEC. Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of Common Stock underlying options, warrants and convertible notes currently exercisable or convertible, or exercisable or convertible within 60 days are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person. Unless otherwise indicated in the footnotes to this table, Vapor believes that each of the stockholders named in the table has sole voting and investment power with respect to the shares of Common Stock indicated as beneficially owned by them. The table includes only vested securities or securities that will vest and become exercisable within 60 days. |
(2) | Holman: A director and executive officer. |
(3) | Hicks: An executive officer. |
(4) | Santi:An executive officer. Includes vested options. |
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2Jeffrey Holman: A director and executive officer.
(5) | Gregory Brauser: A former executive officer. |
3Christopher Santi: An executive officer. Includes 8,000 vested options.
(6) | Friedman: A director. |
4Gregory Brauser: A director and executive officer. Includes 6,924 shares of common stock underlying restricted stock units which are deliverable within 30 days.
(7) | Panariello:A director. |
5Gina Hicks: The chief financial officer.
6William Conway III: A director.
7Daniel MacLachlan: A director.
8Nikhil Raman: A director.
(8) | Total D&O: Includes securities beneficially owned by executives including Named Executive Officers. |
6 |
PROPOSAL 1—REVERSE STOCK SPLIT1. AUTHORIZED SHARE INCREASE
Introduction
Our Board has unanimously determined that it is in the best interests of the Company and our stockholders to amend Section 4 of the Certificate of Incorporation (such amendment as shown inAppendix B)A) to effect a reverse stock splitincrease the number of our issued and outstandingauthorized shares of Common Stock at a ratioto 750,000,000,000, par value $0.0001 (the “Reverse Stock SplitAuthorized Share Increase”).
Why did the Board approve the Reverse Stock Split?Authorized Share Increase?
On January 22,As of June 30, 2016, we received notice that the Nasdaq Listing Qualifications Staff had determined that the continued listingthere were no shares of Vapor’s common stock is no longer in the public interest as that concept is described in Nasdaq Listing Rule 5110. The Staff indicated that, given the potential for dilution of Vapor’s shareholders that may be caused by the cashless exercise provision of Vapor’s Series A Warrants, the Staff believes that the grace period provided to Vapor to regain compliance with the $1.00 bid price requirement is no longer warranted. We have been provided a hearing on March 10, 2016 to determine if theunissued and unreserved Common Stock will be delisted and informing us thatavailable for issuance under our Common Stock may be involuntarily delisted from trading on The NASDAQ Capital Market if we fail to regain compliance with (i)authorized capital. Because the minimum closing bid price requirement of $1.00 perCompany’s authorized share capital is currently 5,000,000,000 shares of Common Stock, we have insufficient shares to cover our obligations unless the Company’s stockholders approve the Authorized Share Increase. On March 8, 2016, the Company effected a 1:70 reverse stock split and (ii)on May 31, 2016, the market valueCompany effected a 1:20,000 reverse stock split. As of listed securities requirementJune 30, 2016, there were approximately 4.7 billion shares of $35 million.Common Stock outstanding, approximately 278 million shares are reserved for pending Series A delistingWarrant exercise transactions, approximately 49,000 shares (32 shares on a post-split basis including rounding up to the nearest whole share for fractional shares) reserved for future issuance of options and restricted stock under our 2015 Equity Incentive Plan, and approximately 59,000 shares (60 shares on a post-split basis including rounding for fractional shares) reserved upon the conversion of our Series A Convertible Preferred Stock. Based on the closing bid price of our Common Stock is likely to reduce the liquidityon June 30, 2016 of our$0.0001, we would need approximately 723 billion shares of Common Stock and may inhibit or preclude our ability to raise additional financing and may also materially and adversely impact our credit terms with our vendors.settle the cashless exercise of all outstanding Series A Warrants.
The quantitative listing standards of The NASDAQ Stock Market, or NASDAQ, require, among other things, that listed companies maintain a minimum closing bid price of $1.00 per share and maintain a minimum value of listed securities of $35 million. We failed to satisfy the minimum bid price threshold and the minimum value of listed securities threshold for 30 consecutive trading days, and on September 14, 2015,If we received a letter from NASDAQ indicating our deficiency.
On February 1, 2016, the Company’s stockholdersdo not have sufficient available authorized the Board to implement a reverse stock split of our Common Stock at a ratiofor issuance upon exercise of between 10the Series A Warrants, we are required to 1 and 70make cash payments in lieu of the issuance of Common Stock. We do not believe that we currently have sufficient available Common Stock to 1 that has not been effected yet. Due to the recent decrease infully satisfy these obligations based on the price of our Common Stock as of June 30, 2016. We, therefore, could be required to a closing pricemake significant cash payments, which we estimate could be up to approximately $72.3 million. As of $0.0125 on February 2,June 30, 2016, we had cash and cash equivalents of approximately $17 million and as of the Board has determined a higher ratio with respectdate hereof we had insufficient cash and cash equivalents to settle all of the reverse stock split will allow the Company the best opportunity to regain and maintain compliance with the minimum closing bid price requirement of $1.00 per share of Common Stock. If the Reverse Stock Split is approved, the Board will not implement the previously authorized reverse stock split.Series A Warrants in cash.
