Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | 15-May-14 | |
Document Information [Line Items] | ||
Document Type | 10-Q/A | |
Amendment Flag | TRUE | |
Amendment description | This Amendment No. 3 to Medbox, Inc.’s Form 10-Q/A for the three months ended March 31, 2014, initially filed with the U.S. Securities and Exchange Commission (the “SECâ€) on May 15, 2014, as amended by those certain amendments dated June 12, 2014 and June 27, 2014 (collectively, the “Original Filingâ€), includes restated condensed consolidated financial statements for the three months ended March 31, 2014 and 2013 (the “Restated Financialsâ€) and a revised Management’s Discussion and Analysis of Financial Condition and Results of Operations, which has been amended to provide disclosure regarding the effect of the Restated Financials. The condensed consolidated financial statements of the Company contained in the Original Filing have been restated to correct errors relating to (i) the timing of recognition of certain revenues for certain customer contracts prior to the period in which they were earned, (ii) recognition of investments from related parties as capital contributions, and (iii) improper capitalization of inventory costs. See Note 15 to the Company’s condensed consolidated financial statements included in “Item 1. Financial Statements†of this report and the information set forth in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations†for additional information. The Company also has restated its unaudited condensed consolidated financial statements as of and for the quarterly periods ended June 30 and September 30, 2014 and the audited condensed consolidated financial statements for the years ended December 31, 2013 and December 31, 2012 set forth in its General Form of Registration of Securities on Form 10 in connection herewith. The Company has amended and restated in its entirety each item of the Original Filing that required a change to reflect this restatement and to include certain additional information. These items include Item 1 and Item 2 of Part I and Item 6 of Part II of this report. No other information included in the Original Filing is amended hereby. Except as stated above, this Amendment speaks only as of May 15, 2014 (the “Original Filing Dateâ€), and this filing has not been updated to reflect any events occurring after such date or to modify or update disclosures affected by other subsequent events. In particular, forward-looking statements included in this Amendment represent management’s views as of the Original Filing Date. Such forward-looking statements should not be assumed to be accurate as of any future date. This Amendment should be read in conjunction with the Company’s other filings made with the SEC subsequent to the Original Filing Date, together with any amendments to those filings. As previously disclosed in the Company’s Current Reports on Form 8-K filed on December 30, 2014 and March 9, 2015, respectively, the Company’s unaudited condensed consolidated financial statements previously included in the Original Filing, the Company’s audited condensed consolidated financial statements for the years ended December 31, 2012 and 2013 reported in the Company’s General Form of Registration of Securities on Form 10 and the unaudited condensed consolidated financial statements as of and for the quarterly periods ended June 30, and September 30, 2014 and 2013 should not be relied upon until restatements thereof have been filed with the SEC. Pursuant to Rule 12b-15 under the Securities and Exchange Act of 1934, as amended, this Form 10-Q/A includes new certifications by our principal executive officer and principal financial officer under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. | |
Document Period End Date | 31-Mar-14 | |
Document Fiscal Year Focus | 2014 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | MDBX | |
Entity Registrant Name | Medbox, Inc. | |
Entity Central Index Key | 1547996 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 30,011,580 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 | Dec. 31, 2012 |
Current assets | ||||
Cash and cash equivalents | $1,977,756 | $168,003 | $1,044,921 | $1,026,902 |
Marketable securities | 442,904 | 184,800 | ||
Accounts receivable | 52,617 | 339,735 | ||
Note receivable | 0 | 115,000 | ||
Inventory | 374,734 | 632,986 | ||
Prepaid expenses and other current assets | 260,622 | 89,241 | ||
Total current assets | 3,108,633 | 1,529,765 | ||
Property and equipment, net of accumulated depreciation of 28,203 and 21,123, respectively | 198,532 | 140,658 | ||
Investments, at cost | 1,200,000 | 1,200,000 | ||
Intangible assets, net of accumulated amortization of $44,375 and 32,750 respectively | 735,598 | 682,429 | ||
Note receivable | 130,000 | 0 | ||
Goodwill | 1,100,037 | 1,090,037 | ||
Deposits and other assets | 99,662 | 98,726 | ||
Total assets | 6,572,462 | 4,741,615 | ||
Current liabilities | ||||
Accounts payable and accrued expenses | 385,686 | 448,314 | ||
Deferred revenue | 1,248,232 | 683,621 | ||
Notes payable | 0 | 75,000 | ||
Related party notes payable | 16,674 | 111,794 | ||
Customer deposits | 1,377,986 | 785,861 | ||
Short term loan payable | 122,135 | 0 | ||
Total current liabilities | 3,150,713 | 2,104,590 | ||
Stockholders' Equity | ||||
Preferred stock, $0.001 par value: 10,000,000 authorized; 3,000,000 and 6,000,000 issued and outstanding as of March 31, 2014 and December 31, 2013, respectively | 3,000 | 3,000 | ||
Common stock, $0.001 par value: 100,000,000 authorized, 30,011,580 and 29,525,750 issued and outstanding as of March 31, 2014 and December 31, 2013, respectively | 30,012 | 29,526 | ||
Additional paid-in capital | 10,583,731 | 8,156,358 | ||
Common stock subscribed | 0 | -15,000 | ||
Accumulated deficit | -7,194,994 | -5,536,859 | ||
Total stockholders' equity | 3,421,749 | 2,637,025 | -153,629 | |
Total liabilities and stockholders' equity | $6,572,462 | $4,741,615 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Property and equipment, accumulated depreciation (in Dollars) | $28,203 | $21,123 |
Intangible assets, accumulated amortization (in Dollars) | $44,375 | $32,750 |
Preferred stock, par value (in Dollars per share) | $0.00 | $0.00 |
Preferred stock, authorized | 10,000,000 | 10,000,000 |
Preferred stock, issued | 3,000,000 | 6,000,000 |
Preferred stock, outstanding | 3,000,000 | 6,000,000 |
Common stock, par value (in Dollars per share) | $0.00 | $0.00 |
Common stock, authorized | 100,000,000 | 100,000,000 |
Common stock, issued | 30,011,580 | 29,525,750 |
Common stock, outstanding | 30,011,580 | 29,525,750 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Revenue | $51,011 | $268,596 | |
Revenue from related party | 0 | 0 | |
Less: allowances and refunds | -60,000 | 0 | |
Net revenue | -8,989 | 268,596 | |
Cost of revenues | 949,874 | 270,060 | |
Gross profit | -958,863 | -1,464 | |
Selling, general and administrative expenses | |||
Selling and marketing | 141,554 | 254,252 | |
Research and development | 8,000 | 8,500 | |
General and administrative | 563,370 | 692,682 | |
Total selling, general and administrative expenses | 712,924 | 955,434 | |
Loss from operations | -1,671,787 | -956,898 | |
Other income (expense), net | 13,652 | -408 | |
Loss before provision for income taxes | -1,658,135 | -957,306 | |
Provision for income taxes | 0 | 0 | |
Net loss | ($1,658,135) | ($957,306) | ($3,791,440) |
Earnings per share attributable to common stockholders | |||
Basic (in Dollars per share) | ($0.05) | ($0.03) | |
Diluted (in Dollars per share) | ($0.05) | ($0.03) | |
Weighted average shares outstanding | |||
Basic (in Shares) | 30,516,271 | 27,957,406 | |
Diluted (in Shares) | 30,516,271 | 27,957,406 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $) | Total | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Common Stock Subscribed [Member] | Retained Earnings [Member] |
Balances at Dec. 31, 2012 | ($153,629) | $6,000 | $27,367 | $1,711,673 | ($153,250) | ($1,745,419) |
Balances (in shares) at Dec. 31, 2012 | 6,000,000 | 27,367,144 | ||||
Issuance of common stock, net of issuance costs | 4,486,541 | 2,115 | 4,484,426 | |||
Issuance of common stock, net of issuance costs (in shares) | 2,115,100 | |||||
Cancellation of preferred stock | -3,000 | 3,000 | ||||
Cancellation of preferred stock (in shares) | -3,000,000 | |||||
Proceeds from common stock subscribed | -138,250 | 138,250 | ||||
Issuance of warrants for acquisition of Vaporfection | 1,166,000 | 1,166,000 | ||||
Issuance of common stock for accounts payable | 119,553 | 44 | 119,509 | |||
Issuance of common stock for accounts payable (in Shares) | 43,506 | |||||
Capital contributions, related parties | 810,000 | 810,000 | ||||
Net loss | -3,791,440 | -3,791,440 | ||||
Balances at Dec. 31, 2013 | 2,637,025 | 3,000 | 29,526 | 8,156,358 | -15,000 | -5,536,859 |
Balances (in shares) at Dec. 31, 2013 | 3,000,000 | 29,525,750 | ||||
Issuance of common stock, net of issuance costs | 2,427,859 | 486 | 2,427,373 | |||
Issuance of common stock, net of issuance costs (in shares) | 485,830 | |||||
Proceeds from common stock subscribed | 15,000 | 15,000 | ||||
Net loss | -1,658,135 | -1,658,135 | ||||
Balances at Mar. 31, 2014 | $3,421,749 | $3,000 | $30,012 | $10,583,731 | ($7,194,994) | |
Balances (in shares) at Mar. 31, 2014 | 3,000,000 | 30,011,580 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Cash flows from operating activities | ||
Net loss | ($1,658,135) | ($957,306) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 18,705 | 5,701 |
Provisions for sales allowances and refunds | 60,000 | 0 |
Changes in operating assets and liabilities | ||
Accounts receivable | 227,118 | 676,075 |
Loan receivable | 0 | -70,000 |
Inventories | 258,252 | -172,388 |
Prepaid expenses and other assets | -172,317 | -109,920 |
Accounts payable and accrued expenses | -62,628 | -42,219 |
Customer deposits | 334,021 | 337,500 |
Deferred revenue | 564,611 | 62,500 |
Net cash provided by (used in) operating activities | -430,373 | -270,057 |
Cash flows from investing activities | ||
Issuance of note receivable | -15,000 | 0 |
Purchase of property and equipment | -64,954 | -38,322 |
Purchase of intangible assets | -74,794 | 0 |
Advances for investments | 0 | -1,475,850 |
Net cash used in investing activities | -154,748 | -1,514,172 |
Cash flows from financing activities | ||
Related party notes payable, net | -95,120 | -433,080 |
Short term loan, net | 122,135 | |
Issuance of (payments on) notes payable | -75,000 | |
Contribution of capital, related party | 0 | 810,000 |
Proceeds from issuance of common stock, net | 2,442,859 | 1,425,328 |
Net cash provided by financing activities | 2,394,874 | 1,802,248 |
Net increase in cash | 1,809,753 | 18,019 |
Cash, beginning of period | 168,003 | 1,026,902 |
Cash, end of period | 1,977,756 | 1,044,921 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 608 | 848 |
Cash paid for income taxes | 0 | 9,068 |
Non- cash transactions: | ||
Marketable securities for accounts receivable | $258,104 | $0 |
NATURE_OF_BUSINESS
NATURE OF BUSINESS | 3 Months Ended |
Mar. 31, 2014 | |
NATURE OF BUSINESS | NOTE 1 – NATURE OF BUSINESS |
Medbox, Inc. (the Company) was incorporated in the state of Nevada on June 16, 1977, originally as Rabatco, Inc., subsequently changing its name on May 12, 2000 to MindfulEye, Inc., and again on August 30, 2011 to Medbox, Inc. The Company, through its subsidiaries Prescription Vending Machines, Inc. (PVM), Medicine Dispensing Systems, Inc. (MDS) and Medbox Technologies, Ltd. (“MT”), is a leader in providing consulting services and patented biometrically controlled medicine storage and dispensing systems to the medical and retail industries. In addition, through its wholly owned subsidiary, Vaporfection International, Inc. (VII), the Company sells a line of vaporizer and accessory products online and through distribution partners. The Company is headquartered in West Hollywood, California with offices in Arizona and Florida. | |
On December 31, 2011, Medbox, Inc. entered into a Stock Purchase Agreement with PVM International, Inc. (PVMI). Pursuant to two separate closings held on January 1, 2012 and December 31, 2012, the Company acquired from PVMI all of the outstanding shares of common stock in (i) Prescription Vending Machines, Inc., (PVM) (ii) Medicine Dispensing Systems, Inc. (our Arizona subsidiary), and (iii) Medbox, Inc. (our California subsidiary that is currently inactive) (these three listed subsidiaries are hereafter referred to as the “PVMI Named Subsidiaries”), in exchange for two million shares of the Company’s common stock and a $1 million promissory note. | |
The transaction between Medbox, Inc. and PVMI is deemed to be a reverse acquisition, where Medbox, Inc. (the legal acquirer) is considered the accounting acquiree and the PVMI Named Subsidiaries (the legal acquiree) are considered the accounting acquirer. The assets and liabilities are transferred at their historical cost with the capital structure of Medbox, Inc. Medbox, Inc. is deemed a continuation of the business of PVMI Named Subsidiaries and the historical financial statements of PVMI Named Subsidiaries are the historical financial statements of Medbox, Inc. For accounting purposes, the reverse merger is treated as a recapitalization of Medbox, Inc. | |
The Company’s subsidiary, Prescription Vending Machines, Inc. was incorporated in the state of California in 2008 and our subsidiary, Medicine Dispensing Systems, Inc. was incorporated in the state of Arizona in 2011. | |
