[1]

Prepayment Penalties. In addition to the principal balance shown, certain debt agreements provide for prepayment penalties up to 25% if the debt is repaid prior to the maturity date.

[2]

Unamortized Discounts. Original issue discounts ("OID") are amortized to interest expense using the effective interest method. The unamortized discount represents the portion of OID that will be charged to interest expense over the remaining term of the respective debt agreements.

[3]

ExWorks Revolving Loan. On June 30, 2015, the Company entered into a credit agreement with ExWorks Capital Fund I, L.P. ("ExWorks"). The credit agreement provides for a revolving line of credit (the "Revolving Loan Agreement") with a total commitment up to $6,000. The borrowing base is equal to (i) up to 75% of eligible accounts receivable and inventory of certain of the Company's U.S. based subsidiaries (up to a maximum of $4,000), plus (ii) up to 75% of the value of eligible inventory of certain of the Company's U.K based subsidiaries (up to a maximum of $2,500), minus (iii) certain availability reserves as determined by ExWorks. The advance rate against eligible accounts is subject to reduction based on credits, returned goods and setoffs. Borrowings under the Revolving Loan Agreement bear interest at an effective annual rate of 27.0%. Either party may elect to terminate the Revolving Loan on June 30, 2016; however, if neither party elects to terminate, the agreement will be automatically extended for an additional 12 months. On September 29, 2015, the Company entered into an amendment to the Revolving Loan Agreement, whereby ExWorks agreed that during the four-month period through January 31, 2016, it will permit borrowings up to $1,500 in excess of the borrowing base calculation set forth in the Loan Agreement. As of September 30, 2015, borrowings under the Revolving Loan Agreement amounted to $2,788 and the Company had unused borrowing availability of $2,076. As discussed in Note 17, the Company repaid all outstanding borrowings under the Revolving Loan Agreement in October 2015 although the credit agreement remains in effect.

[4]

Interest Rate. The stated interest rate is the contractual rate of interest specified in the debt agreement. For variable rate debt and amended debt agreements, the rate in effect as of September 30, 2015 is shown. For debt paid off during the nine months ended September 30, 2015, the rate in effect on December 31, 2014 is shown. See also Note 8 for accounting for the fair value of compound embedded derivatives and detachable common stock purchase warrants that are bifurcated from the host debt agreement and accounted for at fair value.

[5]

Term Loan Agreements. In April 2015, the Company entered into credit agreements with (i) Calm Waters Partnership ("Calm Waters"), an institutional investor and (ii) a group of 15 investors (the "Additional Lenders"), on substantially identical terms, pursuant to which Calm Waters made term loans to the Company of $35,000 and the Additional Lenders made term loans of $6,214 (collectively referred to as the "April Term Loans"). The April Term Loans mature in April 2018 and bear interest at the rate of 12.0% per annum. In June 2015, the Company and Calm Waters entered into an amendment that provided for an additional term loan (the "June Term Loan") of $6,000. The June Term Loan matures in April 2018 and bears interest at 12.0% per annum. The proceeds of the April Term Loans and the June Term Loan were used to repay certain indebtedness, accrued interest, and prepayment penalties in the aggregate amount of $42,077 and the remainder was used for working capital and other general corporate purposes. Upon repayment of the Bridge Financing Notes discussed in Note 7(c), the holders agreed to cancel related warrants received in such financings for 15,104,150 shares of the Company's common stock exercisable at $0.45 per share. See Note 8 for further information on the Company's warrants and see Note 17 for an October 2015 amendment to the Calm Waters credit agreement. On September 30, 2015, the Company and Calm Waters entered into a Forbearance Agreement pursuant to which the Company and Calm Waters agreed, among other things, to (i) provide for a forbearance period up to 18 months until March 31, 2017 (the "Forbearance Period") with respect to the collection of $1,251 of accrued interest payable to Calm Waters through September 30, 2015, and (ii) the Company issued warrants to Calm Waters to purchase an aggregate of 5,995,453 shares of the Company's common stock at an exercise price of approximately $0.21 per share. During the Forbearance Period, the $1,251 forbearance amount will accrue interest at 14.0% per annum. For the period from October 2016 through March 2018, the Company is required to make monthly principal payments of $700 under the April Term Loans and monthly principal payments of $103 under the June Term Loan. Borrowings under the credit agreements are collateralized by a security interests in all of the present and future assets of the Company (except as otherwise provided herein). In addition, the Company pledged all of its equity interests in its subsidiaries as collateral for its obligations under these credit agreements. The credit agreements contain customary representations and warranties and customary affirmative and negative covenants, including, among others, covenants that limit or restrict the Company's ability to incur indebtedness, grant liens, enter into sale and leaseback transactions, merge or consolidate, dispose of property or assets, make investments or loans, make acquisitions, enter into certain transactions with affiliates, pay dividends or make distributions, engage in any business other than its current business, undergo a change of control, or issue equity interests, in each case subject to customary exceptions. In addition, the credit agreements contain customary events of default that entitle the lenders to cause any or all of the Company's indebtedness under the credit agreements to become immediately due and payable. The events of default include, among others, non-payment, inaccuracy of representations and warranties, commencement or filing of a petition for relief under any federal or state bankruptcy laws. Upon the occurrence of an event of default and following any applicable cure periods, a default interest rate of an additional 2% may be applied to the outstanding loan balances, and the Lenders may declare all outstanding obligations immediately due and payable. As additional consideration to induce the lenders to enter into the credit agreements, the Company granted the lenders warrants to purchase an aggregate of 176,198,571 shares of the Company's common stock. In connection with the June Term Loan, the Company granted additional warrants to purchase an aggregate of 30,000,000 shares of the Company's common stock. All of the warrants are exercisable for a period of seven years from the original issue date, and have an exercise price of $0.45 per share. The Company entered into a registration rights agreement with the lenders, pursuant to which the Company agreed to register all of the shares of common stock issuable upon exercise of the warrants on a registration statement on Form S-1 to be filed with the SEC within 45 calendar days following request to do so by Calm Waters, and to cause the registration statement to be declared effective within 90 days following the initial filing date. If the registration statement is not filed or declared effective in a timely manner, the Company is required to pay partial liquidated damages up to 3% of the aggregate principal of each lender's Term Loan. The Company incurred a loss on debt extinguishments of $63,793 associated with the repayment of indebtedness from the proceeds of the April and June Term Loan Agreements. The obligations of the Company are guaranteed by FIN, GEC, VCIG LLC ("VCIG"), Victory Electronic Cigarettes, Inc. ("Victory"), Vapestick, VIP and E-Cigs UK Holding Company Limited ("UK Holding), each of which is a direct or indirect wholly owned subsidiary of the Company (together with the Company, the "Loan Parties"), pursuant to (i) a Guarantee and Collateral Agreement entered into on April 27, 2015, among the Loan Parties and the Lead Lender (the "Lead Lender Guarantee and Collateral Agreement") and (ii) a Guarantee and Collateral Agreement entered into in April 2015, among the Loan Parties and the agent (the "Agent") for the Additional Lenders (the "Additional Lenders Guarantee and Collateral Agreement" and together with the Lead Lender Guarantee and Collateral Agreement, the "Guarantee and Collateral Agreements"). The Term Loan Agreements are collateralized against substantially all of the Company's assets. The Company has also entered into Intercreditor Agreements that govern the relative priorities (and certain other rights) of the Lead Lender, the Additional Lenders, the former shareholders of VIP, and the holders of the Company's 15% Notes pursuant to the respective security agreements that each have entered into with the Loan Parties.

