So far, it has been a excruciating year for Medbox Inc (OTCMKTS:MDBX) shareholders as the stock has declined more than 80% year-to-date, caught in a seemingly endless south journey that keeps eroding share price. Even in last trading session, the picture was not rosy as the stock declined more than 19% to close the trading session at $0.505.
The decline came at a share volume of 855,420 compared to average share volume of 375,047. Monday’s close marks the lowest close for MDBX share for the past two years. The share price has dropped sharply from $0.79 per share to level of $0.505 in a matter of few trading sessions.
The red flags
There are several reasons adversely affecting the overall performance of Medbox. The main problem linked with the company’s performance is its financial reports with misrepresented sales. In March, the company had no option but to release restated financial reports due to numerous errors in reporting. The SEC launched an investigation onto the matter. Also, the private law firms took legal steps against the company.
With the restated numbers posted in March, there were definitely strong reasons with investors to dump company’s stock. As per the restated 10-Q filing, the company net revenue in 1Q2014 was negative and stood at $8900. It was shocking as in previous report revenue was positive $331,000.
There are numerous reasons to frown about the discrepancies. Medbox’s recent 8-K filing highlighted a considerable drop in the price of previously released convertibles as well. On April 9, 2015 the company submitted an S-1 linked to financing for $3.5 million. SEC approval will result the reception of the funds.
The management seems least bothered about then numbers as when asked the founder called the restated numbers problem as nothing more than a bad luck. He even denied receiving a SEC subpoena on restated matter.