On March 22, 2013, the Company entered into a Securities Purchase Agreement with Vapor Systems International, LLC to acquire 100% of the outstanding common stock of VII in exchange for warrants to purchase 260,864 shares of the Company’s common stock. In addition, the Company agreed to provide up to $1,600,000 in working capital to VII at the Company’s sole discretion which included $175,000 paid to the inventor of certain patents including a warrant to purchase 5,000 shares of the Company’s common stock. This transaction was closed in April 2013. | |
On December 9, 2013 Medbox formed Medbox Technologies Ltd (MT), a Canadian corporation to operate as a consulting sales and marketing operation in Canada. As of December 31, 2013 there was no activity for this company. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended | ||||||||||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (RESTATED) | ||||||||||||||||||||||||||||||||
Principles of Consolidation | |||||||||||||||||||||||||||||||||
The consolidated financial statements include the accounts of Medbox, Inc. and its wholly owned subsidiaries, PVM, MDS, VII and MT. All intercompany transactions have been eliminated. VII and MT, represents additional subsidiaries included in the consolidated financial statements for the year 2013. | |||||||||||||||||||||||||||||||||
Use of Estimates | |||||||||||||||||||||||||||||||||
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the consolidated financial statements as well as the reported expenses during the reporting periods. Actual results could differ from these estimates. | |||||||||||||||||||||||||||||||||
The Company’s significant estimates and assumptions include the valuation of the Company’s common stock used in the valuation of goodwill, accounts receivable and note receivable collectability, inventory, advances on investments, the valuation of restricted stock received from customers, the amortization and recoverability of capitalized patent costs and useful lives of long-lived assets, and income tax expense, some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates. Although the Company believes that its estimates and assumptions are reasonable, they are based upon information available at the time the estimates and assumptions were made. | |||||||||||||||||||||||||||||||||
Concentrations of Credit Risk | |||||||||||||||||||||||||||||||||
The Company maintains cash balances at several financial institutions in the Los Angeles, California area and Florida. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000. At March 31, 2014 and December 31, 2013, the Company’s uninsured balances totaled $1,456,548 and $0, respectively. The Company has not experienced any losses in such accounts and periodically evaluates the credit worthiness of the financial institutions and has determined the credit exposure to be negligible. | |||||||||||||||||||||||||||||||||
At March 31, 2014 one customer represented 47.5% of the outstanding receivables and another customer represented 29.0% of gross revenues. At December 31, 2013, two (2) customers represented 78.1% of outstanding receivables. For the three months ended March 31, 2013 two customers represented 93.0% of gross revenues for the period. . | |||||||||||||||||||||||||||||||||
Customer | March 31, 2014 | December 31, 2013 | |||||||||||||||||||||||||||||||
Accounts Receivable | January - March 2014 | Accounts Receivable | January - March 2013 | ||||||||||||||||||||||||||||||
Amount, $ | % | Revenue | Amount, $ | % | Revenue | ||||||||||||||||||||||||||||
A | $ | 25,000 | 47.5 | % | |||||||||||||||||||||||||||||
B | $ | 14,786 | 29 | % | |||||||||||||||||||||||||||||
C | $ | 150,000 | 44.2 | % | |||||||||||||||||||||||||||||
D | 115,200 | 33.9 | % | ||||||||||||||||||||||||||||||
E | $ | 150,000 | 55.8 | % | |||||||||||||||||||||||||||||
F | 100,000 | 37.2 | % | ||||||||||||||||||||||||||||||
Subtotal | 25,000 | 47.5 | % | 14,786 | 29 | % | 265,200 | 78.1 | % | 250,000 | 93 | % | |||||||||||||||||||||
Total | $ | 52,617 | 100 | % | $ | 51,011 | 100 | % | $ | 339,736 | 100 | % | $ | 268,596 | 100 | % | |||||||||||||||||
Advertising and Marketing Costs | |||||||||||||||||||||||||||||||||
Advertising and marketing costs are expensed as incurred. Advertising and marketing expense for the three months ending March 31, 2014 and March 31, 2013 were $141,554 and $254,252, respectively. | |||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | |||||||||||||||||||||||||||||||||
Pursuant to ASC No. 825, Financial Instruments, the Company is required to estimate the fair value of all financial instruments included on its balance sheets. The carrying value of cash, accounts receivable, other receivables, inventory, accounts payable and accrued expenses and notes payable approximate their fair value due to the short period to maturity of these instruments. The Company’s marketable securities and related customer deposits require fair value measurement on a recurring basis as the Company has received advance payment of restricted stock in a publicly traded company for contracted services. The Company has no exposure to gain or loss on the increase or decrease in the value of the marketable securities as any shortfall in the ultimate liquidated value of the securities will be supplemented by additional restricted stock from the customer and any liquidation in excess above the Companies billings will be returned to the customer. | |||||||||||||||||||||||||||||||||
Revenue Recognition (Restated) | |||||||||||||||||||||||||||||||||
The Company applies the revenue recognition provisions pursuant to ASC No. 605, Revenue Recognition, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements filed with the SEC. The guidance outlines the basic criteria that must be met to recognize the revenue and provides guidance for disclosure related to revenue recognition policies. | |||||||||||||||||||||||||||||||||
Revenue is only recognized when the following four criteria are met: 1) persuasive evidence of an arrangement exists, 2) delivery has occurred or services have been rendered, 3) sales price is fixed and determinable and 4) collectability is reasonably assured. For multi-year contracts with upfront payments made by customers, the upfront payments are recognized over the longer of the contract period or the customer relationship. For contracts that include multiple deliverables such as the build out of customer facilities, the Company recognizes revenue when a milestone is reached in the contract such as securing the location, delivery of dispensing machines or completion of the facility. The contract terms are broken down in specific milestones with specific attributable revenue to be earned upon successful completion of the milestone terms. (e.g. if a milestone is completing construction on a client dispensary, the condition for the revenue to be recorded is after issuance of a certificate of occupancy for the newly completed facility. The Company will record a specified amount of revenue attributable to this milestone based on the contract). Equipment sales not associated with a consulting contract are recognized as the product is shipped and title passes. Advance payments from clients in advance of work performed are recorded as customer deposits on the balance sheet. | |||||||||||||||||||||||||||||||||
An allowance for bad debt is established for any customer when their balance is deemed as possibly uncollectible. | |||||||||||||||||||||||||||||||||
Provisions for estimated returns and allowances, and other adjustments are usually provided in the same period the related sales are recorded. The Company will at times allow customers to receive full refunds should regulatory events prevent the customer from being able to operate his or her contracted location. The provision for returns as well as an allowance for doubtful accounts is included in the Company’s balance sheet as determined by management. | |||||||||||||||||||||||||||||||||
Cost of Revenues (Restated) | |||||||||||||||||||||||||||||||||
Cost of revenue consists primarily of expenses associated with the delivery and distribution of our products and services. These include expenses related to the manufacture of our dispensary units, construction expense related to the customer dispensary, site selection and establishment of licensing requirements, and consulting expense for the continued management of the dispensary unit build out, server and security equipment, rent expense, energy and bandwidth costs, and support and maintenance costs prior to when the client moves in. We only begin capitalizing costs when we have obtained a license and a site for operation of a customer dispensary or cultivation center. The previously capitalized costs are charged to cost of revenue in the same period that the associated revenue is earned. In the case where it is determined that previously inventoried costs are in excess of the projected net realizable value of the sale of the licenses then the excess cost above net realizable value is written off to cost of revenues. In addition, cost of revenue related to our vaporizer line of products consists of direct procurement cost of the products along with costs associated with order fulfilment, shipping, inventory storage and inventory management costs. | |||||||||||||||||||||||||||||||||
Basic and Fully Diluted Net Income/Loss Per Share | |||||||||||||||||||||||||||||||||
Basic net income/loss per share is computed by dividing net income/loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share include the effects of any outstanding options, warrants and other potentially dilutive securities. The Company did not consider any potential common shares in the computation of diluted loss per share for the periods ending March 31, 2014 and December 31, 2013, due to the net loss, as they would have an anti-dilutive effect on EPS. | |||||||||||||||||||||||||||||||||
As of March 31, 2014 and December 31, 2013, the Company had 3,000,000 shares of Series A preferred stock outstanding with par value of $0.001 that could be converted into 15,000,000 shares of the Company’s common stock. The Company also had 295,854 warrants to purchase common stock outstanding as of March 31, 2014. | |||||||||||||||||||||||||||||||||
Accounts Receivable and Allowance for Bad Debts | |||||||||||||||||||||||||||||||||
The Company is subject to credit risk as it extends credit to our customers for work performed as specified in individual contracts. The Company extends credit to its customers, mostly on an unsecured basis after performing certain credit analysis. Our typical terms require a portion of the contract price up front and the rest payable upon certain agreed milestones. The Company’s management periodically reviews the creditworthiness of its customers and provides for probable uncollectible amounts through a charge to earnings and a credit to an allowance for bad debts based on our assessment of the current status of individual accounts. Accounts still outstanding after the Company has used reasonable collection efforts are written off through a charge to the allowance for bad debts accounts and a credit to accounts receivable. As of March 31, 2014 and December 31, 2013, the Company’s management considered all accounts outstanding fully collectible. | |||||||||||||||||||||||||||||||||
Property and Equipment | |||||||||||||||||||||||||||||||||
Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate. The estimated useful lives for significant property and equipment categories are as follows: | |||||||||||||||||||||||||||||||||
Vehicles | 5 years | ||||||||||||||||||||||||||||||||
Furniture and Fixtures | 5 years | ||||||||||||||||||||||||||||||||
Office equipment | 3 years | ||||||||||||||||||||||||||||||||
Depreciation and amortization expense for the three months ended March 31, 2014 and March 31, 2013 was $18,705 and $5,701 respectively. | |||||||||||||||||||||||||||||||||
Income Taxes | |||||||||||||||||||||||||||||||||
The Company accounts for income taxes under the asset and liability method in accordance with ASC 740. The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The components of the deferred tax assets and liabilities are classified as current and non-current based on their characteristics. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. | |||||||||||||||||||||||||||||||||
In addition, the Company’s management performs an evaluation of all uncertain income tax positions taken or expected to be taken in the course of preparing the Company’s income tax returns to determine whether the income tax positions meet a “more likely than not” standard of being sustained under examination by the applicable taxing authorizes. This evaluation is required to be performed for all open tax years, as defined by the various statutes of limitations, for federal and state purposes. | |||||||||||||||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||||||||||||
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. | |||||||||||||||||||||||||||||||||
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. | |||||||||||||||||||||||||||||||||
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed. | |||||||||||||||||||||||||||||||||
Recent Accounting Pronouncements | |||||||||||||||||||||||||||||||||
There were various accounting updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s consolidated financial position, consolidated results of operations or cash flows. | |||||||||||||||||||||||||||||||||
Management’s Evaluation of Subsequent Events | |||||||||||||||||||||||||||||||||
The Company evaluates events that have occurred after the balance sheet date of March 31, 2014, through the date which the financial statements were available to be issued. Based upon the review, other than described in Note 15 – Subsequent Events, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements. |
ACQUISITION
