<?xml version="1.0" encoding="us-ascii"?><InstanceReport xmlns:xsd="http://www.w3.org/2001/XMLSchema" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"><Version>2.4.0.8</Version><ReportLongName>0006 - Disclosure - 1. BUSINESS ORGANIZATION</ReportLongName><DisplayLabelColumn>true</DisplayLabelColumn><ShowElementNames>false</ShowElementNames><RoundingOption /><HasEmbeddedReports>false</HasEmbeddedReports><Columns><Column FlagID="0"><Id>1</Id><IsAbstractGroupTitle>false</IsAbstractGroupTitle><LabelSeparator>

</LabelSeparator><CurrencyCode /><FootnoteIndexer /><hasSegments>false</hasSegments><hasScenarios>false</hasScenarios><MCU><KeyName /><CurrencySymbol /><contextRef><ContextID>From2013-01-01to2013-06-30</ContextID><EntitySchema>http://www.sec.gov/CIK</EntitySchema><EntityValue>0001398702</EntityValue><PeriodDisplayName /><PeriodType>duration</PeriodType><PeriodStartDate>2013-01-01T00:00:00</PeriodStartDate><PeriodEndDate>2013-06-30T00:00:00</PeriodEndDate><Segments /><Scenarios /></contextRef><UPS /><CurrencyCode /><OriginalCurrencyCode /></MCU><CurrencySymbol /><Labels><Label Key="CalendarSupplement" Id="0" Label="6 Months Ended" /><Label Key="Calendar" Id="1" Label="Jun. 30, 2013" /></Labels></Column></Columns><Rows><Row FlagID="0"><Id>1</Id><IsAbstractGroupTitle>true</IsAbstractGroupTitle><LabelSeparator>

</LabelSeparator><Level>1</Level><ElementName>ECIG_NotesToFinancialStatementsAbstract</ElementName><ElementPrefix>ECIG_</ElementPrefix><IsBaseElement>false</IsBaseElement><BalanceType>na</BalanceType><PeriodType>duration</PeriodType><IsReportTitle>false</IsReportTitle><IsSegmentTitle>false</IsSegmentTitle><IsCalendarTitle>false</IsCalendarTitle><IsEquityPrevioslyReportedAsRow>false</IsEquityPrevioslyReportedAsRow><IsEquityAdjustmentRow>false</IsEquityAdjustmentRow><IsBeginningBalance>false</IsBeginningBalance><IsEndingBalance>false</IsEndingBalance><IsReverseSign>false</IsReverseSign><FootnoteIndexer /><Cells><Cell FlagID="0" ContextID="" UnitID=""><Id>1</Id><IsNumeric>false</IsNumeric><IsRatio>false</IsRatio><DisplayZeroAsNone>false</DisplayZeroAsNone><NumericAmount>0</NumericAmount><RoundedNumericAmount>0</RoundedNumericAmount><NonNumbericText /><FootnoteIndexer /><CurrencyCode /><CurrencySymbol /><IsIndependantCurrency>false</IsIndependantCurrency><ShowCurrencySymbol>false</ShowCurrencySymbol><DisplayDateInUSFormat>false</DisplayDateInUSFormat></Cell></Cells><ElementDataType>xbrli:stringItemType</ElementDataType><SimpleDataType>string</SimpleDataType><IsTotalLabel>false</IsTotalLabel><UnitID>0</UnitID><Label>Notes to Financial Statements</Label></Row><Row FlagID="0"><Id>2</Id><IsAbstractGroupTitle>false</IsAbstractGroupTitle><LabelSeparator>

</LabelSeparator><Level>2</Level><ElementName>us-gaap_BusinessDescriptionAndBasisOfPresentationTextBlock</ElementName><ElementPrefix>us-gaap_</ElementPrefix><IsBaseElement>true</IsBaseElement><BalanceType>na</BalanceType><PeriodType>duration</PeriodType><IsReportTitle>false</IsReportTitle><IsSegmentTitle>false</IsSegmentTitle><IsCalendarTitle>false</IsCalendarTitle><IsEquityPrevioslyReportedAsRow>false</IsEquityPrevioslyReportedAsRow><IsEquityAdjustmentRow>false</IsEquityAdjustmentRow><IsBeginningBalance>false</IsBeginningBalance><IsEndingBalance>false</IsEndingBalance><IsReverseSign>false</IsReverseSign><FootnoteIndexer /><Cells><Cell FlagID="0" ContextID="From2013-01-01to2013-06-30" UnitID=""><Id>1</Id><IsNumeric>false</IsNumeric><IsRatio>false</IsRatio><DisplayZeroAsNone>false</DisplayZeroAsNone><NumericAmount>0</NumericAmount><RoundedNumericAmount>0</RoundedNumericAmount><NonNumbericText>&lt;p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&lt;font style="font-size: 8pt"&gt;These
financial statements represent the consolidated financial statements of Victory Electronic Cigarettes Corporation (&amp;#147;Victory&amp;#148;),
formerly known as Teckmine Industries, Inc., and its wholly owned operating subsidiary, Victory Electronic Cigarettes, Inc. (&amp;#147;VEC&amp;#148;).
Victory and VEC are collectively referred to herein as the &amp;#147;Company&amp;#148;. VEC was formed as a limited liability company
under the laws of the State of Florida on March 2, 2010 and effected a conversion on March 8, 2013 into a corporation under the
laws of the State of Nevada. The financial statements of VEC have been restated to reflect this conversion.&lt;/font&gt;&lt;/p&gt;

