844856--3/31/2010--VAPOR

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{regulation, government, change}

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We Cannot Predict Our Future Capital Needs And We May Not Be Able To Secure Additional Financing. One of Our Credit Card Transaction Processors are Holding Our Funds We have been added to the Credit Card Processors Terminated Merchant File New Product Faces Intense Media Attention and Public Pressure The Market For Our Products Is Uncertain And Is Still Evolving. We Market a Single Class of Products, Which may be Subject to Certain Government Regulations, Whose Approval We may or may not be Able to Achieve. Our Products Contain Nicotine Which is Considered to be a Highly Addictive Substance. Our Products may not Serve their Intended Purpose. We May Not Successfully Commercialize Our Personal Vaporizers. Our Business may be Affected if we are Taxed Like Other Tobacco Products or if we are Required to Collect and Remit Sales Tax on Certain of our Internet Sales Downturns In The Economy May Affect the demand for our products and our Financial Performance The World Health Organization (WHO) does not consider electronic cigarettes to be a legitimate therapy for smokers trying to quit smoking We may be Unable to Anticipate Changes in Consumer Preferences or to Respond to Consumer Behavior Influenced by Economic Downturns. We may Become Dependent on Foreign Sales to Maintain Our Business Foreign Commercialization Will Result in Additional Costs and Expenses. Our Success is Dependent Upon Our Marketing Efforts. If we are to gain FDA Regulatory Approval to Market our Products, We will need to develop marketing, distribution and production capabilities or relationships to be successful. We Rely on the Efforts of Our Outside Independent Sales Force to Generate Sales We May Not Be Able to Adapt to Trends In our Industry Existing or Pending Patents Could Prevent Us From Operating Our Business In Its Present Form. We Depend On Third Party Suppliers and Manufacturers For Our Personal Vaporizer Products. We Use Chinese Manufacturers for the Production of Our Products Product Exchanges, Returns, Warranty Claims, Defect and Recalls May Adversely Affect Our Business We May Be Unable To Promote And Maintain Our Brands. We Depend on Our Intellectual Property Rights to Distinguish our Brands and Products 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 Launched. We Depend On The Efforts Of our Management. Our Management Team Lacks Experience In Managing A Public Company and the Obligations Incident to Being a Public Company Will Place Significant Demands on Our Management. Our ability to implement our strategy of attracting and retaining employees may be impaired by the uncertainty in our business due to the FDA s public statements. We may Encounter Difficulties in Managing Our Growth, Which Would Adversely Affect Our Results of Operations. We Face a Risk of Product Liability Claims and may not be Able to Obtain Adequate Insurance. We Face Substantial And Increasing Competition. Litigation and Government regulation will dictate who will be our direct competitors and how we can market our products, if at all. We Face Competition from Foreign Importers Who Do Not Comply With Government Regulation Restrictions On the Use of Our Products may Reduce the Attractiveness and Demand for Our Personal Vaporizers Liability for Improper Marketing, Medical Claims and Labeling Internet Security Poses a Risk To Our E-Commerce Sales. Credit Card Payment Processors and Merchant Account Risk The Former Shareholder of Smoke Anywhere USA Are Controlling Stockholders, Our Stockholders May Be Unable To Affect Corporate Activity Without The Support Of These Individuals. Our Earnings Could be Adversely Affected by Currency Exchange Rates and Currency Devaluations. Risks Related To Government Regulation State Actions Against Us May have a Material Effect on our Ability to Sell Our Products We have not yet applied for any regulatory approval in the United States or any foreign jurisdiction for our product candidates. The regulatory approval process is lengthy, and we may not be able to obtain all of the regulatory approvals required to manufacture and commercialize our product candidates. A Ruling in a Federal District Court and any Subsequent Appeals, Will Dictate What Regulations We Are Required to Follow, if Any in Marketing Certain of Our Products. The Family Smoking Prevention and Tobacco Control Act Grants the FDA Authority to Regulate Tobacco Products and How they are Marketed and Sold. The FDA Regulates How Products are Marketed and Used The FDA Regulates Drugs and Medical Devices, If Our Products are Considered Either or Both We may be subject to Regulation and May in Fact have Violated Federal law in our Previous Sales and Marketing Efforts. Regulations on the Transportation of Lithium Ion Batteries may Affect Our Business If We Have Improperly Marketed and Distributed Certain of Our Products in Violation of FDA Regulations We may be Subject to Disciplinary, Actions, Administrative Actions, Sanctions and Fines. The FDA has Issued an Import Alert Which has Limited Our Ability to Import Certain of Our Products Changes in Governmental Regulation May Affect the Countries in Which we Sell Our products Actions by the FDA Adverse to Our Company and Our Products may Restrict our Ability to do Business Domestically and Internationally. Our Products Contain Two Components Each and or Both of which may Require FDA Approvals to be Marketed If our Third-Party Suppliers or Contract Manufacturers do not Maintain Appropriate Standards of Manufacturing in Accordance with cGMP and Other Manufacturing Regulations, our Development and Commercialization Activities Could Suffer Significant Interruptions or Delays. Risks Related to FDA Regulation Our Product development Efforts may fail. Failure can Occur at any Stage of our Product Development Efforts. We rely on third parties to conduct our clinical trials, and if they do not perform their obligations to us we may not be able to obtain approval for Certain of Our Products. If Our Non-Clinical or Clinical Trials are Unsuccessful or Significantly Delayed, Our Ability to Commercialize Our Product Candidates May be Impaired. We Have Not Conducted any Clinical or Non-Clinical Testing for Our Product Candidates and We are not Certain at this Time Which Clinical or Non-Clinical Tests the FDA Will Require with Respect to any NDA that We may File. Despite Our Efforts We may Fail to Gain Regulatory Approval For our Products Even if we are successful at winning regulatory approval from the FDA, a prescription may be required to buy our products. Post-approval marketing of our products will be subject to substantial government regulation. Failure to comply with these regulations could result in fines and withdrawal of approvals. Risks Related to Ownership of Our Stock Our Board of Directors is Authorized to Issue Additional Shares of Our Stock Which Would Dilute Existing Shareholders. Your Percentage Ownership of our Common Shares may be Diluted by Future Share Issuances We Do Not Intend To Pay Future Cash Dividends.

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844856--3/31/2010--VAPOR_CORP.