ACQUISITION | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
ACQUISITION | NOTE 3 – ACQUISITION | ||||
On March 22, 2013, the Company entered into a purchase agreement for 100% of the issued and outstanding common stock of Vaporfection International Inc. (“VII”) owned by Vapor Systems International LLC. The Company issued 260,854 warrants to shareholders of VII allowing them to purchase one (1) share of Medbox common stock at $.001 per share beginning April 1, 2014. These warrants were valued for the Company’s accounting purposes at $4.47 per share which represented the fair value of the Company’s stock as determined by the Company’s independent appraiser. In addition, the Company assumed certain liabilities and a 10% convertible note of VII in the aggregate amount of approximately $470,000. The total value of the acquisition was approximately $1,635,000 and has been allocated in accordance with ASC 805 as per the Company’s independent valuation as follows: | |||||
Machinery & Equipment | $ | 70,000 | |||
IP and related technology | 287,000 | ||||
Amortizable intangible assets: | |||||
Customer contracts and related relationships | 314,000 | ||||
Trade name, trademark, and domain name | 46,000 | ||||
Non-compete covenants | 23,000 | ||||
Goodwill | 895,000 | ||||
Total assets acquired | 1,635,000 | ||||
Fair value of liabilities assumed | (469,000 | ) | |||
Net fair value | $ | 1,166,000 | |||
The amortizable intangible assets have useful lives not exceeding ten years and a weighted average useful life of seven years. No amounts have been allocated to in-process research and development and $895,000 has been allocated to goodwill. In addition, from the date of acquisition through March 31, 2014 and December 31, 2013, the liabilities assumed have been increased by approximately $10,000 and $195,000 respectively as they have been accrued or settled. Accordingly, $205,000 has also been allocated to goodwill. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and is not deductible for tax purposes. | |||||
In addition, to the above warrants the purchase agreement and associated consulting contract with the prior management company of the business unit calls for additional shares to be issued in the event that the performance of the business unit exceeds $11,818,140 of accumulated EBITBA profitability over the subsequent 4 year operating period. The Company is contingent upon future events and accordingly has treated the obtainment of that performance provision as being remote and consequently has not assigned any future value to the purchase price. |
INVESTMENTS
INVESTMENTS | 3 Months Ended |
Mar. 31, 2014 | |
INVESTMENTS | NOTE 4 – INVESTMENTS |
On February 8, 2013, the Company entered into an agreement with Bio-Tech Medical Software, Inc. which would allow the Company to purchase 833,333 of authorized shares of common stock which would represent 25% of Bio-Tech’s issued and outstanding shares of common stock for $1,500,00. The Company advanced $600,000 upon execution of this agreement for the right to purchase with the remaining balance of $900,000 due and payable in installments at various dates by August 25, 2013. On June 26, 2013, the Company notified Bio-Tech that it was canceling the agreements with them. | |
On February 27, 2014, the Company signed a settlement agreement, and in connection therewith, a second amended and restated technology license agreement with Bio-Tech. According to the second amended and restated technology license agreement, the Company received full licensed right on biometric inventory tracking technology for the term of five years with no additional monies due. All stock transfer between companies was canceled and rescinded. | |
On March 12, 2013, the Company entered into an agreement with three members of Medvend Holdings LLC whereby the Company would acquire 50% of their equity interest in Medvend. The purchase price of the equity interest is $4,100,000 whereby the Company paid an advance of $300,000 upon execution of the contract for the right to purchase and another $300,000 was disbursed as an additional investment to Medvend Holdings LLC. In May 2013, the three members of Medvend Holdings LLC were named in a lawsuit by that entity’s minority shareholders alleging improper conveyance of the three members’ ownership interest in Medvend Holding LLC to the Company. Accordingly, also in May 2013, Medbox filed suit against Medvend Holdings, LLC and the three members of that entity that were involved in the transaction. As of March 31, 2014, the company’s management expects a full recovery of its investment. |
INVENTORIES_RESTATED
INVENTORIES (RESTATED) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
INVENTORIES (RESTATED) | NOTE 5 – INVENTORIES (RESTATED) | ||||||||
Inventories are stated at the lower of cost or market value. Cost is determined on a standard cost basis that approximates the first-in, first-out (FIFO) method. | |||||||||
The consolidated inventories at March 31, 2014 and December 31, 2013 consist of: | |||||||||
March 31, 2014 | December 31, 2013 | ||||||||
Inventories | |||||||||
Work in process and related capitalized costs | $ | — | $ | 242,488 | |||||
Deposits on dispensing machines | 167,400 | 138,423 | |||||||
Vaporizers and accessories | 207,334 | 193,575 | |||||||
Dispensing machines | — | 58,500 | |||||||
Total inventory | $ | 374,734 | $ | 632,986 | |||||
PROPERTY_AND_EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
PROPERTY AND EQUIPMENT | NOTE 6 – PROPERTY AND EQUIPMENT | ||||||||
Property and equipment at March 31, 2014 and December 31, 2013 consists of: | |||||||||
March 31, 2014 | December 31, 2013 | ||||||||
Property Plant and Equipment | |||||||||
Office equipment | $ | 19,439 | $ | 17,192 | |||||
Furniture and fixtures | 74,404 | 73,567 | |||||||
Website development | 46,922 | 46,922 | |||||||
Product development | 85,970 | 24,100 | |||||||
226,735 | 161,781 | ||||||||
Less accumulated depreciation | (28,203 | ) | (21,123 | ) | |||||
Property and equipment, net | $ | 198,532 | $ | 140,658 | |||||
Product design costs are related to development of new product and related prototype unit by VII. These development costs are accumulated and capitalized until the date of launching the new product. |
INTANGIBLE_ASSETS
INTANGIBLE ASSETS | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
INTANGIBLE ASSETS | NOTE 7 – INTANGIBLE ASSETS | ||||||||
The Company acquired certain intangible assets with its purchase of 100% of the outstanding common stock of VII on March 22, 2013. The Company accounts for intangible assets acquired in a business combination, if any, under the purchase method of accounting at their estimated fair values at the date of acquisition. Intangibles are either amortized over their estimated lives, if a definite life is determined, or are not amortized if their life is considered indefinite. | |||||||||
March 31, 2014 | December 31, 2013 | ||||||||
Intangible assets | |||||||||
Distributor relationship | 314,000 | 314,000 | |||||||
IP/Technology/Patents | 311,973 | 332,179 | |||||||
Domain names | 131,000 | 46,000 | |||||||
Non-Compete covenants | 23,000 | 23,000 | |||||||
779,973 | 715,179 | ||||||||
Less accumulated amortization | (44,375 | ) | (32,750 | ) | |||||
Intangible assets, net | 735,598 | 682,429 | |||||||
The estimated useful lives for significant intangible assets are as follows: | |||||||||
Distributor Relationship | 10 years | ||||||||
Domain Names | 10 years | ||||||||
Non-Compete covenants | 3 years | ||||||||
With the recent acquisition of its intangible assets in April 2013, the Company’s management does not believe any impairment of intangible assets has occurred as of March 31, 2014. |
ACCOUNTS_AND_NOTES_RECEIVABLE_
ACCOUNTS AND NOTES RECEIVABLE (RESTATED) | 3 Months Ended |
Mar. 31, 2014 | |
ACCOUNTS AND NOTES RECEIVABLE (RESTATED) | NOTE 8 – ACCOUNTS AND NOTES RECEIVABLE (RESTATED) |
Periodically, the Company assesses and reviews the receivables for collectability. As of March 31, 2014 and December 31, 2013, the Company’s management considered all accounts outstanding fully collectible. | |
During December 2013, the Company entered in to a multiple advance secured promissory note for $1,000,000 with a Canadian partner, all transactions with whom are considered to be on an arms-length basis. This note is due and payable, together with interest at 5% per annum. As of March 31, 2014 and December 31, 2013 the outstanding balance of this note receivable was $130,000 and $115,000 respectively. |
MARKETABLE_SECURITIES
MARKETABLE SECURITIES | 3 Months Ended |
Mar. 31, 2014 | |
MARKETABLE SECURITIES | NOTE 9 – MARKETABLE SECURITIES |
Marketable securities | |
At March 31, 2014, the Company held as a deposit of 7,000,000 restricted shares (issued on September 5, 2013) as payment for $300,000 in accounts receivable billed to a customer. The fair value of the shares as of March 31, 2014 and December 31, 2013 (with 12% discount because of restriction) was $442,904 and $184,800. The value of these unliquidated restricted shares is offset against the outstanding amounts owed to the Company up to $300,000 (the value of receivable of the client) until such time that the shares are liquidated and the cash proceeds are used to pay off the receivable and any excess cash will be returned to the client in accordance with the contract. The difference of $142,904 ($442,904-$300,000) is presented in the balance sheet as a component of customer deposit. |
CUSTOMER_DEPOSITS
CUSTOMER DEPOSITS | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
CUSTOMER DEPOSITS | NOTE 10 – CUSTOMER DEPOSITS | ||||||||
Customer deposits | |||||||||
Advance payments from customers are recorded as customer deposits on the balance sheet. | |||||||||
March 31, 2014 | December 31, 2013 | ||||||||
Customer deposits | |||||||||
Advance payments from customers | $ | 1,302,649 | $ | 710,225 | |||||
Prepaid sales of vaporizers | 75,337 | 75,636 | |||||||
Total customer deposits | $ | 1,377,986 | $ | 785,861 | |||||
SHORTTERM_DEBT
SHORT-TERM DEBT | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
SHORT-TERM DEBT | NOTE 11 – SHORT-TERM DEBT | ||||||||
Short-term debt as of March 31, 2014 and December 31, 2013 consisted of: | |||||||||
March 31, 2014 | December 31, 2013 | ||||||||
Short-term debt | |||||||||
Note payable to unrelated third party payable | $ | — | $ | 75,000 | |||||
Notes payable to related party | 16,674 | 111,794 | |||||||
Short term loan payable | 122,135 | — | |||||||
Total current debt | $ | 138,809 | $ | 186,794 | |||||
Note payable to unrelated party was signed on March 22, 2013 and is due on April 22, 2014, bearing an interest rate of 10% per annum. Interest expense on notes payable for three months ended March 31, 2014 and March 31, 2013 was $28,667 and $0, respectively. | |||||||||
The notes payable to related parties bear no interest and are due on demand. | |||||||||
The short term loan represents the balance of the financing in the amount of $137,160 for the D&O insurance. The financing bears a 4.25% interest and is payable in monthly annuities of $15,511 for the period of nine months with the first payment due on March 5, 2014 and the last on November 5, 2014. The interest charge for the period ended March 31, 2014 was $486. |
RELATED_PARTY_TRANSACTIONS_RES
RELATED PARTY TRANSACTIONS (RESTATED) | 3 Months Ended |
Mar. 31, 2014 | |
RELATED PARTY TRANSACTIONS (RESTATED) | NOTE 12 – RELATED PARTY TRANSACTIONS (RESTATED) |
The Company utilizes Vincent Chase Inc., a related party and 100% owned by the founder of the Company for management advisory and consulting services. During the three months ended March 31, 2014, the Company incurred $37,500 for these services. | |
During 2013, the Company issued two promissory notes payable to Vincent Chase Inc., on September 20, 2013 in the amount of $150,000 and on October 28, 2013 in the amount of $100,000. At December 31, 2013 the outstanding amount for the combined notes was $111,794. As of March 31, 2014 the aforementioned notes were repaid in full. | |
In February 2014 the Company issued notes payable to PVM International Inc. (PVMI), a related party which is 100% owned by the founder of the Company in the amount of $250,000 and $100,000. These notes were subsequently repaid leaving $16,674 outstanding as of March 31, 2014. | |
During three months ending March 31, 2014 the Company paid salary to Dr. Bruce Bedrick, the Chief Executive Officer in the gross amount of $32,934. | |
On March 25, 2014, the Company completed a contract for management rights with a related party and shareholder in the amount of $400,000. Also, the same related party paid the Company $150,000 during the first quarter of 2014 on behalf of one of the related party’s partners. These amounts were recorded as deposits in the Company’s balance sheet. In addition, on March 28, 2014, the Company entered into an agreement with the same related party for territory rights in Colorado for $500,000. The agreement has a term of five years and, accordingly, the revenue will be recognized ratably over five year term. |
STOCKHOLDERS_EQUITY
STOCKHOLDER'S EQUITY | 3 Months Ended |
Mar. 31, 2014 | |
STOCKHOLDER'S EQUITY | NOTE 13 – STOCKHOLDER’S EQUITY |
Preferred Stock | |
In November 2011, the Company issued 6,000,000 of $0,001 par value Series A convertible restricted preferred stock to the founder and a shareholder of the Company. This preferred stock can be converted from 1 (one) restricted share to 5 (five) restricted shares of common stock. In October 2012, 3,000,000 shares of preferred stock were returned to the Company by the shareholder and reissued to the founder. In January 2013, the founder returned to the Company the 3,000,000 shares of Preferred stock and they were immediately cancelled. The outstanding number of series A convertible preferred stock as of March 31, 2014 was 3,000,000. | |