What is the purpose of the Reverse Stock Split?
Given the increased market volatility of our Common Stock, the challenging environment in our industry and our potential lack of liquidity, we may be unable to regain compliance with the closing bid price requirement. A delisting of our Common Stock is likely to reduce the liquidity of our Common Stock and may inhibit or preclude our ability to raise additional financing and may make it difficult for our stockholders to sell any securities if they desire or need to sell them.Authorized Share Increase?
The Board has consideredrecommends the potential harmAuthorized Share Increase for the following reasons:
· | To permit the Company to issue shares of Common Stock to holders of the Company’s Series A Warrants upon exercise of the Series A Warrants; |
· | To permit the Company to make future issuances or exchanges of Common Stock for capital raising purposes or to restructure outstanding securities of the Company, including the Series A Warrants; and |
· | To permit the Company to make future issuances of options, warrants and other convertible securities. |
Why would the Company not have sufficient shares of Common Stock to issue shares of Common Stock upon the exercise of the Series A Warrants?
On July 29, 2015, we sold 3,761,657 Units in a public offering. Each Unit consisted of one-fourth of a share of Series A Convertible Preferred Stock and 20 Series A Warrants (0.000014 Series A Warrants on a post-split basis). Each one-fourth share of Series A Convertible Preferred Stock is convertible into ten shares of Common Stock (0.000007 on a post-split basis) at the option of the holder. Each Series A Warrant is exercisable into one share of common stock (0.0000007 on a post-split basis) at an exercise price of $1.24 per share ($1,736,000 per share on a post-split basis) 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 Company and our stockholders should NASDAQ delist our Common Stock. Delisting from NASDAQ would adversely affect our ability to raise additional financing through the public or private sale of equity securities and would significantly affect the ability of investors to trade our securities. Delisting would also likely negatively affect the value and liquidity of our Common Stock because alternatives, such as the OTC Bulletin Board and the pink sheets, are generally considered to be less efficient markets.
We believe that the Company’s best option to meet NASDAQ’s $1.00 minimum bid price requirement required by NASDAQ is to effect the Reverse Stock Split to increase the per-share trading price of our Common Stock. Given the volatility and fluctuations in the capital markets, the Board believes that the likelihood of our stock price increasing to meet the NASDAQ listing requirements without the Reverse Stock Split is remote and that the Company likely will have to take additional actions to comply with NASDAQ requirements.Black Scholes Value (as discussed
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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.”
The Series A Warrant’s “cashless exercise” feature is 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 ($1,736,000 per share on a post-split basis) or (2) in a “cashless exercise” using a Black Scholes Value (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 two days before exercise notice is submitted or, instead, the Company has the option to pay the BSV in cash to the warrant holder. As defined in the Series A Warrants, BSV is determined based on the BSV 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 BSV 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 our Common Stock as of July 23, 2015 (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, 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.
What could happen if the stockholders do not approve the Reverse Stock Split, the Company may be delisted from The NASDAQ Capital Market due to our failure to maintain a minimum bid price for our Common Stock of $1.00 per share as required by the NASDAQ Marketplace Rules. Even if the Company effects the Reverse Stock Split, the Company will still be subject to delisting pending its upcoming hearing with NASDAQ.Authorized Share Increase?
· | If we do not receive stockholder approval for the Authorized Share Increase, we will have insufficient authorized shares of Common Stock to settle the Series A Warrants and we will be required to make cash payments with respect to the exercise of the Series A Warrants, which we estimate to be approximately $72.3 million. As of June 30, 2016, we had cash and cash equivalents of approximately $17 million and as of the date hereof we had insufficient cash and cash equivalents to settle all of the Series A Warrants in cash. To the extent our cash and cash equivalents are insufficient to enable us to make cash payments with respect to the exercise of the Series A Warrants, if we are unable to negotiate a settlement or restructuring with the holders of the Series A Warrants, we may be required to seek protection under the federal bankruptcy laws. |
· | If we do not increase our authorized shares of Common Stock, we may be unable to conduct further offerings of our equity securities to raise additional capital to implement our business plan or to further our corporate objectives. |
What amendments are being made to the Certificate of Incorporation?