[6]

VIP Promissory Notes. In April 2014, the Company issued $11,000 of promissory notes (the "VIP Promissory Notes") in connection with the April 2014 acquisition of VIP. The VIP Promissory Notes provided for interest at 10.0% and matured in December 2014. During 2014, additional consideration of $5,000 was also due under an earnout provision in the acquisition agreement. In April 2015, the VIP Promissory Notes were amended whereby the Company agreed to combine the $5,000 earnout into the VIP Promissory Notes. Under the amended terms, the Company agreed to make principal payments of (i) $8,000 in April 2015, (ii) $300 per month from October 2016 through November 2017, and (iii) accrued interest and any remaining principal balance is payable in December 2017.

[7]

Unsecured Note. In March 2015, the Company exchanged the remaining principal amount of $9,149 related to the Senior Secured 6% Notes with an accredited investor for (i) a cash payment of $13,000, (ii) an unsecured note in the principal amount of $1,800 (the "Unsecured Note") and (iii) the issuance of warrants at an exercise price of $0.45 per share for 8,333,333 shares (the "Prepaid Warrants") of Common Stock for which the holders prepaid the exercise fee in the aggregate amount of $3,750. As of September 30, 2015, all of the Prepaid Warrants have been exercised. The Unsecured Note is due March 1, 2016 and bears interest at a rate of 0.40% per annum. The principal amount of the Unsecured Note is payable in twelve equal monthly installments of $150 on the first business day of each month from April 2015 through March 2016.

[8]

Vapestick Credit Facility. The Company has a credit facility (the "Vapestick Credit Facility") with a bank in the United Kingdom. The Vapestick Credit Facility provides for up to $310 of borrowings collateralized by trade receivables that bear interest at 3.6% as of September 30, 2015. The Vapestick Credit Facility also provides for up to $310 of borrowings collateralized by inventories that bear interest at 4.8% as of September 30, 2015. As of September 30, 2015, total borrowings of $170 were outstanding at a weighted average interest rate of 4.8%. Under the terms of the Vapestick Credit Facility, the Company's Vapestick subsidiary is subject to restrictive covenants including minimum tangible net worth and certain asset tests as defined in the credit agreement.

[9]

Convertible to Common Stock. The outstanding principal balance and accrued interest of the Convertible Debt is convertible to shares of the Company's common stock. Additional details about outstanding convertible debt agreements are summarized in Note 7(c).