Common Stock | |
During first quarter of 2014, the Company issued 485,830 shares of common stock at the price $5.00, resulting in net cash proceeds of $2,427,859. | |
On December 19, 2013 the Company declared a 1:1 common stock dividend on each share of outstanding common stock, effectively a two-for-one forward stock split. This stock dividend required FINRA approval which was granted in 2014 and the stock dividend aggregating 14,762,875 restricted common shares was issued on February 3, 2014. Accordingly, the Company’s 2013 consolidated financial statements have been retroactively stated to reflect the common stock dividend. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
COMMITMENTS AND CONTINGENCIES | NOTE 14 – COMMITMENTS AND CONTINGENCIES | ||||
The Company may rent property, equipment, transportation equipment, and various clinics on an as needed basis. | |||||
On August 1, 2011, the Company entered into a lease agreement for office space located in West Hollywood, California through June 30, 2017 at a monthly rate of $14,397. | |||||
In addition, the Company leases office facilities located at West Hills, California and Scottsdale, Arizona from unrelated third parties at a monthly rate of $1,300 and $1,420. The West Hills lease is on the month to month basis. The Arizona lease is a non-auto renewing lease with the most current agreement covering the period from November 1, 2013 to April 30, 2014. In March 2014, a new lease agreement was signed for six months commencing May 1, 2014. | |||||
At December 17, 2013 the Company’s subsidiary Vaporfection International, Inc. entered in to an agreement for a 1 year non-cancelable lease in Deerfield Beach, Florida. The lease starts on January 1, 2014 at a monthly rate of $1,981, after December 31, 2014 the lease will be on the month to month basis. | |||||
The Company rents virtual offices/meeting spaces in Tokyo, London and New York on a month to month basis for approximate $330 per month. The payment is charged to rent expense as incurred. | |||||
Total rent expense under operating leases for the three months ended March 31, 2014 and 2013 were $51,473 and $14,021, respectively. | |||||
The minimum future lease payments under non-cancelable operating leases with remaining term in excess of one year at December 31, 2013 were as follows: | |||||
Amount | |||||
Year Ending | |||||
2014 | $ | 147,398 | |||
2015 | 172,759 | ||||
2016 | 172,759 | ||||
2017 | 86,379 | ||||
Total | $ | 579,295 | |||
RESTATEMENT
RESTATEMENT | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
RESTATEMENT | NOTE 15. RESTATEMENT | ||||||||||||||||
On December 30, 2014, Medbox, Inc. (the “Registrant”) filed with the Securities and Exchange Commission a Current Report on Form 8-K (the “Original 8-K”) disclosing its determination to (i) amend and restate its financial statements for the year ended December 31, 2013, the third and fourth quarters of 2013 and the first three quarters of 2014 and (ii) to examine the Company’s financial statements for the fiscal year 2012 and the first two quarters of 2013 and, if necessary, to restate those also. Thereafter, management, together with is professional advisor, undertook a comprehensive review of revenue recognition for all periods from 2012 to the present. | |||||||||||||||||
Management and the outside professional advisor have completed the review of revenue recognition for the years 2012, 2013 and 2014. Conclusions that relate to the periods being restated herein include: | |||||||||||||||||
1) | Revenue on some contracts with customers was recognized before all required criteria were met, resulting in an overstatement of revenue; and, | ||||||||||||||||
2) | Certain transactions with related parties in the amount of $810,000 during the year ended December 31, 2013 were improperly recorded as revenue instead of capital contributions | ||||||||||||||||
The combined impacts of all adjustments to the applicable line items in our condensed consolidated financial statements for the periods covered by this Form 10-Q/A are provided in the tables below. | |||||||||||||||||
Financial Statement Presentation. In addition to the restatement of our consolidated financial statements, we have also restated the following items to reflect certain changes noted above. | |||||||||||||||||
• | Note 2 - Summary of Significant Accounting Policies | ||||||||||||||||
• | Note 5 – Inventories | ||||||||||||||||
• | Note 8 - Accounts and Notes Receivable | ||||||||||||||||
• | Note 12 - Related Parties | ||||||||||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||||||||||
March 31, | Impact of 2013 | Early | March 31, | ||||||||||||||
2014 | restatement | Recognition | 2014 | ||||||||||||||
(Unaudited) | of Revenue | (Unaudited) | |||||||||||||||
(As originally presented) | (Restated) | ||||||||||||||||
Assets | |||||||||||||||||
Current assets | |||||||||||||||||
Cash and cash equivalents | $ | 1,977,756 | $ | 1,977,756 | |||||||||||||
Marketable securities | 442,904 | 442,904 | |||||||||||||||
Accounts receivable | 1,319,461 | (1,524,771 | ) | 257,927 | 52,617 | ||||||||||||
Inventory | 1,069,156 | (636,468 | ) | (57,954 | ) | 374,734 | |||||||||||
Prepaid expenses and other current assets | 260,622 | 260,622 | |||||||||||||||
Total current assets | 5,069,899 | 3,108,633 | |||||||||||||||
Property and equipment | 198,532 | 198,532 | |||||||||||||||
Investments, at cost | 1,200,000 | 1,200,000 | |||||||||||||||
Intangible assets | 735,598 | 735,598 | |||||||||||||||
Note receivable | 130,000 | 130,000 | |||||||||||||||
Goodwill | 1,100,037 | 1,100,037 | |||||||||||||||
Deposits and other assets | 99,662 | 99,662 | |||||||||||||||
Total assets | $ | 8,533,728 | $ | 6,572,462 | |||||||||||||
(2,161,239 | ) | 199,973 | |||||||||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||
Current liabilities | |||||||||||||||||
Accounts payable and accrued expenses | $ | 535,686 | (150,000 | ) | $ | 385,686 | |||||||||||
Notes payable | — | — | |||||||||||||||
Deferred revenue | 683,621 | 564,611 | 1,248,232 | ||||||||||||||
Related party notes payable | 16,674 | 16,674 | |||||||||||||||
Customer deposits | 538,311 | 582,675 | 257,000 | 1,377,986 | |||||||||||||
Provision for customers refunds | 222,925 | (222,925 | ) | — | |||||||||||||
Short term loan payable | 122,135 | 122,135 | |||||||||||||||
Total current liabilities | 1,435,731 | 3,150,713 | |||||||||||||||
Stockholders’ Equity | |||||||||||||||||
Preferred stock | 3,000 | 3,000 | |||||||||||||||
Common stock | 30,012 | 30,012 | |||||||||||||||
Additional paid-in capital | 9,212,731 | 1,371,000 | 10,583,731 | ||||||||||||||
Common stock subscribed | 0 | — | |||||||||||||||
Accumulated deficit | (2,147,746 | ) | (4,648,535 | ) | (398,713 | ) | (7,194,994 | ) | |||||||||
Total stockholders’ equity | 7,097,997 | 3,421,749 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 8,533,728 | $ | 6,572,462 | |||||||||||||
(2,161,239 | ) | 199,973 | |||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
Three months ended | Early Recognition of | Three months ended | |||||||||||||||
March 31, 2014 | Revenue | March 31, 2014 | |||||||||||||||
(As originally presented) | (Restated) | ||||||||||||||||
Revenue | $ | 294,550 | $ | (243,539 | ) | $ | 51,011 | ||||||||||
Revenue from related party | 1,000,000 | (1,000,000 | ) | — | |||||||||||||
Less: allowances and refunds | (962,780 | ) | 902,780 | (60,000 | ) | ||||||||||||
Net revenue | 331,770 | (340,759 | ) | (8,989 | ) | ||||||||||||
Cost of revenues | 891,920 | 57,954 | 949,874 | ||||||||||||||
Gross profit | (560,150 | ) | (398,713 | ) | (958,863 | ) | |||||||||||
Operating expenses | |||||||||||||||||
Selling and marketing | 141,554 | 141,554 | |||||||||||||||
Research and development | 8,000 | 8,000 | |||||||||||||||
General and administrative | 563,370 | 563,370 | |||||||||||||||
Total operating expenses | 712,924 | 712,924 | |||||||||||||||
Loss from operations | (1,273,074 | ) | (1,671,787 | ) | |||||||||||||
Other income (expense), net | 13,652 | 13,652 | |||||||||||||||
Loss before provision for income taxes | (1,259,422 | ) | (1,658,135 | ) | |||||||||||||
Provision for income taxes | — | — | |||||||||||||||
Net loss | $ | (1,259,422 | ) | (398,713 | ) | $ | (1,658,135 | ) | |||||||||
Earnings per share attributable to common stockholders | |||||||||||||||||
Basic | $ | (0.04 | ) | $ | (0.05 | ) | |||||||||||
Diluted | $ | (0.04 | ) | $ | (0.05 | ) | |||||||||||
Weighted average shares outstanding | |||||||||||||||||
Basic | 30,516,271 | 30,516,271 | |||||||||||||||
Diluted | 30,516,271 | 30,516,271 | |||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
Three months ended | Early Recognition of | Contributions to | Three months ended | ||||||||||||||
March 31, 2013 | Revenue | Capital | March 31, 2013 | ||||||||||||||
(As originally presented) | (Restated) | ||||||||||||||||
Revenue | $ | 1,245,522 | $ | (166,926 | ) | $ | (810,000 | ) | $ | 268,596 | |||||||
Revenue from related party | — | — | |||||||||||||||
Less: allowances and refunds | — | — | |||||||||||||||
Net revenue | 1,245,522 | 268,596 | |||||||||||||||
Cost of revenues | 620,060 | (350,000 | ) | 270,060 | |||||||||||||
Gross profit | 625,462 | (1,464 | ) | ||||||||||||||
Operating expenses | |||||||||||||||||
Selling and marketing | 254,252 | 254,252 | |||||||||||||||
Research and development | 8,500 | 8,500 | |||||||||||||||
General and administrative | 692,682 | 692,682 | |||||||||||||||
Total operating expenses | 955,434 | 955,434 | |||||||||||||||
Loss from operations | (329,972 | ) | (956,898 | ) | |||||||||||||
Other income (expense), net | (408 | ) | (408 | ) | |||||||||||||
Loss before provision for income taxes | (330,380 | ) | (957,306 | ) | |||||||||||||
Provision for income taxes | — | — | |||||||||||||||
Net loss | $ | (330,380 | ) | 183,074 | (810,000 | ) | $ | (957,306 | ) | ||||||||
Earnings per share attributable to common stockholders | |||||||||||||||||
Basic | $ | (0.01 | ) | $ | (0.03 | ) | |||||||||||
Diluted | $ | (0.01 | ) | $ | (0.03 | ) | |||||||||||
Weighted average shares outstanding | |||||||||||||||||
Basic | 27,957,406 | 27,957,406 | |||||||||||||||
Diluted | 45,290,739 | 27,957,406 | |||||||||||||||
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 3 Months Ended | |||
Mar. 31, 2014 | ||||
SUBSEQUENT EVENTS | NOTE 16 – SUBSEQUENT EVENTS | |||
Effective April 10, 2014, Ambassador Ned Sigel was elected to the Company’s Board of Directors. Ambassador Siegel will be bringing over 30 years of entrepreneurial experience as a developer, owner, and manager of vast and diverse holdings to assist the company with capitalizing on current market opportunities as well as finding and developing new investments and implementing strategies. On the same day as Ambassador’s Siegel’s election to the Board of Directors, the Board accepted the resignation of Mr. Vincent Mehdizadeh as the Chief Operating Officer of the Company and appointed him as Senior Strategist. | ||||
On April 9, 2014, the Company formed six new subsidiaries, as follows: | ||||
• | Medbox CBD, Inc., specializing in hemp-oil concentrates and development of pharmaceutical products derived from cannabis to produce and distribute products based upon lifting of federal prohibitions of such activities. | |||
• | Medbox Property Investments, Inc., specializing in real property acquisitions and leases to dispensaries and cultivation centers. | |||
• | Medbox Management Services, Inc., specializing in dispensary management services to State licensed dispensaries for cultivation, dispensing, and marijuana infused products (MIPS). | |||
• | Medbox Merchant Service, Inc., specializing in banking transactions with prepaid debit cards, convenience checks, and cash depository needs for operators. | |||
• | Medbox Armored Transport, Inc., specializing in armored car transport of cash from Dispensaries to participating banks. | |||
• | Medbox Investments, Inc., specializing in investments and strategic partnerships in other public companies in the marijuana ancillary service sector that Medbox believes are viable and have growth potential. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended | ||||||||||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||||||||||
Principles of Consolidation | Principles of Consolidation | ||||||||||||||||||||||||||||||||
The consolidated financial statements include the accounts of Medbox, Inc. and its wholly owned subsidiaries, PVM, MDS, VII and MT. All intercompany transactions have been eliminated. VII and MT, represents additional subsidiaries included in the consolidated financial statements for the year 2013. | |||||||||||||||||||||||||||||||||
Use of Estimates | Use of Estimates | ||||||||||||||||||||||||||||||||
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the consolidated financial statements as well as the reported expenses during the reporting periods. Actual results could differ from these estimates. | |||||||||||||||||||||||||||||||||
The Company’s significant estimates and assumptions include the valuation of the Company’s common stock used in the valuation of goodwill, accounts receivable and note receivable collectability, inventory, advances on investments, the valuation of restricted stock received from customers, the amortization and recoverability of capitalized patent costs and useful lives of long-lived assets, and income tax expense, some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates. Although the Company believes that its estimates and assumptions are reasonable, they are based upon information available at the time the estimates and assumptions were made. | |||||||||||||||||||||||||||||||||