The following paragraph will be added to Section 4 of the Certificate of Incorporation:Incorporation shall be amended to read as follows:
“Upon the effectiveness4. The total number of this Certificateshares of Amendment to the Certificate of Incorporation ofstock which the Corporation every [number of shares]is authorized to issue is750,001,000,000. 750,000,000,000 shares of the Corporation’s issued and outstanding Common Stock,shall be common stock, par value $0.0001 per share that are issued(“Common Stock”), and outstanding immediately prior to [date]1,000,000 shall automatically and without any further action onbe preferred stock, par value $0.001 per share (“Preferred Stock”). Except as otherwise provided in this Certificate of Incorporation, authority is hereby vested in the partBoard of Directors of the Corporation from time to time to provide for the issuance of shares of one or more series of Preferred Stock and in connection therewith to fix by resolution or resolutions providing for the holderissue of any such series, the number of shares to be included therein, the voting powers thereof, be combinedand such of the designations, preferences and relative participating, optional or other special rights and qualifications, limitations and restrictions of each such series, including, without limitation, dividend rights, voting rights, rights of redemption, or conversion into one (1) validly issued, fully paidCommon Stock rights, and non-assessable shareliquidation preferences, to the fullest extent now or hereafter permitted by the Delaware General Corporation Law and any other provisions of the Corporation’s Common Stock, par value $0.0001 per share, provided that inCertificate of Incorporation, as amended. The Board of Directors is further
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authorized to increase or decrease (but not below the event a stockholder would otherwise be entitled to a fractionnumber of a sharesuch shares of Common Stock pursuantsuch class or series then outstanding) the number of shares of any such class or series subsequent to the provisionsissuance of this Article, such stockholder shall receive one whole shareshares of Common Stock in lieu of such fractional share and no fractional shares shall be issued.that class or series.”
Does the Board recommend approval of the Reverse Stock Split?Authorized Share Increase?
Yes. After considering the entirety of the circumstances, the Board has unanimously concluded that the Reverse Stock SplitAuthorized Share Increase is in the best interests of the Company and its stockholders and the Board unanimously recommends that the Company’s stockholders vote in favor of the Reverse Stock Split.Authorized Share Increase.
What vote is required to approve the Reverse Stock Split?Authorized Share Increase?
The affirmative vote of the holders of a majority of the outstanding shares of our Common Stock is required to amend theour Certificate of Incorporation to effect the Reverse Stock Split.Authorized Share Increase. Failures to vote, abstentions and abstentionsbroker “non-votes”, if any, will be the equivalent of a vote against“AGAINST” this proposal.
Material Effects of the Proposed Reverse Stock SplitIF OUR STOCKHOLDERS DO NOT APPROVE THE AUTHORIZED SHARE INCREASE, THE BOARD BELIEVES THAT THE LONG-TERM FINANCIAL VIABILITY OF THE COMPANY COULD BE THREATENED DUE TO (1) THE CASH PAYMENTS REQUIRED OF THE COMPANY IF IT IS UNABLE TO SETTLE THE EXERCISES OF THE SERIES A WARRANTS WITH SHARES OF COMMON STOCK AND (2) THE COMPANY’S INABILITY TO CONSUMMATE FUTURE EQUITY OFFERINGS TO MEET ITS ONGOING EXPENSES.
Upon the effectiveness of the amendment to our Certificate of Incorporation effecting the Reverse Stock Split, the outstanding shares of our Common Stock will be combined into a lesser number of shares such that one share of our Common Stock will be issued for every two hundred shares of our Common Stock. In connection with the Reverse Stock Split, any fractional shares that would otherwise be issued as a result of the Reverse Stock Split will be rounded up to the nearest whole share. Even if stockholder approval of the Reverse Stock Split is obtained, the Board may abandon the Reverse Stock Split in its sole discretion if it determines that the Reverse Stock Split is no longer in the best interests of the Company and its stockholders.
The Reverse Stock Split will not change the number of authorized shares of our Common Stock.
The Reverse Stock Split will affect all holders of our Common Stock uniformly and will not affect any stockholder’s percentage ownership interest in the Company (subject to the treatment of fractional shares). In addition, the Reverse Stock Split will not affect any holder of Common Stock’s proportionate voting power (subject to the treatment of fractional shares).
Based on our shares of Common Stock outstanding as of the Record Date, the principal effects of the Reverse Stock Split will be that the number of shares of our Common Stock issued and outstanding will be reduced from [58,881,575] shares as of the Record Date to a range of [588,816] shares (if a 1-for-100 ratio is chosen) or to [58,882] shares (if a 1-for-1,000 ratio is chosen), depending on the exact exchange ratio chosen by the Board and without giving effect to any rounding up of fractional shares.
The table below sets forth, as of [February 2], 2016 and for illustrative purposes only, certain effects of the potential ratios of between 1-for-100 and 1-for-1,000, inclusive, including on our total outstanding Common Stock equivalents (without giving effect to the treatment of fractional shares).
