Medbox’s Largest Shareholder Comments on Recent Events and the Company’s Outlook for 2015
LOS ANGELES, CA–(Marketwired – Dec 30, 2014) – P. Vincent Mehdizadeh — Founder and Majority Shareholder of Medbox, Inc. (OTCQB: MDBX) issued a letter to fellow shareholders today regarding his vision for the future of the company and insight into recent developments affecting the company.
The letter stated:
“Dear Medbox Shareholders:
It has truly been an interesting journey during the last 2 years. When I commenced operations of the private company in 2010 that later became Medbox, I never anticipated that the company would be as noteworthy and relevant as we are today. The company has a rare blend of consulting and patented technology that gives entrepreneurs a jumpstart on realizing their dreams of operating a business in a newly emerging industry. I have thoroughly enjoyed watching our client’s dreams be realized, along with our shareholders that have watched our company grow and prosper over these years.
Medbox rocketed to stardom and notoriety amidst a positive outlook for the marijuana industry in November of 2012 based on favorable election results and highlighted by several media sources, including the Wall Street Journal, which ushered in what many have called the ‘Green Rush.’ In the days that followed, the company’s stock price saw unprecedented increases that was said to have resulted from investors looking to participate in ‘The Next Great American Industry.’ Up until 3 months ago, I was involved in almost every decision the company made, and my decision at that time was to caution investors about investing in any company in the marijuana industry because of the inherent risks. We also publicly cautioned investors to temper their expectations about our stock and to make informed investment decisions. The company fielded criticism in doing so, but we felt that separating ourselves from other public company industry participants in our sector and focusing on protecting investors as best we could was a beneficial direction for the company. In my opinion, one of the keys to Medbox’s success has been superior corporate messaging and timely dissemination of information to our shareholders.
Since that point in time a little over two years ago, I have made it my mission to take the company from being a non-reporting pinksheet to being a fully reporting SEC Filer. I took it upon myself to set these goals and achieve them for the benefit of the company and its shareholders. We did this to have an increased level of transparency so that investors can think of Medbox as the public company standard for respectability and reliability in the newly emerging marijuana industry that was taking shape. As a result, we engaged a Public Company Accounting and Oversight Board (PCAOB) registered auditor, Q Accountancy Corporation, and also hired a full-time Chief Financial Officer, Thomas Iwanski, a CPA with excellent references and extensive public company experience.
Since the company engaged Mr. Iwanski and Q Accountancy Corporation, I also recruited a star-studded board and together we appointed Guy Marsala to lead the company as the Chief Executive Officer. As it was explained to me, in situations where a new CEO is brought on, they typically look to appoint their own Chief Financial Officer. Thus, when Mr. Marsala decided to replace Mr. Iwanski as CFO, I did not give it a second thought, although I was sad to see him go since his experience with public company oversight was superb.
Today, the company’s current management issued a statement regarding the company’s financials. Prior management, including Mr. Iwanski and the company’s current auditor, both disagree with current management’s position on the matter. Both the current auditor and prior CFO have made their opinions known to current management, to no avail. Both have stated that they had support for recognizing revenue in the periods in which they were recognized. However, the company’s current CFO has a difference of opinion on that aspect and believes that the revenue in question should be recognized in later periods, which has now resulted in a proposed restatement set to occur. This fact along with the fact that the revenue items in dispute amount to less than 10% of the total revenue booked for 2013, was not accurately discussed in the disclosure released this morning.
As stated previously in this letter, corporate messaging and communication to shareholders is one of the many aspects that made Medbox a great company. I now feel the company is not doing enough to accurately disclose matters in a manner that is easy to understand and digest by the public. Stating that the current CFO has a difference of opinion with the prior CFO and current auditor would have gone a long way to explaining the situation properly. Instead, we have the inaccurate and incomplete disclosure that was released today that leaves the public with more questions than giving them the answers they need to understand the situation.
As we were on a path to transition to NASDAQ and had filed an application to be listed on that exchange, I felt that since I had a checkered past that was disclosed in company filings it would tarnish the Medbox brand if I stayed involved in any capacity other than as a consultant to the company. Although these offenses were non-violent, non-securities related offenses, all of which resulted in probation and all occurring prior to Medbox, I still felt that the company would always be a target of ‘short and distort’ campaigns by financial bloggers if I remained an Officer or Director. To that end, I recently gave full control to the board and current management to steer the ship and navigate the company properly. Recent events have caused me to call into question whether current management and the board of directors has enough industry experience to properly run this company. It is for this reason that I will be adding industry-experienced members to the board to work with the current board members to more effectively operate the company. I will also be taking a more active role with the company again to ensure our short-term and long-term goals can be achieved.
I believe that a founder’s passion separates a typical company from a company that achieves the utmost success. The company needs my help now more than ever, and I intend to fill that need to the best of my ability going forward. I look forward to a strong and prosperous future for Medbox.
P. Vincent Mehdizadeh”
About P. Vincent Mehdizadeh, Founder and Majority Shareholder at Medbox, Inc.
P. Vincent Mehdizadeh founded Medbox’s main subsidiary, Medicine Dispensing Systems, in February 2008. He commenced operations for that company in 2010, and in December of 2011 sold that company to what became Medbox, Inc. Mr. Mehdizadeh served as senior consultant from December 2012 until May 10, 2013 for Medbox, Inc. and then transitioned to Chief Operations Officer and Board Chairman for Medbox, Inc. through May of 2014. Mr. Mehdizadeh was responsible for creating the 2 main patents behind the company’s technology, helping to assemble the talented management team at Medbox, and also developing the concept behind the business models driving revenue for the company.
About Medbox, Inc:
Medbox is a leader in the development, sales and service of automated, biometrically controlled dispensing and storage systems for medicine and merchandise. Headquartered in Los Angeles, Medbox, through its wholly owned subsidiary, Medicine Dispensing Systems, offers their patented systems, software and consulting services to pharmacies, alternative medicine dispensaries and local governments in the U.S. In addition, through its wholly owned subsidiary, Vaporfection International, Inc. (www.vaporfection.com), the company offers an industry award winning medical vaporizer product. Medbox, through its newly established subsidiaries, is in development of the following ancillary services catered to the alternative medicine industry: merchant services and armored transport for cash deposits, cannabidiol research and development, real estate acquisitions and subsequent lease programs to alternative medicine dispensaries, and alternative medicine dispensary management services.
The Innovation Agency