Concentrations of Credit Risk | Concentrations of Credit Risk | ||||||||||||||||||||||||||||||||
The Company maintains cash balances at several financial institutions in the Los Angeles, California area and Florida. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000. At March 31, 2014 and December 31, 2013, the Company’s uninsured balances totaled $1,456,548 and $0, respectively. The Company has not experienced any losses in such accounts and periodically evaluates the credit worthiness of the financial institutions and has determined the credit exposure to be negligible. | |||||||||||||||||||||||||||||||||
At March 31, 2014 one customer represented 47.5% of the outstanding receivables and another customer represented 29.0% of gross revenues. At December 31, 2013, two (2) customers represented 78.1% of outstanding receivables. For the three months ended March 31, 2013 two customers represented 93.0% of gross revenues for the period. . | |||||||||||||||||||||||||||||||||
Customer | March 31, 2014 | December 31, 2013 | |||||||||||||||||||||||||||||||
Accounts Receivable | January - March 2014 | Accounts Receivable | January - March 2013 | ||||||||||||||||||||||||||||||
Amount, $ | % | Revenue | Amount, $ | % | Revenue | ||||||||||||||||||||||||||||
A | $ | 25,000 | 47.5 | % | |||||||||||||||||||||||||||||
B | $ | 14,786 | 29 | % | |||||||||||||||||||||||||||||
C | $ | 150,000 | 44.2 | % | |||||||||||||||||||||||||||||
D | 115,200 | 33.9 | % | ||||||||||||||||||||||||||||||
E | $ | 150,000 | 55.8 | % | |||||||||||||||||||||||||||||
F | 100,000 | 37.2 | % | ||||||||||||||||||||||||||||||
Subtotal | 25,000 | 265,200 | 78.1 | % | 250,000 | 93 | % | ||||||||||||||||||||||||||
Total | $ | 52,617 | 100 | % | $ | 51,011 | 100 | % | $ | 339,736 | 100 | % | $ | 268,596 | 100 | % | |||||||||||||||||
Advertising and Marketing Costs | Advertising and Marketing Costs | ||||||||||||||||||||||||||||||||
Advertising and marketing costs are expensed as incurred. Advertising and marketing expense for the three months ending March 31, 2014 and March 31, 2013 were $141,554 and $254,252, respectively. | |||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments | ||||||||||||||||||||||||||||||||
Pursuant to ASC No. 825, Financial Instruments, the Company is required to estimate the fair value of all financial instruments included on its balance sheets. The carrying value of cash, accounts receivable, other receivables, inventory, accounts payable and accrued expenses and notes payable approximate their fair value due to the short period to maturity of these instruments. The Company’s marketable securities and related customer deposits require fair value measurement on a recurring basis as the Company has received advance payment of restricted stock in a publicly traded company for contracted services. The Company has no exposure to gain or loss on the increase or decrease in the value of the marketable securities as any shortfall in the ultimate liquidated value of the securities will be supplemented by additional restricted stock from the customer and any liquidation in excess above the Companies billings will be returned to the customer. | |||||||||||||||||||||||||||||||||
Revenue Recognition (Restated) | Revenue Recognition (Restated) | ||||||||||||||||||||||||||||||||
The Company applies the revenue recognition provisions pursuant to ASC No. 605, Revenue Recognition, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements filed with the SEC. The guidance outlines the basic criteria that must be met to recognize the revenue and provides guidance for disclosure related to revenue recognition policies. | |||||||||||||||||||||||||||||||||
Revenue is only recognized when the following four criteria are met: 1) persuasive evidence of an arrangement exists, 2) delivery has occurred or services have been rendered, 3) sales price is fixed and determinable and 4) collectability is reasonably assured. For multi-year contracts with upfront payments made by customers, the upfront payments are recognized over the longer of the contract period or the customer relationship. For contracts that include multiple deliverables such as the build out of customer facilities, the Company recognizes revenue when a milestone is reached in the contract such as securing the location, delivery of dispensing machines or completion of the facility. The contract terms are broken down in specific milestones with specific attributable revenue to be earned upon successful completion of the milestone terms. (e.g. if a milestone is completing construction on a client dispensary, the condition for the revenue to be recorded is after issuance of a certificate of occupancy for the newly completed facility. The Company will record a specified amount of revenue attributable to this milestone based on the contract). Equipment sales not associated with a consulting contract are recognized as the product is shipped and title passes. Advance payments from clients in advance of work performed are recorded as customer deposits on the balance sheet. | |||||||||||||||||||||||||||||||||
An allowance for bad debt is established for any customer when their balance is deemed as possibly uncollectible. | |||||||||||||||||||||||||||||||||
Provisions for estimated returns and allowances, and other adjustments are usually provided in the same period the related sales are recorded. The Company will at times allow customers to receive full refunds should regulatory events prevent the customer from being able to operate his or her contracted location. The provision for returns as well as an allowance for doubtful accounts is included in the Company’s balance sheet as determined by management. | |||||||||||||||||||||||||||||||||
Cost of Revenues (Restated) | Cost of Revenues (Restated) | ||||||||||||||||||||||||||||||||
Cost of revenue consists primarily of expenses associated with the delivery and distribution of our products and services. These include expenses related to the manufacture of our dispensary units, construction expense related to the customer dispensary, site selection and establishment of licensing requirements, and consulting expense for the continued management of the dispensary unit build out, server and security equipment, rent expense, energy and bandwidth costs, and support and maintenance costs prior to when the client moves in. We only begin capitalizing costs when we have obtained a license and a site for operation of a customer dispensary or cultivation center. The previously capitalized costs are charged to cost of revenue in the same period that the associated revenue is earned. In the case where it is determined that previously inventoried costs are in excess of the projected net realizable value of the sale of the licenses then the excess cost above net realizable value is written off to cost of revenues. In addition, cost of revenue related to our vaporizer line of products consists of direct procurement cost of the products along with costs associated with order fulfilment, shipping, inventory storage and inventory management costs. | |||||||||||||||||||||||||||||||||
Basic and Fully Diluted Net Income/Loss Per Share | Basic and Fully Diluted Net Income/Loss Per Share | ||||||||||||||||||||||||||||||||
Basic net income/loss per share is computed by dividing net income/loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share include the effects of any outstanding options, warrants and other potentially dilutive securities. The Company did not consider any potential common shares in the computation of diluted loss per share for the periods ending March 31, 2014 and December 31, 2013, due to the net loss, as they would have an anti-dilutive effect on EPS. | |||||||||||||||||||||||||||||||||
As of March 31, 2014 and December 31, 2013, the Company had 3,000,000 shares of Series A preferred stock outstanding with par value of $0.001 that could be converted into 15,000,000 shares of the Company’s common stock. The Company also had 295,854 warrants to purchase common stock outstanding as of March 31, 2014. | |||||||||||||||||||||||||||||||||
Accounts Receivable and Allowance for Bad Debts | Accounts Receivable and Allowance for Bad Debts | ||||||||||||||||||||||||||||||||
The Company is subject to credit risk as it extends credit to our customers for work performed as specified in individual contracts. The Company extends credit to its customers, mostly on an unsecured basis after performing certain credit analysis. Our typical terms require a portion of the contract price up front and the rest payable upon certain agreed milestones. The Company’s management periodically reviews the creditworthiness of its customers and provides for probable uncollectible amounts through a charge to earnings and a credit to an allowance for bad debts based on our assessment of the current status of individual accounts. Accounts still outstanding after the Company has used reasonable collection efforts are written off through a charge to the allowance for bad debts accounts and a credit to accounts receivable. As of March 31, 2014 and December 31, 2013, the Company’s management considered all accounts outstanding fully collectible. | |||||||||||||||||||||||||||||||||
Property and Equipment | Property and Equipment | ||||||||||||||||||||||||||||||||
Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate. The estimated useful lives for significant property and equipment categories are as follows: | |||||||||||||||||||||||||||||||||
Vehicles | 5 years | ||||||||||||||||||||||||||||||||
Furniture and Fixtures | 5 years | ||||||||||||||||||||||||||||||||
Office equipment | 3 years | ||||||||||||||||||||||||||||||||
Depreciation expense for the three months ended March 31, 2014 and March 31, 2013 was $18,705 and $5,701 respectively. | |||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes | ||||||||||||||||||||||||||||||||
The Company accounts for income taxes under the asset and liability method in accordance with ASC 740. The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The components of the deferred tax assets and liabilities are classified as current and non-current based on their characteristics. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. | |||||||||||||||||||||||||||||||||
In addition, the Company’s management performs an evaluation of all uncertain income tax positions taken or expected to be taken in the course of preparing the Company’s income tax returns to determine whether the income tax positions meet a “more likely than not” standard of being sustained under examination by the applicable taxing authorizes. This evaluation is required to be performed for all open tax years, as defined by the various statutes of limitations, for federal and state purposes. | |||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies | ||||||||||||||||||||||||||||||||
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. | |||||||||||||||||||||||||||||||||
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. | |||||||||||||||||||||||||||||||||
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed. | |||||||||||||||||||||||||||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements | ||||||||||||||||||||||||||||||||
There were various accounting updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s consolidated financial position, consolidated results of operations or cash flows. | |||||||||||||||||||||||||||||||||
Management's Evaluation of Subsequent Events | Management’s Evaluation of Subsequent Events | ||||||||||||||||||||||||||||||||
The Company evaluates events that have occurred after the balance sheet date of March 31, 2014, through the date which the financial statements were available to be issued. Based upon the review, other than described in Note 15 – Subsequent Events, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended | ||||||||||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||||||||||
Schedules of Concentration of Risk, by Risk Factor | For the three months ended March 31, 2013 two customers represented 93.0% of gross revenues for the period. . | ||||||||||||||||||||||||||||||||
Customer | March 31, 2014 | December 31, 2013 | |||||||||||||||||||||||||||||||
Accounts Receivable | January - March 2014 | Accounts Receivable | January - March 2013 | ||||||||||||||||||||||||||||||
Amount, $ | % | Revenue | Amount, $ | % | Revenue | ||||||||||||||||||||||||||||
A | $ | 25,000 | 47.5 | % | |||||||||||||||||||||||||||||
B | $ | 14,786 | 29 | % | |||||||||||||||||||||||||||||
C | $ | 150,000 | 44.2 | % | |||||||||||||||||||||||||||||
D | 115,200 | 33.9 | % | ||||||||||||||||||||||||||||||
E | $ | 150,000 | 55.8 | % | |||||||||||||||||||||||||||||
F | 100,000 | 37.2 | % | ||||||||||||||||||||||||||||||
Subtotal | 25,000 | 47.5 | % | 14,786 | 29 | % | 265,200 | 78.1 | % | 250,000 | 93 | % | |||||||||||||||||||||
Total | $ | 52,617 | 100 | % | $ | 51,011 | 100 | % | $ | 339,736 | 100 | % | $ | 268,596 | 100 | % | |||||||||||||||||
PROPERTY_AND_EQUIPMENT_Tables
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Estimated Useful Lives [Member] | |||||||||
Property, Plant and Equipment | The estimated useful lives for significant property and equipment categories are as follows: | ||||||||
Vehicles | 5 years | ||||||||
Furniture and Fixtures | 5 years | ||||||||
Office equipment | 3 years | ||||||||
Property And Equipment [Member] | |||||||||
Property, Plant and Equipment | Property and equipment at March 31, 2014 and December 31, 2013 consists of: | ||||||||
March 31, 2014 | December 31, 2013 | ||||||||
Property Plant and Equipment | |||||||||
Office equipment | $ | 19,439 | $ | 17,192 | |||||