In determining which ratio to implement, if any, following receipt of stockholder approval, our Board may consider, among other things, various factors such as:
The principal effects of the Reverse Stock Split will be as follows:
Possible Anti-Takeover Implications of the ReverseAuthorized Share Increase
The Company has no intent or plan to employ the additional unissued authorized shares as an anti-takeover device. As indicated above, the purpose of the Authorized Share Increase is to ensure that we have sufficient authorized Common Stock Splitto, among other things, consummate future equity financings and attempt to mitigate risk in connection with the exercise of the Series A Warrants. However, the Company’s authorized but unissued shares of Common Stock could (within the limits imposed by applicable law and regulation) be issued in one or more transactions that could make a change of control more difficult and therefore more unlikely.
Our Board did not propose the Authorized Share Increase in response to any effort known to our Board to accumulate Common Stock or to obtain control of the Company by means of a merger, tender offer or solicitation in opposition to management. Further, our Board does not currently contemplate recommending the adoption of any other amendments to our Certificate of Incorporation that could be construed as limiting the ability of third parties to take over or effect a change of control.
The issuance in the future of additional authorized shares of our Common Stock made available by the Reverse Stock Split may have the effect of diluting the earnings or loss per share and book value per share, as well as the ownership and voting rights of the holders of our then-outstanding shares of Common Stock. In addition, an increase in the number of authorized but unissued shares of our Common Stock due to the Reverse Stock Split may have a potential anti-takeover effect, as our ability to issue additional shares could be used to thwart persons, or otherwise dilute the stock ownership of stockholders, seeking to control us. Further, the ability to issue our shares of Common Stock at a lower price may afford the Company added flexibility to deter a potential takeover of the Company by diluting the shares held by a potential suitor or issuing shares to a stockholder that will vote in accordance with the Board’s desires at a very low par value. A takeover may be beneficial to independent stockholders because, among other reasons, a potential suitor may offer such stockholders a premium for their shares of Common Stock compared to the then-existing market price. The Reverse Stock SplitAuthorized Share Increase is not being recommended by our Board as part of an anti-takeover strategy.
Reservation of Right to Delay the Filing of, or Abandon, the Reverse Stock Split and Par Value Change
If stockholder approval is obtained to effect the Reverse Stock Split, the Board will have the authority to implement the Reverse Stock Split on or before [April 15], 2017. However, the Board reserves the authority to decide, in its sole discretion, to abandon the Reverse Stock Split after such vote and before the effectiveness of the Reverse Stock Split if it determines that the Reverse Stock Split is no longer in the best interests of the Company and its stockholders.
Fractional Shares
Our stockholders will not receive fractional post-Reverse Stock Split shares in connection with the Reverse Stock Split. Instead, any fractional shares that would otherwise be issuable as a result of the Reverse Stock Split will be rounded up to the nearest whole share. No stockholders will receive cash in lieu of fractional shares.
No Going Private Transaction
The Reverse Stock Split is not intended as, and will not have the effect of, a “going private transaction” covered by Rule 13e-3 under the U.S. Exchange Act. Following the Reverse Stock Split, the Company will continue to be subject to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended (the“Exchange Act”).
Effective Time
The proposed Reverse Stock Split would become effective on the time and date (the “Effective Time”) specified in the amendment to the Certificate of Incorporation effecting the Reverse Stock Split as filed with the office of the Secretary of State of Delaware. Except as explained above with respect to fractional shares, at the Effective Time, shares of our Common Stock issued and outstanding immediately prior thereto will be combined, automatically and without any action on the part of our stockholders, into one share of our Common Stock in accordance with the ratio of between 1 for 100 and 1 for 1,000.
After the Effective Time, our Common Stock will have a new committee on uniform securities identification procedures (“CUSIP”) number, which is a number used to identify our equity securities, and stock certificates with the older CUSIP numbers will need to be exchanged for stock certificates with the new CUSIP numbers by following the procedures described below.
After the Effective Time, we will continue to be subject to periodic reporting and other requirements of the Exchange Act. If our Common Stock is not delisted by NASDAQ because of our failure to comply with the $1.00 minimum bid price requirement or the minimum value of listed securities, our Common Stock will continue to be listed on The NASDAQ Capital Market under the symbol “VPCO.”
Procedures for effecting the Reverse Stock Split and Exchange of Stock Certificates
If the Company’s stockholders approve the Reverse Stock Split and the Board determines that it is in the Company’s best interest to effect the Reverse Stock Split, the Reverse Stock Split would become effective at such time as the amendment to the Certificate of Incorporation, the form of which is attached as Appendix B to this Proxy Statement, is filed with the Secretary of State of Delaware or such time and date as stated therein when filed.
