Companies related with marijuana used to be the best penny stocks to buy 18 months ago, but with the times having changed and the majority of them being nothing but fluff, traders buying them have become more selective and more short-term focused about them. Medbox Inc. (OTCQB: MDBX), a development stage provider of specialized services to the cannabis sector, was one of the better performers on Tuesday after shares ended the session up 48.15% on what looks to be an attempt to bounce. Having just closed a $4.5 million financing deal with its existing lenders, eyeing for dips on MDBX stock would be a smart approach heading into September.
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Medbox, with 69,823,415 shares issued and outstanding as of August 10, has seen both its share price and revenues fall by waist side over the past year with shares dropping from above $10 to as low as 0.05. The company filed their 10Q 2 weeks ago which showed revenues for the 3 months ended June 30 coming in at just $59,447 in comparison to $335,187 reported for the same period the year prior.
Cash is available for Medbox, with $564,267 being reported as the balance on June 30, 2015, but with costs of revenues for the three months being reported as $867,025, they won’t possibly be able to make it through another quarter without adding more debt to their balance sheet. While the idea of providing specialized consulting services to the marijuana industry and selling associated patented products, including its Medbox medical dispensing system and medical vaporization devices might sound like a solid business model, the cost of doing such business is crushing the chances of MDBX seeing anything more than a “dead cat bounce” in the foreseeable future.
Two weeks ago, on August 13, 2015, Medbox, P. Vincent Mehdizadeh, PVM International Inc., Vincent Chase, Inc. and each member of the board of directors (Ned Siegel, Mitch Lowe and Jennifer Love) amended their Voting Agreement which allowed for the sale and purchase of convertible debentures in the aggregate principal amount of up to $ 3,979,877. The funds, which could come in up to 11 tranches, is simply the one and only vehicle allowing for Medbox to stay afloat and those Prospectus filings, like the one filed Monday for the sale of up to 40,134,556 shares of MDBX stock, are going to be a regular occurrence.
Medbox looks pretty strong, from a corporate perspective, being that they have multiple subsidiaries in various segments of the marijuana industry:
- Prescription Vending Machines, Inc., a California corporation, d/b/a Medicine Dispensing Systems in the State of California (“MDS”), which distributes our Medbox™ product and provides related consulting services;
- Vaporfection International, Inc., a Florida corporation through which they distribute their medical vaporizing products and accessories;
- Medbox Property Investments, Inc., a California corporation specializing in real property acquisitions and leases for dispensaries and cultivation centers;
- MJ Property Investments, Inc., a Washington corporation specializing in real property acquisitions and leases for dispensaries and cultivation centers in the state of Washington;
- Medbox Management Services, Inc., a California corporation specializing in providing management oversight and compliance services to state-licensed dispensaries for cultivation, dispensing, and marijuana infused products; and
- Medicine Dispensing Systems, Inc., an Arizona corporation, which distributes their Medbox dispensing system and provides related consulting services in the State of Arizona
The reality of MDBX shares having been on a steep decline over the last 12 months, with the exception of the profitable bounce at the start of July, makes anything other than a flip a risky move. During the first half of 2014, Medbox recorded an allowance for refunds to be paid to San Diego clients. If you lose money by thinking MDBX is going to “get high” for more than a brief moment in time, perhaps you should arrange to file for a refund with whomever is giving you that idea.
Find out more about MDBX shares here: $MDBX
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