Furniture and fixtures | 74,404 | 73,567 | |||||||
Website development | 46,922 | 46,922 | |||||||
Product development | 85,970 | 24,100 | |||||||
226,735 | 161,781 | ||||||||
Less accumulated depreciation | (28,203 | ) | (21,123 | ) | |||||
Property and equipment, net | $ | 198,532 | $ | 140,658 | |||||
ACQUISITION_Tables
ACQUISITION (Tables) | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The total value of the acquisition was approximately $1,635,000 and has been allocated in accordance with ASC 805 as per the Company’s independent valuation as follows: | ||||
Machinery & Equipment | $ | 70,000 | |||
IP and related technology | 287,000 | ||||
Amortizable intangible assets: | |||||
Customer contracts and related relationships | 314,000 | ||||
Trade name, trademark, and domain name | 46,000 | ||||
Non-compete covenants | 23,000 | ||||
Goodwill | 895,000 | ||||
Total assets acquired | 1,635,000 | ||||
Fair value of liabilities assumed | (469,000 | ) | |||
Net fair value | $ | 1,166,000 | |||
INVENTORIES_RESTATED_Tables
INVENTORIES (RESTATED) (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Schedule of Inventory, Current | The consolidated inventories at March 31, 2014 and December 31, 2013 consist of: | ||||||||
March 31, 2014 | December 31, 2013 | ||||||||
Inventories | |||||||||
Work in process and related capitalized costs | $ | — | $ | 242,488 | |||||
Deposits on dispensing machines | 167,400 | 138,423 | |||||||
Vaporizers and accessories | 207,334 | 193,575 | |||||||
Dispensing machines | — | 58,500 | |||||||
Total inventory | $ | 374,734 | $ | 632,986 | |||||
INTANGIBLE_ASSETS_Tables
INTANGIBLE ASSETS (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Finite-Lived Intangible Assets [Member] | |||||||||
Schedule of Finite-Lived Intangible Assets | |||||||||
March 31, 2014 | December 31, 2013 | ||||||||
Intangible assets | |||||||||
Distributor relationship | 314,000 | 314,000 | |||||||
IP/Technology/Patents | 311,973 | 332,179 | |||||||
Domain names | 131,000 | 46,000 | |||||||
Non-Compete covenants | 23,000 | 23,000 | |||||||
779,973 | 715,179 | ||||||||
Less accumulated amortization | (44,375 | ) | (32,750 | ) | |||||
Intangible assets, net | 735,598 | 682,429 | |||||||
Estimated Useful Lives [Member] | |||||||||
Schedule of Finite-Lived Intangible Assets | The estimated useful lives for significant intangible assets are as follows: | ||||||||
Distributor Relationship | 10 years | ||||||||
Domain Names | 10 years | ||||||||
Non-Compete covenants | 3 years |
CUSTOMER_DEPOSITS_Tables
CUSTOMER DEPOSITS (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Customer Advances And Deposits, Current | Advance payments from customers are recorded as customer deposits on the balance sheet. | ||||||||
March 31, 2014 | December 31, 2013 | ||||||||
Customer deposits | |||||||||
Advance payments from customers | $ | 1,302,649 | $ | 710,225 | |||||
Prepaid sales of vaporizers | 75,337 | 75,636 | |||||||
Total customer deposits | $ | 1,377,986 | $ | 785,861 | |||||
SHORTTERM_DEBT_Tables
SHORT-TERM DEBT (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Schedule of Short-term Debt | Short-term debt as of March 31, 2014 and December 31, 2013 consisted of: | ||||||||
March 31, 2014 | December 31, 2013 | ||||||||
Short-term debt | |||||||||
Note payable to unrelated third party payable | $ | — | $ | 75,000 | |||||
Notes payable to related party | 16,674 | 111,794 | |||||||
Short term loan payable | 122,135 | — | |||||||
Total current debt | $ | 138,809 | $ | 186,794 | |||||
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | The minimum future lease payments under non-cancelable operating leases with remaining term in excess of one year at December 31, 2013 were as follows: | ||||
Amount | |||||
Year Ending | |||||
2014 | $ | 147,398 | |||
2015 | 172,759 | ||||
2016 | 172,759 | ||||
2017 | 86,379 | ||||
Total | $ | 579,295 | |||
RESTATEMENT_Tables
RESTATEMENT (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Schedule of Error Corrections and Prior Period Adjustments | CONSOLIDATED BALANCE SHEETS | ||||||||||||||||
March 31, | Impact of 2013 | Early | March 31, | ||||||||||||||
2014 | restatement | Recognition | 2014 | ||||||||||||||
(Unaudited) | of Revenue | (Unaudited) | |||||||||||||||
(As originally presented) | (Restated) | ||||||||||||||||
Assets | |||||||||||||||||
Current assets | |||||||||||||||||
Cash and cash equivalents | $ | 1,977,756 | $ | 1,977,756 | |||||||||||||
Marketable securities | 442,904 | 442,904 | |||||||||||||||
Accounts receivable | 1,319,461 | (1,524,771 | ) | 257,927 | 52,617 | ||||||||||||
Inventory | 1,069,156 | (636,468 | ) | (57,954 | ) | 374,734 | |||||||||||
Prepaid expenses and other current assets | 260,622 | 260,622 | |||||||||||||||
Total current assets | 5,069,899 | 3,108,633 | |||||||||||||||
Property and equipment | 198,532 | 198,532 | |||||||||||||||
Investments, at cost | 1,200,000 | 1,200,000 | |||||||||||||||
Intangible assets | 735,598 | 735,598 | |||||||||||||||
Note receivable | 130,000 | 130,000 | |||||||||||||||
Goodwill | 1,100,037 | 1,100,037 | |||||||||||||||
Deposits and other assets | 99,662 | 99,662 | |||||||||||||||
Total assets | $ | 8,533,728 | $ | 6,572,462 | |||||||||||||
(2,161,239 | ) | 199,973 | |||||||||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||
Current liabilities | |||||||||||||||||
Accounts payable and accrued expenses | $ | 535,686 | (150,000 | ) | $ | 385,686 | |||||||||||
Notes payable | — | — | |||||||||||||||
Deferred revenue | 683,621 | 564,611 | 1,248,232 | ||||||||||||||
Related party notes payable | 16,674 | 16,674 | |||||||||||||||
Customer deposits | 538,311 | 582,675 | 257,000 | 1,377,986 | |||||||||||||
Provision for customers refunds | 222,925 | (222,925 | ) | — | |||||||||||||
Short term loan payable | 122,135 | 122,135 | |||||||||||||||
Total current liabilities | 1,435,731 | 3,150,713 | |||||||||||||||
Stockholders’ Equity | |||||||||||||||||
Preferred stock | 3,000 | 3,000 | |||||||||||||||
Common stock | 30,012 | 30,012 | |||||||||||||||
Additional paid-in capital | 9,212,731 | 1,371,000 | 10,583,731 | ||||||||||||||
Common stock subscribed | 0 | — | |||||||||||||||
Accumulated deficit | (2,147,746 | ) | (4,648,535 | ) | (398,713 | ) | (7,194,994 | ) | |||||||||
Total stockholders’ equity | 7,097,997 | 3,421,749 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 8,533,728 | $ | 6,572,462 | |||||||||||||
(2,161,239 | ) | 199,973 | |||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
Three months ended | Early Recognition of | Three months ended | |||||||||||||||
March 31, 2014 | Revenue | March 31, 2014 | |||||||||||||||
(As originally presented) | (Restated) | ||||||||||||||||
Revenue | $ | 294,550 | $ | (243,539 | ) | $ | 51,011 | ||||||||||
Revenue from related party | 1,000,000 | (1,000,000 | ) | — | |||||||||||||
Less: allowances and refunds | (962,780 | ) | 902,780 | (60,000 | ) | ||||||||||||
Net revenue | 331,770 | (340,759 | ) | (8,989 | ) | ||||||||||||
Cost of revenues | 891,920 | 57,954 | 949,874 | ||||||||||||||
Gross profit | (560,150 | ) | (398,713 | ) | (958,863 | ) | |||||||||||
Operating expenses | |||||||||||||||||
Selling and marketing | 141,554 | 141,554 | |||||||||||||||
Research and development | 8,000 | 8,000 | |||||||||||||||
General and administrative | 563,370 | 563,370 | |||||||||||||||
Total operating expenses | 712,924 | 712,924 | |||||||||||||||
Loss from operations | (1,273,074 | ) | (1,671,787 | ) | |||||||||||||
Other income (expense), net | 13,652 | 13,652 | |||||||||||||||
Loss before provision for income taxes | (1,259,422 | ) | (1,658,135 | ) | |||||||||||||
Provision for income taxes | — | — | |||||||||||||||
Net loss | $ | (1,259,422 | ) | (398,713 | ) | $ | (1,658,135 | ) | |||||||||
Earnings per share attributable to common stockholders | |||||||||||||||||
Basic | $ | (0.04 | ) | $ | (0.05 | ) | |||||||||||
Diluted | $ | (0.04 | ) | $ | (0.05 | ) | |||||||||||
Weighted average shares outstanding | |||||||||||||||||
Basic | 30,516,271 | 30,516,271 | |||||||||||||||
Diluted | 30,516,271 | 30,516,271 | |||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
Three months ended | Early Recognition of | Contributions to | Three months ended | ||||||||||||||
March 31, 2013 | Revenue | Capital | March 31, 2013 | ||||||||||||||
(As originally presented) | (Restated) | ||||||||||||||||
Revenue | $ | 1,245,522 | $ | (166,926 | ) | $ | (810,000 | ) | $ | 268,596 | |||||||
Revenue from related party | — | — | |||||||||||||||
Less: allowances and refunds | — | — | |||||||||||||||
Net revenue | 1,245,522 | 268,596 | |||||||||||||||
Cost of revenues | 620,060 | (350,000 | ) | 270,060 | |||||||||||||
Gross profit | 625,462 | (1,464 | ) | ||||||||||||||
Operating expenses | |||||||||||||||||
Selling and marketing | 254,252 | 254,252 | |||||||||||||||
Research and development | 8,500 | 8,500 | |||||||||||||||
General and administrative | 692,682 | 692,682 | |||||||||||||||
Total operating expenses | 955,434 | 955,434 | |||||||||||||||
Loss from operations | (329,972 | ) | (956,898 | ) | |||||||||||||
Other income (expense), net | (408 | ) | (408 | ) | |||||||||||||
Loss before provision for income taxes | (330,380 | ) | (957,306 | ) | |||||||||||||
Provision for income taxes | — | — | |||||||||||||||
Net loss | $ | (330,380 | ) | 183,074 | (810,000 | ) | $ | (957,306 | ) | ||||||||
Earnings per share attributable to common stockholders | |||||||||||||||||
Basic | $ | (0.01 | ) | $ | (0.03 | ) | |||||||||||
Diluted | $ | (0.01 | ) | $ | (0.03 | ) | |||||||||||
Weighted average shares outstanding | |||||||||||||||||
Basic | 27,957,406 | 27,957,406 | |||||||||||||||
Diluted | 45,290,739 | 27,957,406 | |||||||||||||||
NOTE_1_NATURE_OF_BUSINESS_Deta
NOTE 1 - NATURE OF BUSINESS (Detail) (USD $) | 12 Months Ended | |
Dec. 31, 2012 | Dec. 31, 2013 | |
PVM International Inc. (PVMI) [Member] | ||
NOTE 1 - NATURE OF BUSINESS (Details) [Line Items] | ||
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | 2,000,000 | |
Notes Issued | $1,000,000 | |
Vaporfection International Inc. [Member] | ||
NOTE 1 - NATURE OF BUSINESS (Details) [Line Items] | ||
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | 260,864 | |
Business Acquisition, Percentage of Voting Interests Acquired | 100.00% | |
Contributed Contribution Commitment | $1,600,000 | |
Other Commitments, Description | In addition, the Company agreed to provide up to $1,600,000 in working capital to VII at the Company's sole discretion which included $175,000 paid to the inventor of certain patents including a warrant to purchase 5,000 shares of the Company's common stock. This transaction was closed in April 2013. |
NOTE_2_SUMMARY_OF_SIGNIFICANT_
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items] | |||
Cash, FDIC Insured Amount | $250,000 | ||
Cash, Uninsured Amount | 1,456,548 | 0 | |
Advertising Expense | 141,554 | 254,252 | |
Preferred Stock, Shares Outstanding (in Shares) | 3,000,000 | 6,000,000 | |
Incremental Common Shares Attributable to Dilutive Effect of Call Options and Warrants (in Shares) | 295,854 | ||
Depreciation and amortization | $18,705 | $5,701 | |
Series A Preferred Stock [Member] | |||
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items] | |||
Preferred Stock, Shares Outstanding (in Shares) | 3,000,000 | 3,000,000 | |
Preferred Stock, No Par Value (in Dollars per share) | $0.00 | 0.001 | |
Convertible Preferred Stock, Shares Issued upon Conversion (in Shares) | 15,000,000 | 15,000,000 | |
Credit Concentration Risk [Member] | Accounts Receivable [Member] | |||
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items] | |||
Concentration Risk, Percentage | 100.00% | 100.00% | |
Customer Concentration Risk [Member] | Sales [Member] | |||
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items] | |||
Concentration Risk, Percentage | 100.00% | 100.00% | |
Customer A [Member] | Credit Concentration Risk [Member] | Accounts Receivable [Member] | |||
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items] | |||
Concentration Risk, Percentage | 47.50% | ||
Concentration Risk, Customer | two (2) customers, one of which is related | ||
Customer A [Member] | Customer Concentration Risk [Member] | Sales [Member] | |||
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items] | |||
Concentration Risk, Percentage | 29.00% | ||
Customer B [Member] | Customer Concentration Risk [Member] | Sales [Member] | |||
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items] | |||
Concentration Risk, Percentage | 29.00% | ||
Subtotal [Member] | Credit Concentration Risk [Member] | Accounts Receivable [Member] | |||
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items] | |||
Concentration Risk, Percentage | 47.50% | 78.10% | |
Subtotal [Member] | Customer Concentration Risk [Member] | Sales [Member] | |||
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items] | |||
Concentration Risk, Percentage | 29.00% | 93.00% |
NOTE_2_SUMMARY_OF_SIGNIFICANT_1
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedules of Concentration of Risk, by Risk Factor (Detail) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Dec. 31, 2013 | |
Concentration Risk [Line Items] | ||
Accounts Receivable Amount | $52,617 | $339,735 |
Credit Concentration Risk [Member] | Accounts Receivable [Member] | ||
Concentration Risk [Line Items] | ||
Accounts Receivable Amount | 52,617 | 339,736 |
Concentration Risk, Percentage | 100.00% | 100.00% |
Customer Concentration Risk [Member] | Sales [Member] | ||
Concentration Risk [Line Items] | ||
Gross Revenue Generated | 51,011 | 268,596 |
Concentration Risk, Percentage | 100.00% | 100.00% |
Customer A [Member] | Credit Concentration Risk [Member] | Accounts Receivable [Member] | ||
Concentration Risk [Line Items] | ||