As soon as practicable after the effective date of the Reverse Stock Split, the Company will notify its stockholders that the Reverse Stock Split has been implemented. Equity Stock Transfer, LLC, the Company’s transfer agent, will act as exchange agent for purposes of implementing the exchange of stock certificates. Holders of pre-Reverse Stock Split shares of our Common Stock will be asked to surrender to the exchange agent certificates representing pre-Reverse Stock Split shares of our Common Stock in accordance with the procedures to be set forth in a letter of transmittal that will be delivered to the Company’s common stockholders. No new certificates will be issued to a stockholder until the stockholder has surrendered to the exchange agent his, her or its outstanding certificate(s) together with the properly completed and executed letter of transmittal. STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATES AND SHOULD NOT SUBMIT ANY CERTIFICATES UNTIL REQUESTED TO DO SO. Stockholders whose shares are held by their stockbroker do not need to submit old share certificates for exchange. These shares will automatically reflect the new quantity of shares based on the Reverse Stock Split. Beginning on the effective date of the Reverse Stock Split, each certificate representing pre-Reverse Stock Split shares will be deemed for all corporate purposes to evidence ownership of post-Reverse Stock Split shares.
Effect on Registered and Beneficial Holders of Common Stock
Upon the effectiveness of the Reverse Stock Split, shares of our Common Stock held by stockholders that hold their shares through a broker or other nominee will be treated in the same manner as shares held by registered stockholders that hold their shares in their names. Brokers and other nominees that hold shares of our Common Stock will be instructed to effect the Reverse Stock Split for the beneficial owners of such shares. However, those brokers or other nominees may implement different procedures than those to be followed by registered stockholders
for processing the Reverse Stock Split. Stockholders whose shares of our Common Stock are held in the name of a broker or other nominee are encouraged to contact their broker or other nominee with any questions regarding the procedure of implementing the Reverse Stock Split with respect to their shares.
Effect on Registered “Book-Entry” Holders of Our Common Stock
Registered holders of shares of our Common Stock may hold some or all of their shares electronically in book-entry form under the direct registration system for the securities. Those stockholders will not have stock certificates evidencing their ownership of shares of our Common Stock, but generally have a statement reflecting the number of shares registered in their accounts.
Stockholders that hold registered shares of our Common Stock in book-entry form do not need to take any action to receive post-Reverse Stock Split shares. Any such stockholder that is entitled to post-Reverse Stock Split shares will automatically receive, at the stockholder’s address of record, a transaction statement indicating the number of post-Reverse Stock Split shares held following the implementation of the Reverse Stock Split.
Dissenters’ Rights
Our stockholders will not be entitled to dissenters’ rights with respect to the proposed amendment to the Certificate of Incorporation in connection with the Reverse Stock Split.
No Effect on Authorized Preferred Stock
Pursuant to our current Certificate of Incorporation, our capital stock consists of a total of 5,001,000,000 authorized shares, of which 5,000,000,000 shares, par value $0.0001 per share, are designated as Common Stock and 1,000,000 shares, par value $0.001 per share, are designated as preferred stock. The proposed Reverse Stock SplitAuthorized Share Increase would not impact the total authorized number of shares of preferred stock or the par value of the preferred stock.
Effect on DividendsThe Board recommends a vote “For” this proposal.
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The paymentVapor has no knowledge of dividends, includingany other matters that may come before the timingSpecial Meeting and amount dividends, mustdoes not intend to present any other matters. However, if any other matters shall properly come before the Meeting or any adjournment, the persons soliciting proxies will have the discretion to vote as they see fit unless directed otherwise.
If you do not plan to attend the Special Meeting, in order that your shares may be maderepresented and in accordance with our Certificateorder to assure the required quorum, please sign, date and return your proxy promptly. In the event you are able to attend the Special Meeting, at your request, Vapor will cancel your previously submitted proxy.
By the Order of the Board of Directors: | |
/s/ Jeffrey Holman | |
Jeffrey Holman | |
Chairman of the Board and Chief Executive Officer |
July [__], 2016
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CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORPORATION OF VAPOR CORP.
Vapor Corp. (the “Company”), a corporation organized and existing under the requirementsGeneral Corporation Law of the State of Delaware (the “Delaware General Corporation Law”), hereby certifies as follows:
1. Pursuant to Sections 242 and 228 of the Delaware General Corporation Law, (the “the amendment herein set forth has been duly approved by the Board of Directors and holders of a majority of the outstanding capital stock of the Company.
