ORGANIZATION, OPERATIONS AND BASIS OF PRESENTATION

12 Months Ended

Dec. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION, OPERATIONS AND BASIS OF PRESENTATION

Organization and Operations

Electronic Cigarettes International Group, Ltd. and its consolidated subsidiaries (collectively referred to as the “Company”) have prepared the accompanying consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company is an independent marketer and distributor of vaping products and electronic cigarettes (“E-cigarettes”) which are manufactured by third party suppliers at the direction of the Company. E-cigarettes are battery-powered products that simulate tobacco smoking through inhalation of nicotine vapor without the smoke, ash and smell, or the tar, carbon monoxide, and other chemicals found in traditional cigarettes.

Reverse Stock Split

On March 23, 2015, the Company effected a one-for-fifteen reverse split of its common stock. Accordingly, all references to the number of common shares and the price per share for transactions prior to the reverse split have been retroactively restated.

Revisions to 2014 Financial Statements

In the course of preparing the Company’s 2015 financial statements, management discovered two errors that affected the previously issued 2014 financial statements, as follows:

• The first reporting error relates to the $5,000 compensatory earn-out agreement entered into in connection with the acquisition of VIP as discussed in Note 4. In the previously issued financial statements for 2014, the Company capitalized this $5,000 payment as goodwill but under U.S. GAAP it should have been included in compensation expense.

• The second reporting error relates to the issuance of a credit to a large customer of FIN. The credit was issued in June 2014 and resulted from the Company’s agreement to provide retroactive price concessions. In the previously issued financial statements for 2014, the Company failed to account for the unsettled portion of this price concession through the recognition of a liability of $2,269 as of December 31, 2014. The impact of this error on the Company’s previously reported results of operations was an understatement of net sales by $1,214 and an understatement of marketing and selling expenses by $3,483 for the net impact of $2,269.

Management has evaluated the effect of these errors and determined that they are quantitatively and qualitatively immaterial to the Company’s previously reported consolidated financial position as of December 31, 2014 and the results of operations for the year then ended. Therefore, amendment of the previously filed Annual Report on Form 10-K for the year ended December 31, 2014 is not necessary. However, if out-of-period adjustments to correct these errors had been recorded during the year ended December 31, 2015, the Company believes the impact would have been significant to the 2015 financial statements. Accordingly, under SEC Staff Accounting Bulletin No. 108 the Company has revised the previously issued 2014 financial statements included herein to correct these errors.

The following table sets forth the previously reported balances for 2014 along with the adjustments discussed above to reconcile previously reported amounts to the revised amounts for 2014 as presented in the accompanying consolidated financial statements:

	Previously
	Reported			Adjustments			Revised
Summarized Consolidated Balance Sheet:
Current assets	$	18,631		$	-		$	18,631
Long-term assets		113,200			(5,000	)		108,200
Total assets	$	131,831		$	(5,000	)	$	126,831
Current liabilities	$	164,737		$	2,269		$	167,006
Long-term liabilities		86,976			-			86,976
Stockholders' deficit		(119,882	)		(7,269	)		(127,151	)
Total liabilities and stockholders' deficit	$	131,831		$	(5,000	)	$	126,831
Summarized Consolidated Statement of Operations:
Net sales	$	43,476		$	1,214		$	44,690
Cost of goods sold		31,464			-			31,464
Gross profit		12,012			1,214			13,226
Operating expenses		227,179			8,483			235,662
Loss from operations		(215,167	)		(7,269	)		(222,436	)
Other income (expense), net		(187,947	)		-			(187,947	)
Loss before income tax benefit		(403,114	)		(7,269	)		(410,383	)
Income tax benefit		21,539			-			21,539
Net loss	$	(381,575	)	$	(7,269	)	$	(388,844	)
Loss per common share- basic and diluted	$	(73.06	)	$	(1.39	)	$	(74.45	)