Accounts Receivable Amount | 25,000 | |
Concentration Risk, Percentage | 47.50% | |
Customer A [Member] | Customer Concentration Risk [Member] | Sales [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 29.00% | |
Customer B [Member] | Customer Concentration Risk [Member] | Sales [Member] | ||
Concentration Risk [Line Items] | ||
Gross Revenue Generated | 14,786 | |
Concentration Risk, Percentage | 29.00% | |
Customer C [Member] | Credit Concentration Risk [Member] | Accounts Receivable [Member] | ||
Concentration Risk [Line Items] | ||
Accounts Receivable Amount | 150,000 | |
Concentration Risk, Percentage | 44.20% | |
Customer D [Member] | Credit Concentration Risk [Member] | Accounts Receivable [Member] | ||
Concentration Risk [Line Items] | ||
Accounts Receivable Amount | 115,200 | |
Concentration Risk, Percentage | 33.90% | |
Customer E [Member] | Customer Concentration Risk [Member] | Sales [Member] | ||
Concentration Risk [Line Items] | ||
Gross Revenue Generated | 150,000 | |
Concentration Risk, Percentage | 55.80% | |
Customer F [Member] | Customer Concentration Risk [Member] | Sales [Member] | ||
Concentration Risk [Line Items] | ||
Gross Revenue Generated | 100,000 | |
Concentration Risk, Percentage | 37.20% | |
Subtotal [Member] | Credit Concentration Risk [Member] | Accounts Receivable [Member] | ||
Concentration Risk [Line Items] | ||
Accounts Receivable Amount | 25,000 | 265,200 |
Concentration Risk, Percentage | 47.50% | 78.10% |
Subtotal [Member] | Customer Concentration Risk [Member] | Sales [Member] | ||
Concentration Risk [Line Items] | ||
Gross Revenue Generated | $14,786 | $250,000 |
Concentration Risk, Percentage | 29.00% | 93.00% |
NOTE_2_SUMMARY_OF_SIGNIFICANT_2
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Property, Plant and Equipment, Estimated Useful Lives (Detail) | 3 Months Ended |
Mar. 31, 2014 | |
Vehicles [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life | 5 years |
Furniture and Fixtures [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life | 5 years |
Office Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life | 3 years |
NOTE_3_ACQUISITION_Detail
NOTE 3 - ACQUISITION (Detail) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2013 | Mar. 22, 2013 | |
NOTE 3 - ACQUISITION (Details) [Line Items] | |||
Goodwill | $1,100,037 | $1,090,037 | |
Vaporfection International Inc. [Member] | |||
NOTE 3 - ACQUISITION (Details) [Line Items] | |||
Business Acquisition, Percentage of Voting Interests Acquired | 100.00% | ||
Business Acquisition, Equity Interest Issued or Issuable, Description | The Company issued 260,854 warrants to shareholders of VII allowing them to purchase one (1) share of Medbox common stock at $.001 per share beginning April 1, 2014. | ||
Business Acquisition, Equity Issued or Issuable, Number of Warrants (in Shares) | 260,854 | ||
Fair Value Assumptions, Exercise Price (in Dollars per share) | $4.47 | ||
Business Combination, Consideration Transferred, Liabilities Incurred | 470,000 | ||
Business Combination, Consideration Transferred | 1,635,000 | ||
Finite-Lived Intangible Asset, Useful Life | 10 years | ||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 7 years | ||
Goodwill | 895,000 | 895,000 | |
Increase (Decrease) in Other Accounts Payable and Accrued Liabilities | 10,000 | 195,000 | |
Goodwill, Period Increase (Decrease) | $205,000 | ||
Business Combination, Contingent Consideration Arrangements, Description | In addition, to the above warrants the purchase agreement and associated consulting contract with the prior management company of the business unit calls for additional shares to be issued in the event that the performance of the business unit exceeds $11,818,140 of accumulated EBITBA profitability over the subsequent 4 year operating period. |
NOTE_3_ACQUISITION_Schedule_of
NOTE 3 - ACQUISITION - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 22, 2013 |
NOTE 3 - ACQUISITION (Details) - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Line Items] | |||
Goodwill | $1,100,037 | $1,090,037 | |
Vaporfection International Inc. [Member] | |||
NOTE 3 - ACQUISITION (Details) - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Line Items] | |||
Machinery & Equipment | 70,000 | ||
Goodwill | 895,000 | 895,000 | |
Total assets acquired | 1,635,000 | ||
Fair value of liabilities assumed | -469,000 | ||
Net fair value | 1,166,000 | ||
Vaporfection International Inc. [Member] | Customer Relationships [Member] | |||
NOTE 3 - ACQUISITION (Details) - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Line Items] | |||
Intangible assets | 314,000 | ||
Vaporfection International Inc. [Member] | Trademarks and Trade Names [Member] | |||
NOTE 3 - ACQUISITION (Details) - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Line Items] | |||
Intangible assets | 46,000 | ||
Vaporfection International Inc. [Member] | Noncompete Agreements [Member] | |||
NOTE 3 - ACQUISITION (Details) - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Line Items] | |||
Intangible assets | 23,000 | ||
IP and Related Technology [Member] | Vaporfection International Inc. [Member] | |||
NOTE 3 - ACQUISITION (Details) - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Line Items] | |||
Intangible assets | $287,000 |
NOTE_4_INVESTMENTS_Detail
NOTE 4 - INVESTMENTS (Detail) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Dec. 31, 2013 | |
Bio-Tech Medical Software [Member] | ||
NOTE 4 - INVESTMENTS (Details) [Line Items] | ||
Licensing Agreement, Term | 5 years | |
Investment in Bio-Tech Medical Software [Member] | ||
NOTE 4 - INVESTMENTS (Details) [Line Items] | ||
Equity Method Investment, Additional Information | The Company advanced $600,000 upon execution of this agreement for the right to purchase with the remaining balance of $900,000 due and payable in installments at various dates by August 25, 2013. On June 26, 2013, the Company notified Bio-Tech that it was canceling the agreements with them. | |
Payments to Acquire Trading Securities Held-for-investment | $600,000 | |
Investment in Bio-Tech Medical Software [Member] | Maximum [Member] | ||
NOTE 4 - INVESTMENTS (Details) [Line Items] | ||
Investment, Authorized Shares available for Purchase (in Shares) | 833,333 | |
Equity Method Investment, Ownership Percentage | 25.00% | |
Investment, Purchase Price | 150,000 | |
Investment Agreement With Three Members Of Medvend Holdings LLC [Member] | ||
NOTE 4 - INVESTMENTS (Details) [Line Items] | ||
Equity Method Investment, Ownership Percentage | 50.00% | |
Investment, Purchase Price | 4,100,000 | |
Equity Method Investment, Additional Information | In May 2013, the three members of Medvend Holdings LLC were named in a lawsuit by that entity's minority shareholders alleging improper conveyance of the three members' ownership interest in Medvend Holding LLC to the Company. Accordingly, also in May 2013, Medbox filed suit against Medvend Holdings, LLC and the three members of that entity that were involved in the transaction. As of March 31, 2014, the company's management expects a full recovery of its investment. | |
Investment Agreement With Three Members Of Medvend Holdings LLC [Member] | Amount Paid Upon Execution of the Contract [Member] | ||
NOTE 4 - INVESTMENTS (Details) [Line Items] | ||
Payments to Acquire Trading Securities Held-for-investment | 300,000 | |
Investment Agreement With Three Members Of Medvend Holdings LLC [Member] | Amount Disbursed as an Additional Investment [Member] | ||
NOTE 4 - INVESTMENTS (Details) [Line Items] | ||
Payments to Acquire Trading Securities Held-for-investment | $300,000 |
NOTE_5_INVENTORIES_Schedule_of
NOTE 5 - INVENTORIES - Schedule of Inventory, Current (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Inventory [Line Items] | ||
Work in process and related capitalized costs | $242,488 | |
Inventory | 374,734 | 632,986 |
Deposits on Dispensing Machines [Member] | ||
Inventory [Line Items] | ||
Inventory | 167,400 | 138,423 |
Vaporizers and Accessories [Member] | ||
Inventory [Line Items] | ||
Inventory | 207,334 | 193,575 |
Dispensing Machines [Member] | ||
Inventory [Line Items] | ||
Inventory | $58,500 |
NOTE_6_PROPERTY_AND_EQUIPMENT_
NOTE 6 - PROPERTY AND EQUIPMENT - Schedule of Property, Plant and Equipment (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $226,735 | $161,781 |
Less accumulated depreciation | -28,203 | -21,123 |
Property and equipment, net | 198,532 | 140,658 |
Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 19,439 | 17,192 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 74,404 | 73,567 |
Website Development [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 46,922 | 46,922 |
Product Development [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $85,970 | $24,100 |
NOTE_7_INTANGIBLE_ASSETS_Detai
NOTE 7 - INTANGIBLE ASSETS (Detail) (Vaporfection International Inc. [Member]) | Dec. 31, 2013 |
Vaporfection International Inc. [Member] | |
NOTE 8 - INTANGIBLE ASSETS (Details) [Line Items] | |
Business Acquisition, Percentage of Voting Interests Acquired | 100.00% |
NOTE_7_INTANGIBLE_ASSETS_Sched
NOTE 7 - INTANGIBLE ASSETS - Schedule of Finite-Lived Intangible Assets (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $779,973 | $715,179 |
Less accumulated amortization | -44,375 | -32,750 |
Intangible assets, net | 735,598 | 682,429 |
Distribution Rights [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 314,000 | 314,000 |
Patented Technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 311,973 | 332,179 |
Internet Domain Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 131,000 | 46,000 |
Noncompete Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $23,000 | $23,000 |
NOTE_7_INTANGIBLE_ASSETS_Sched1
NOTE 7 - INTANGIBLE ASSETS - Schedule of Finite-Lived Intangible Assets, Estimated Useful Life (Detail) | 3 Months Ended |
Mar. 31, 2014 | |
Distribution Rights [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, estimated useful lives | 10 years |
Internet Domain Names [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, estimated useful lives | 10 years |
Noncompete Agreements [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, estimated useful lives | 3 years |
NOTE_8_ACCOUNTS_AND_NOTES_RECE
NOTE 8 - ACCOUNTS AND NOTES RECEIVABLE (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Receivables [Abstract] | ||
Note Receivable, Face Amount | $1,000,000 | |
Note Receivable, Stated Interest Rate, Percentage | 5.00% | |
Notes, Loans and Financing Receivable, Net, Noncurrent | 130,000 | 0 |
Notes, Loans and Financing Receivable, Net, Current | $0 | $115,000 |
NOTE_9_MARKETABLE_SECURITIES_A
NOTE 9 - MARKETABLE SECURITIES AND CUSTOMER DEPOSITS (Detail) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2013 | |
NOTE 9 - MARKETABLE SECURITIES AND CUSTOMER DEPOSITS (Details) [Line Items] | ||
Marketable Securities, Number of Shares Held as Deposit (in Shares) | 7,000,000 | |
Marketable Securities, Value of Shares Held as Customer Deposit | $300,000 | |
Fair Value Inputs, Discount Rate | 12.00% | |
Marketable Securities, Restricted, Current | 442,904 | 184,800 |
Customer Deposits, Current | 75,337 | 75,636 |
Fair Value Of Marketable Securities Held In Deposit [Member] | ||
NOTE 9 - MARKETABLE SECURITIES AND CUSTOMER DEPOSITS (Details) [Line Items] | ||
Customer Deposits, Current | $142,904 |
NOTE_10_CUSTOMER_DEPOSITS_Deta
NOTE 10 - CUSTOMER DEPOSITS (Details) - Customer Advances and Deposits, Current (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
NOTE 10 - MARKETABLE SECURITIES AND CUSTOMER DEPOSITS (Details) [Line Items] | ||
Advance payments from customers | $1,302,649 | $710,225 |
Prepaid sales of vaporizers | 75,337 | 75,636 |
Total customer deposits | $1,377,986 | $785,861 |
NOTE_11_SHORTTERM_DEBT_Schedul
NOTE 11 - SHORT-TERM DEBT - Schedule of Short-term Debt (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Schedule of Short-term Debt [Abstract] | ||
Note payable to unrelated third party payable | $0 | $75,000 |
Notes payable to related party | 16,674 | 111,794 |
Short term loan payable | 122,135 | 0 |
Total current debt | $138,809 | $186,794 |
NOTE_11_SHORTTERM_DEBT_Detail
NOTE 11 - SHORT-TERM DEBT (Detail) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Unrelated Party Note Payable [Member] | |||
NOTE 11 - SHORT-TERM DEBT (Details) [Line Items] | |||
Debt Instrument, Issuance Date | 22-Mar-13 | ||
Debt Instrument, Maturity Date | 22-Apr-14 | ||
Debt Instrument, Interest Rate, Stated Percentage | 10.00% | ||
Interest Expense, Debt | $28,667 | $0 | |
Related Party Notes Payable [Member] | |||
NOTE 11 - SHORT-TERM DEBT (Details) [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 0.00% | ||
D&O Insurance Financing [Member] | |||
NOTE 11 - SHORT-TERM DEBT (Details) [Line Items] | |||
Debt Instrument, Maturity Date | 5-Nov-14 | ||
Debt Instrument, Interest Rate, Stated Percentage | 4.25% | ||
Interest Expense, Debt | 486 | ||
Debt Instrument, Face Amount | 137,160 | ||
Debt Instrument, Frequency of Periodic Payment | Monthly | ||
Debt Instrument, Periodic Payment | $15,511 | ||
Debt Instrument, Maturity Date, Description | Nine months | ||
Debt Instrument, Date of First Required Payment | 5-Mar-14 |
NOTE_12_RELATED_PARTY_TRANSACT
NOTE 12 - RELATED PARTY TRANSACTIONS (Detail) (USD $) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2014 | Dec. 31, 2013 | Mar. 28, 2014 | Mar. 25, 2014 | |
NOTE 12 - RELATED PARTY TRANSACTIONS (Details) [Line Items] | ||||
Deposits and other assets | $99,662 | $98,726 | ||
Chief Executive Officer [Member] | ||||
NOTE 12 - RELATED PARTY TRANSACTIONS (Details) [Line Items] | ||||
Payments to Employees | 32,934 | |||
Vincent Chase Inc. [Member] | Founder [Member] | ||||
NOTE 12 - RELATED PARTY TRANSACTIONS (Details) [Line Items] | ||||