2. Section 4 of the Certificate of Incorporation is amended to read as follows:
4. The total number of shares of stock which the Corporation is authorized to issue is750,001,000,000. 750,000,000,000 shares shall be common stock, par value $0.0001 per share (“DGCLCommon Stock”), and 1,000,000 shall be preferred stock, par value $0.001 per share (“Preferred Stock”). We cannot assure you that any dividends will be paidExcept as otherwise provided in this Certificate of Incorporation, authority is hereby vested in the future onBoard of Directors of the Corporation from time to time to provide for the issuance of shares of Common Stock. Any declarationone or more series of Preferred Stock and paymentin connection therewith to fix by resolution or resolutions providing for the issue of future dividendsany such series, the number of shares to holdersbe included therein, the voting powers thereof, and such of ourthe designations, preferences and relative participating, optional or other special rights and qualifications, limitations and restrictions of each such series, including, without limitation, dividend rights, voting rights, rights of redemption, or conversion into Common Stock will be at the discretion of our Boardrights, and will depend on many factors, including our financial condition, earnings, capital requirements, level of indebtedness, statutory future prospects and contractual restrictions applicableliquidation preferences, to the payment of dividends,fullest extent now or hereafter permitted by the Delaware General Corporation Law and any other considerations that our Board deems relevant. The decrease in par value may affect our ability to make dividend payments. Under the DGCL, the aggregate par value must be deducted from the amount available for dividends (the result being “surplus,” out of which dividends can be paid). Accordingly, the reduction in par value contemplated by this proposal would increase our surplus for DGCL purposes, and therefore our potential dividend paying ability.
Accounting Matters
The Reverse Stock Split will change the par valueprovisions of the Corporation’s Certificate of Incorporation, as amended. The Board of Directors is further authorized to increase or decrease (but not below the number of such shares of our Common Stock andsuch class or series then outstanding) the number of shares of Common Stock issued and outstanding. As a result, as of the effective time of the Reverse Stock Split, the stated capital attributableany such class or series subsequent to the shares of our Common Stock on our balance sheet will be reduced proportionately based on the ratio chosen by the Board for the Reverse Stock Split to reflect the new number of shares outstanding and the new par value, and the additional paid-in capital account will be credited with the amount by which the stated capital is reduced. The per share net income or loss will be restated because there will be fewer shares of Common Stock outstanding.
Effect on Our Preferred Shares, Options and Warrants
If the Reverse Stock Split is effected, the numberissuance of shares of Common Stock issuable upon exercisethat class or conversion of our outstanding preferred shares, stock options (including shares reserved for issuance under the Company’s stock plans) and warrants will be proportionately adjusted by the applicable administrator, using the ratio as the Reverse Stock Split, rounded up to the nearest whole share. In connection with the Reverse Stock Split, the Board or the applicable administrator will implement only applicable technical, conforming changes to the securities, including ratably reducing the authorized shares of Common Stock available for awards under the Company’s stock plans. In addition, the conversion price for each outstanding preferred shares and the exercise price for each outstanding stock option and warrant would be increased in inverse proportion to the split ratio such that upon an conversion or exercise, the aggregate conversion price for conversion of preferred stock and the aggregate exercise price payable by the optionee or warrantholder to the Company for the shares subject to the option or warrant would remain approximately the same as the aggregate exercise price prior to the Reverse Stock Split.series.
Interests of Directors and Executive Officers
Our directors and executive officers do not have substantial interests, directly or indirectly, in the matters set forth in this proposal except to the extent of their ownership of shares of our Common Stock or any other of our securities.
Certain Material U.S. Federal Income Tax Consequences of the Reverse Stock Split
The following is a summary of material United States federal income tax consequences of the Reverse Stock Split to holders of our Common Stock. Except where noted, this summary deals only with our Common Stock that is held as a capital asset.
3. This summary is based upon provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and United States Treasury regulations, rulings and judicial decisions as of the date hereof. Those authorities may be changed, perhaps retroactively, so as to result in United States federal income tax consequences different from those summarized below.
This summary does not address all aspects of United States federal income taxes that may be applicable to holders of Common Stock and does not deal with non-U.S., state, local or other tax considerations that may be relevant to stockholders in light of their particular circumstances. In addition, it does not represent a detailed description of the United States federal income tax consequences applicable to you if you are subject to special treatment under the United States federal income tax laws (including if you are a dealer in securities or currencies; a financial institution; a regulated investment company; a real estate investment trust; an insurance company; a tax-exempt organization; a person holding shares as part of a hedging, integrated or conversion transaction, a constructive sale or a straddle; a trader in securities that has elected the mark-to-market method of accounting for your securities; a person liable for alternative minimum tax; a person who owns or is deemed to own 10% or more of our voting stock; a partnership or other pass-through entity for United States federal income tax purposes; a person whose “functional currency” is not the United States dollar; a United States expatriate; a “controlled foreign corporation”; or a “passive foreign investment company”).
We cannot assure you that a change in law will not alter significantly the tax considerations that we describe in this summary. No ruling from the Internal Revenue Service or opinion of counsel will be obtained regarding the federal income tax consequences to stockholders as a result of the Reverse Stock Split.
