Investor Due Diligence Q&A with Medbox
(Taken from the 2014 Q2 Shareholder Call)
Why have profits eroded so much compared to prior year?
Answer provided by CEO Guy Marsala: The decrease in our revenue reflects the transitioning of our business model away from providing one-off license application services for a set fee and being finished with a project to one of building a perpetual revenue model where we develop the asset with our entrepreneurial partners and participate in a number of revenue streams associated with each project once the project begins operations. While this new model will take time to fully deploy, our pipeline of business in Nevada, Washington, Oregon, and the San Diego, California markets is robust. In addition, this quarter we expect to be filing multiple applications in Illinois. During the third quarter we also expect to begin to have our first sales of our Vaporfection subsidiaries new portable vaporizer called the miVape. So we’re quite positive about our revenue growth as these initiatives roll forward.
What’s happening to the stock price?
Answer provided by CEO Guy Marsala: Our stock price, like those of the other publically traded companies in our space, has been very variable. I can’t comment on the activity of our stock other than to say we’re focused on executing our growth plan which we believe will build shareholder value over time.
Why did we change the business model?
Answer provide by CEO Guy Marsala: Our management team and board felt that the time was now to take the expertise our company has developed and leverage it into a higher revenue growth, more profitable recurring revenue model. This will lead to greater predictability and visibility of our growth and should translate into a higher market value for our company.
Why did the company replace the CEO?
Answer provide by CEO Guy Marsala: This strategy has been in place for quite some time and has been communicated previously. We’re leaders in this emerging industry and we wanted to put in place people that were successful in other public companies to help Medbox take the next step in our growth process. Adding Mitch Lowe, Ambassador Siegel to the Board, Tom Iwanski as CFO, and now me as Chairman and CEO gives us a governance and management team that is unmatched in our industry.
Will the company run out of money? What is the company doing to raise capital and where do they stand on this?
Answer provide by CEO Guy Marsala: Medbox continues to receive multiple offers for funding. There is great interest in our industry from investors, both small and institutional. It is our job to choose the group or groups that believes in our strategy and is a good partner for the company.
Can you give any details about recent financing, like who invested? Is there a forward price to the amortization part if you would like to pay it in stock?
Answer provide by CEO Guy Marsala: All the details of our recent financing can be found in our second quarter 10-Q and Form 8-K. I will say that we’re very happy with our investors and they are big believers in our company.
Does the company intend to list on NASDAQ?
Answer provide by CEO Guy Marsala: It is the company’s intention to pursue an up-listing to NASDAQ as soon as practicable. I can’t give details on the time line, but it is an important part of our corporate strategy going forward.