Number of Promissory Notes | 2 | |||
Due to Related Parties, Current | 111,794 | |||
Vincent Chase Inc. [Member] | Founder [Member] | Related Party Note Payable Issued On September 20, 2013 [Member] | ||||
NOTE 12 - RELATED PARTY TRANSACTIONS (Details) [Line Items] | ||||
Debt Instrument, Face Amount | 150,000 | |||
Vincent Chase Inc. [Member] | Founder [Member] | Related Party Note Payable Issued October 28, 2013 [Member] | ||||
NOTE 12 - RELATED PARTY TRANSACTIONS (Details) [Line Items] | ||||
Debt Instrument, Face Amount | 100,000 | |||
Vincent Chase Inc. [Member] | Founder [Member] | Management Advisory and Consulting Services [Member] | ||||
NOTE 12 - RELATED PARTY TRANSACTIONS (Details) [Line Items] | ||||
Related Party Transaction, Description of Transaction | The Company utilizes Vincent Chase Inc., a related party and 100% owned by the founder of the Company for management advisory and consulting services. | |||
Related Party Transaction, Amounts of Transaction | 37,500 | |||
PVM International Inc. (PVMI) [Member] | Founder [Member] | ||||
NOTE 12 - RELATED PARTY TRANSACTIONS (Details) [Line Items] | ||||
Related Party Transaction, Description of Transaction | Company issued notes payable to PVM International Inc. (PVMI), a related party which is 100% owned by the founder of the Company | |||
Due to Related Parties, Current | 16,674 | |||
PVM International Inc. (PVMI) [Member] | Founder [Member] | Related Party Note Payable #1 [Member] | ||||
NOTE 12 - RELATED PARTY TRANSACTIONS (Details) [Line Items] | ||||
Debt Instrument, Face Amount | 250,000 | |||
PVM International Inc. (PVMI) [Member] | Founder [Member] | Related Party Note Payable #2 [Member] | ||||
NOTE 12 - RELATED PARTY TRANSACTIONS (Details) [Line Items] | ||||
Debt Instrument, Face Amount | 100,000 | |||
Amount Received From Related Party Owed To The Company By Unrelated Third Party [Member] | ||||
NOTE 12 - RELATED PARTY TRANSACTIONS (Details) [Line Items] | ||||
Related Party Transaction, Amounts of Transaction | 150,000 | |||
Deposits and other assets | $500,000 | $400,000 | ||
Contract agreements of managements right with related party and shareholder | 3 years |
NOTE_13_STOCKHOLDERS_EQUITY_De
NOTE 13 - STOCKHOLDER'S EQUITY (Detail) (USD $) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2011 | Dec. 31, 2012 | |
NOTE 13 - STOCKHOLDER'S EQUITY (Details) [Line Items] | |||||
Preferred Stock, Par or Stated Value Per Share (in Dollars per share) | $0.00 | $0.00 | |||
Preferred Stock, Shares Outstanding | 3,000,000 | 6,000,000 | |||
Proceeds from Issuance of Common Stock (in Dollars) | $2,442,859 | $1,425,328 | |||
Sale of Stock, Price Per Share (in Dollars per share) | $5 | ||||
Dividends Payable, Nature | declared a 1:1 common stock dividend on each share of outstanding common stock | ||||
Stockholders' Equity Note, Stock Split | two-for-one | ||||
Common Stock Dividends, Shares | 14,762,875 | ||||
Series A Preferred Stock [Member] | |||||
NOTE 13 - STOCKHOLDER'S EQUITY (Details) [Line Items] | |||||
Preferred Stock, Shares Outstanding | 3,000,000 | 3,000,000 | |||
Common Stock Issuance [Member] | |||||
NOTE 13 - STOCKHOLDER'S EQUITY (Details) [Line Items] | |||||
Stock Issued During Period, Shares, New Issues | 485,830 | ||||
Proceeds from Issuance of Common Stock (in Dollars) | $2,427,859 | ||||
Stock Issued to Founder and Shareholder [Member] | Series A Preferred Stock [Member] | |||||
NOTE 13 - STOCKHOLDER'S EQUITY (Details) [Line Items] | |||||
Stock Issued During Period, Shares, New Issues | 6,000,000 | ||||
Preferred Stock, Par or Stated Value Per Share (in Dollars per share) | $1 | ||||
Convertible Preferred Stock, Terms of Conversion | converted from 1 (one) restricted share to 5 (five) restricted shares of common stock | ||||
Stock Issued to Founder [Member] | Series A Preferred Stock [Member] | |||||
NOTE 13 - STOCKHOLDER'S EQUITY (Details) [Line Items] | |||||
Stock Issued During Period, Shares, New Issues | 3,000,000 | ||||
Stock Repurchased and Retired During Period, Shares | 3,000,000 | ||||
Stock Issued To Shareholder [Member] | Series A Preferred Stock [Member] | |||||
NOTE 13 - STOCKHOLDER'S EQUITY (Details) [Line Items] | |||||
Stock Repurchased During Period, Shares | 3,000,000 |
NOTE_14_COMMITMENTS_AND_CONTIN
NOTE 14 - COMMITMENTS AND CONTINGENCIES (Detail) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
NOTE 14 - COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||
Operating Leases, Rent Expense | $51,473 | $14,021 |
Office Lease, West Hollywood, California [Member] | ||
NOTE 14 - COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||
Description of Lessee Leasing Arrangements, Operating Leases | entered into a lease agreement for office space located in West Hollywood, California through June 30, 2017 at a monthly rate of $14,397 | |
Operating Leases, Rent Expense, Minimum Rentals | 14,397 | |
Office Facilities Lease, West Hills, California [Member] | ||
NOTE 14 - COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||
Operating Leases, Rent Expense, Minimum Rentals | 1,300 | |
Office Facilities Lease, Scottsdale, Arizona [Member] | ||
NOTE 14 - COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||
Operating Leases, Rent Expense, Minimum Rentals | 1,420 | |
Office Facilities Lease, West Hills, California and Scottsdale, Arizona [Member] | ||
NOTE 14 - COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||
Description of Lessee Leasing Arrangements, Operating Leases | leases office facilities located at West Hills, California and Scottsdale, Arizona from unrelated third parties at a monthly rate of $1,300 and $1,420. The West Hills lease is on the month to month basis. The Arizona lease is a non-auto renewing lease with the most current agreement covering the period from November 1, 2013 to April 30, 2014. In March 2014, a new lease agreement was signed for six months commencing May 1, 2014 | |
Lease In Deerfield Beach Florida [Member] | Vaporfection International Inc. [Member] | ||
NOTE 14 - COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||
Description of Lessee Leasing Arrangements, Operating Leases | entered in to an agreement for a 1 year non-cancelable lease in Deerfield Beach, Florida. The lease starts on January 1, 2014 at a monthly rate of $1,981, after December 31, 2014 the lease will be on the month to month basis | |
Operating Leases, Rent Expense, Minimum Rentals | 1,981 | |
Virtial Office Lease, Tokyo, London and New York [Member] | ||
NOTE 14 - COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||
Description of Lessee Leasing Arrangements, Operating Leases | rents virtual offices/meeting spaces in Tokyo, London and New York on a month to month basis for approximate $330 per month | |
Operating Leases, Rent Expense, Minimum Rentals | $330 |
NOTE_14_COMMITMENTS_AND_CONTIN1
NOTE 14 - COMMITMENTS AND CONTINGENCIES - Schedule of Future Minimum Rental Payments for Operating Leases (Detail) (USD $) | Dec. 31, 2013 |
Schedule of Future Minimum Rental Payments for Operating Leases [Abstract] | |
2014 | $147,398 |
2015 | 172,759 |
2016 | 172,759 |
2017 | 86,379 |
Total | $579,295 |
NOTE_15_RESTATEMENT_Restated_C
NOTE 15 - RESTATEMENT - Restated Consolidated Balance Sheets (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 | Dec. 31, 2012 |
Current assets | ||||
Cash and cash equivalents | $1,977,756 | $168,003 | $1,044,921 | $1,026,902 |
Marketable securities | 442,904 | 184,800 | ||
Accounts receivable | 52,617 | 339,735 | ||
Inventory | 374,734 | 632,986 | ||
Prepaid expenses and other current assets | 260,622 | 89,241 | ||
Total current assets | 3,108,633 | 1,529,765 | ||
Property and equipment | 198,532 | 140,658 | ||
Investments, at cost | 1,200,000 | 1,200,000 | ||
Intangible assets | 735,598 | 682,429 | ||
Note receivable | 130,000 | 0 | ||
Goodwill | 1,100,037 | 1,090,037 | ||
Deposits and other assets | 99,662 | 98,726 | ||
Total assets | 6,572,462 | 4,741,615 | ||
Current liabilities | ||||
Accounts payable and accrued expenses | 385,686 | 448,314 | ||
Notes payable | 0 | 75,000 | ||
Deferred revenue | 1,248,232 | 683,621 | ||
Related party notes payable | 16,674 | 111,794 | ||
Customer deposits | 1,377,986 | 785,861 | ||
Short term loan payable | 122,135 | 0 | ||
Total current liabilities | 3,150,713 | 2,104,590 | ||
Stockholders' Equity | ||||
Preferred stock | 3,000 | 3,000 | ||
Common stock | 30,012 | 29,526 | ||
Additional paid-in capital | 10,583,731 | 8,156,358 | ||
Common stock subscribed | 0 | -15,000 | ||
Accumulated deficit | -7,194,994 | -5,536,859 | ||
Total stockholders' equity | 3,421,749 | 2,637,025 | -153,629 | |
Total liabilities and stockholders' equity | 6,572,462 | 4,741,615 | ||
As Originally Presented [Member] | ||||
Current assets | ||||
Cash and cash equivalents | 1,977,756 | |||
Marketable securities | 442,904 | |||
Accounts receivable | 1,319,461 | |||
Inventory | 1,069,156 | |||
Prepaid expenses and other current assets | 260,622 | |||
Total current assets | 5,069,899 | |||
Property and equipment | 198,532 | |||
Investments, at cost | 1,200,000 | |||
Intangible assets | 735,598 | |||
Note receivable | 130,000 | |||
Goodwill | 1,100,037 | |||
Deposits and other assets | 99,662 | |||
Total assets | 8,533,728 | |||
Current liabilities | ||||
Accounts payable and accrued expenses | 535,686 | |||
Notes payable | 0 | |||
Related party notes payable | 16,674 | |||
Customer deposits | 538,311 | |||
Provision for customers refunds | 222,925 | |||
Short term loan payable | 122,135 | |||
Total current liabilities | 1,435,731 | |||
Stockholders' Equity | ||||
Preferred stock | 3,000 | |||
Common stock | 30,012 | |||
Additional paid-in capital | 9,212,731 | |||
Common stock subscribed | 0 | |||
Accumulated deficit | -2,147,746 | |||
Total stockholders' equity | 7,097,997 | |||
Total liabilities and stockholders' equity | 8,533,728 | |||
Impact of Restatement [Member] | ||||
Current assets | ||||
Accounts receivable | -1,524,771 | |||
Inventory | -636,468 | |||
Total assets | -2,161,239 | |||
Current liabilities | ||||
Accounts payable and accrued expenses | -150,000 | |||
Notes payable | 0 | |||
Deferred revenue | 683,621 | |||
Customer deposits | 582,675 | |||
Stockholders' Equity | ||||
Additional paid-in capital | 1,371,000 | |||
Accumulated deficit | -4,648,535 | |||
Total liabilities and stockholders' equity | -2,161,239 | |||
Early Recognition of Revenue [Member] | ||||
Current assets | ||||
Accounts receivable | 257,927 | |||
Inventory | -57,954 | |||
Total assets | 199,973 | |||
Current liabilities | ||||
Notes payable | 0 | |||
Deferred revenue | 564,611 | |||
Customer deposits | 257,000 | |||
Provision for customers refunds | -222,925 | |||
Stockholders' Equity | ||||
Accumulated deficit | -398,713 | |||
Total liabilities and stockholders' equity | $199,973 |
NOTE_15_RESTATEMENT_Restated_C1
NOTE 15 - RESTATEMENT - Restated Consolidated Statements of Operations (Detail) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Revenue | $51,011 | $268,596 | |
Revenue from related party | 0 | 0 | |
Less: allowances and refunds | -60,000 | 0 | |
Net revenue | -8,989 | 268,596 | |
Cost of revenues | 949,874 | 270,060 | |
Gross profit | -958,863 | -1,464 | |
Operating expenses | |||
Selling and marketing | 141,554 | 254,252 | |
Research and development | 8,000 | 8,500 | |
General and administrative | 563,370 | 692,682 | |
Total operating expenses | 712,924 | 955,434 | |
Loss from operations | -1,671,787 | -956,898 | |
Other income (expense), net | 13,652 | -408 | |
Loss before provision for income taxes | -1,658,135 | -957,306 | |
Provision for income taxes | 0 | 0 | |
Net loss | -1,658,135 | -957,306 | -3,791,440 |
Earnings per share attributable to common stockholders | |||
Basic (in Dollars per share) | ($0.05) | ($0.03) | |
Diluted (in Dollars per share) | ($0.05) | ($0.03) | |
Weighted average shares outstanding | |||
Basic (in Shares) | 30,516,271 | 27,957,406 | |
Diluted (in Shares) | 30,516,271 | 27,957,406 | |
As Originally Presented [Member] | |||
Revenue | 294,550 | 1,245,522 | |
Revenue from related party | 1,000,000 | ||
Less: allowances and refunds | -962,780 | ||
Net revenue | 331,770 | 1,245,522 | |
Cost of revenues | 891,920 | 620,060 | |
Gross profit | -560,150 | 625,462 | |
Operating expenses | |||
Selling and marketing | 141,554 | 254,252 | |
Research and development | 8,000 | 8,500 | |
General and administrative | 563,370 | 692,682 | |
Total operating expenses | 712,924 | 955,434 | |
Loss from operations | -1,273,074 | -329,972 | |
Other income (expense), net | 13,652 | -408 | |
Loss before provision for income taxes | -1,259,422 | -330,380 | |
Provision for income taxes | 0 | 0 | |
Net loss | -1,259,422 | -330,380 | |
Earnings per share attributable to common stockholders | |||
Basic (in Dollars per share) | ($0.04) | ($0.01) | |
Diluted (in Dollars per share) | ($0.04) | ($0.01) | |
Weighted average shares outstanding | |||
Basic (in Shares) | 30,516,271 | 27,957,406 | |
Diluted (in Shares) | 30,516,271 | 45,290,739 | |
Early Recognition of Revenue [Member] | |||
Revenue | -243,539 | -166,926 | |
Revenue from related party | -1,000,000 | ||
Less: allowances and refunds | 902,780 | ||
Net revenue | -340,759 | ||
Cost of revenues | 57,954 | -350,000 | |
Gross profit | -398,713 | ||
Operating expenses | |||
Provision for income taxes | 0 | 0 | |
Net loss | -398,713 | 183,074 | |
Contribution to Capital [Member] | |||
Revenue | -810,000 | ||
Operating expenses | |||
Provision for income taxes | 0 | ||
Net loss | ($810,000) |
NOTE_16_SUBSEQUENT_EVENTS_Deta
NOTE 16 - SUBSEQUENT EVENTS (Detail) (Subsequent Event [Member]) | 0 Months Ended |
Apr. 09, 2014 | |
Subsequent Event [Member] | |
NOTE 16 - SUBSEQUENT EVENTS (Details) [Line Items] | |
Number of New Subsidiaries Formed | 6 |