If a partnership (or other entity treated as a partnership for United States federal income tax purposes) holds our Common Stock, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our Common Stock, you should consult your own tax advisors.
We believe that the Reverse Stock Split, if implemented, would be a tax-free recapitalization under the Code. If the Reverse Stock Split qualifies as a tax-free recapitalization under the Code, then, generally, for United States federal income tax purposes, no gain or loss will be recognized by the Company in connection with the Reverse Stock Split, and no gain or loss will be recognized by stockholders that exchange their shares of pre-split Common Stock for shares of post-split Common Stock. The post-split Common Stock in the hands of a stockholder following the Reverse Stock Split will have an aggregate tax basis equal to the aggregate tax basis of the pre-split Common Stock held by that stockholder immediately prior to the Reverse Stock Split. A stockholder’s holding period for the post-split Common Stock generally will be the same as the holding period for the pre-split Common Stock exchanged therefor.
Alternative characterizations of the Reverse Stock Split are possible. For example, while the Reverse Stock Split, if implemented, would generally be treated as a tax-free recapitalization under the Code, stockholders whose fractional shares resulting from the Reverse Stock Split are rounded up to the nearest whole share may recognize gain for United States federal income tax purposes equal to the value of the additional fractional share. However, we believe that, in such case, the resulting tax liability may not be material in view of the low value of such fractional interest. Stockholders should consult their own tax advisors regarding the characterization of the Reverse Stock Split for United States federal income tax purposes.
Certain Risks Associated with the Reverse Stock Split
The Board believes that the Reverse Stock Split will increase the price level of our shares of Common Stock and, as a result, may enable the Company to maintain listing of our Common Stock on The NASDAQ Capital Market. Given the volatility and fluctuations in the capital markets, however, the Board believes that the likelihood of our stock price increasing to meet the NASDAQ listing requirements without the Reverse Stock Split is remote and that the Company likely will have to take additional actions to comply with NASDAQ requirements. There are a number of risks associated with the Reverse Stock Split, including as follow:
THE BOARD RECOMMENDS A VOTE “FOR” THE AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO EFFECT THE REVERSE STOCK SPLIT.
PROPOSAL 2—ADJOURNMENT PROPOSAL
Introduction
If at the Special Meeting the number of shares of Common Stock present or represented and voting in favor of the Reverse Stock Split is insufficient to approve the Reverse Stock Split, management may move to adjourn, postpone or continue the Special Meeting in order to enable the Board to continue to solicit additional proxies in favor of the proposed the Reverse Stock Split.
In this Adjournment Proposal, we are asking you to authorize the holder of any proxy solicited by the Board to vote in favor of adjourning, postponing or continuing the Special Meeting and any later adjournments. If the stockholders approve the Adjournment Proposal, we could adjourn, postpone or continue the Special Meeting, and any adjourned session of the Special Meeting, to use the additional time to solicit additional proxies in favor of the Reverse Stock Split. Among other things, approval of the Adjournment Proposal could mean that, even if proxies representing a sufficient number of votes against the Reverse Stock Split have been received, we could adjourn, postpone or continue the Special Meeting without a vote on the Reverse Stock Split and seek to convince the holders of those shares to change their votes to votes in favor of the Reverse Stock Split.
What vote is required to approve the Adjournment Proposal?
The Adjournment Proposal will be approved if a majority of the shares of Common Stock present in person or by proxy votes FOR the proposal. Accordingly, abstentions and broker non-votes, if any, will be counted as votes AGAINST the Adjournment Proposal. No proxy that is specifically marked AGAINST the Reverse Stock Split will be voted in favor of the Adjournment Proposal, unless it is specifically marked FOR the discretionary authority to adjourn, postpone or continue the Special Meeting to a later date.
Why am I being asked to vote on the Adjournment Proposal?
The Board believes that if the number of shares of Common Stock present or represented at the Special Meeting and voting in favor of the Reverse Stock Split proposal are insufficient to approve such proposal, it is in the best interests of the stockholders to enable the Board, for a limited period of time, to continue to seek to obtain a sufficient number of additional votes to approve the Reverse Stock Split.
THE BOARD RECOMMENDS A VOTE “FOR” APPROVAL OF THE ADJOURNMENT PROPOSAL.
The Company is unaware of any business, other than described in this Proxy Statement, that may be considered at the Special Meeting. If any other matters should properly come before the Special Meeting, it is the intention of the persons named in the accompanying form of proxy to vote the proxies held by them in accordance with their best judgment.