&lt;p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&lt;font style="font-size: 8pt"&gt;&amp;#160;&lt;/font&gt;&lt;/p&gt;

&lt;p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&lt;font style="font-size: 8pt"&gt;On June
25, 2013, pursuant to a share exchange agreement, Victory merged with VEC, a Nevada corporation, in which the existing stockholders
of VEC exchanged all of their issued and outstanding shares of common stock for 32,500,000 shares of common stock of Victory (the
&amp;#147;Reverse Merger&amp;#148;). After the consummation of the Reverse Merger, stockholders of VEC own 60.9% of Victory&amp;#146;s
outstanding common stock.&lt;/font&gt;&lt;/p&gt;

&lt;p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&lt;font style="font-size: 8pt"&gt;&amp;#160;&lt;/font&gt;&lt;/p&gt;

&lt;p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&lt;font style="font-size: 8pt"&gt;As a result
of the Reverse Merger, VEC became a wholly owned subsidiary of Victory. For accounting purposes, the Reverse Merger was treated
as a reverse acquisition with VEC as the acquirer and Victory as the acquired party. As a result, the business and financial information
included in this Quarterly Report on Form 10-Q is the business and financial information of VEC. The accumulated deficit of Victory
has been included in additional paid-in-capital. Pro-forma information has not been presented as the financial information of
Victory was insignificant.&lt;/font&gt;&lt;/p&gt;

&lt;p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&lt;font style="font-size: 8pt"&gt;&amp;#160;&lt;/font&gt;&lt;/p&gt;

&lt;p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&lt;font style="font-size: 8pt"&gt;The Company
imports and distributes smokeless electronic cigarettes (&amp;#147;E-Cigarettes&amp;#148;) and their components via the internet and
retail outlets. The Company&amp;#146;s primary operations are based near Atlanta, Georgia.&lt;/font&gt;&lt;/p&gt;</NonNumbericText><FootnoteIndexer /><CurrencyCode /><CurrencySymbol /><IsIndependantCurrency>false</IsIndependantCurrency><ShowCurrencySymbol>false</ShowCurrencySymbol><DisplayDateInUSFormat>false</DisplayDateInUSFormat></Cell></Cells><ElementDataType>nonnum:textBlockItemType</ElementDataType><SimpleDataType>na</SimpleDataType><ElementDefenition>The entire disclosure for the business description and basis of presentation concepts.  Business description describes the nature and type of organization including but not limited to organizational structure as may be applicable to holding companies, parent and subsidiary relationships, business divisions, business units, business segments, affiliates and information about significant ownership of the reporting entity.  Basis of presentation describes the underlying basis used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS).</ElementDefenition><ElementReferences>No definition available.</ElementReferences><IsTotalLabel>false</IsTotalLabel><UnitID>0</UnitID><Label>1. BUSINESS ORGANIZATION</Label></Row></Rows><Footnotes /><IsEquityReport>false</IsEquityReport><ReportName>1. BUSINESS ORGANIZATION</ReportName><MonetaryRoundingLevel>UnKnown</MonetaryRoundingLevel><SharesRoundingLevel>UnKnown</SharesRoundingLevel><PerShareRoundingLevel>UnKnown</PerShareRoundingLevel><ExchangeRateRoundingLevel>UnKnown</ExchangeRateRoundingLevel><HasCustomUnits>true</HasCustomUnits><IsEmbedReport>false</IsEmbedReport><IsMultiCurrency>false</IsMultiCurrency><ReportType>Sheet</ReportType><RoleURI>http://tckn.com/role/BusinessOrganization</RoleURI><NumberOfCols>1</NumberOfCols><NumberOfRows>2</NumberOfRows></InstanceReport>