To assure the presence of the necessary quorum and to vote on the matters to come before the Special Meeting, please promptly indicate your choices via the Internet, by phone or by mail, according to the procedures described on the proxy card. The submission of a proxy via the internet, by phone or by mail does not prevent you from attending and voting at the Special Meeting.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and, in accordance therewith, files reports and other information with the Securities and Exchange Commission (the“SEC”). Any interested party may inspect information filed by the Company, without charge, at the public reference facilities of the SEC at its principal office at 100 F. Street, N.E., Washington, D.C. 20549. Any interested party may obtain copies of all or any portion of the information filed by the Company at prescribed rates from the Public Reference Section of the SEC at its principal office at 100 F. Street, N.E., Washington, D.C. 20549. In addition, the SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding the Company and other registrants that file electronically with the SEC athttp://www.sec.gov.
The Company’s Common Stock is listed on The NASDAQ Capital Market and trades under the symbol “VPCO”.
ANNEXES
ANNEX A Form of Proxy Card
ANNEX B Certificate of Amendment to Certificate of Incorporation regardingwas duly adopted and approved by the Reverse Stock Splitstockholders of this Company on the ___day of August, 2016 in accordance with Section 242 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment to Certificate of Incorporation as of the ___ day of ______, 2016.
VAPOR CORP. | |||
, |
February [__], 2016
Please sign and return the enclosed form of proxy promptly. If you decide to attend the meeting, you may, if you wish, revoke the proxy and vote your shares in person.
Table of ContentsAnnex A
VAPOR CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF STOCKHOLDERS—[March 1]STOCKHOLDERS – [AUGUST 2], 2016 AT 10:2:00 A.M.
VOTING INSTRUCTIONS
If you vote by phone or internet, please DO NOT mail your proxy card.PM
VOTING INSTRUCTIONS |
If you vote by phone or internet, please DO NOT mail your proxy card. |
MAIL: | Please mark, sign, date, and return this Proxy Card promptly using the enclosed envelope. |
PHONE: | Call 1 (800) 690-6903 |
https://www.proxyvote.com |
Control ID:Proxy ID:Password:
Control ID: | |
Proxy ID: | |
Password: |
MARK “X” HERE IF YOU PLAN TO ATTEND THE MEETING:¨
MARK HERE FOR ADDRESS CHANGE¨ New Address (if applicable):
IMPORTANT:Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
Dated: _____ ___,_______, 2016
(Print Name of Stockholder and/or Joint Tenant) |
(Signature of Stockholder) |
(Second Signature if held jointly) |
The stockholder(s) hereby appoints Jeffrey Holman and Gregory Brauser,Christopher Santi, or either of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of votingcommon stock of VAPOR CORP. that the stockholder(s) is/are entitled to vote at the Special Meeting of Stockholder(s) to be held at 10:2:00 A.M. Eastern Timep.m., New York time on [Tuesday, March 1][August 2], 2016, at Vapor’sVapor Corp.’s headquarters, located at 3001 Griffin Road, Dania Beach, Florida 33312, and any adjournment or postponement thereof.
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This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted “FOR” Proposals 1 and 2.Proposal 1. If any other business is presented at the meeting, this proxy will
be voted by the above-named proxies at the direction of the Board of Directors. At the present time, the Board of Directors knows of no other business to be presented at the meeting.
Proposal:
The Board of Directors recommends you vote FOR Proposals 1 and 2.Proposal:
1. To approve the amendment to Vapor’s Certificate of Incorporation to increase the authorized shares of common stock to 750,000,000,000 shares. | FOR¨ | AGAINST | ABSTAIN | |||
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CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORPORATIONOF VAPOR CORP.
Vapor Corp. (the “Company”), a corporation organized and existing under the General Corporation Law of the State of Delaware (the “Delaware General Corporation Law”), hereby certifies as follows:
1. Pursuant to Sections 242 and 228 of the Delaware General Corporation Law, the amendment herein set forth has been duly approved by the Board of Directors and holders of a majority of the outstanding capital stock of the Company.
2. Section 4 of the Certificate of Incorporation is amended by adding the following paragraph:
“Upon the effectiveness of this Certificate of Amendment to the Certificate of Incorporation of the Corporation, every [number of shares] shares of the Corporation’s issued and outstanding Common Stock, par value $0.0001 per share, that are issued and outstanding immediately prior to [date] shall, automatically and without any further action on the part of the Corporation or the holder thereof, be combined into one (1) validly issued, fully paid and non-assessable share of the Corporation’s Common Stock, par value $0.0001 per share, provided that in the event a stockholder would otherwise be entitled to a fraction of a share of Common Stock pursuant to the provisions of this Article, such stockholder shall receive one whole share of Common Stock in lieu of such fractional share and no fractional shares shall be issued.”
3. The foregoing amendment shall be effective as of ____ on _________, 2016.
4. This Certificate of Amendment to Certificate of Incorporation was duly adopted and approved by the stockholders of this Company on the _ day of _______, 2016 in accordance with Section 242 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment to Certificate of Incorporation as of the _____ day of _____, 2016.
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