Todor Pichurov

Medbox, Inc. (OTCMKTS:MDBX) Crashes After Filing Restated Reports

by Todor Pichurov March 18, 2015

The wait is over – Medbox, Inc. (OTCMKTS:MDBX) filed the full batch of restated reports that were due. The company put up a press release to inform of the event at the closing bell yesterday. The market reaction to the filings was unambiguous. MDBX slipped a good 9% yesterday, abandoning its comfort zone near $2 and stopped at $1.79 by the closing bell, on swelling volume.

MDBX had to restate a number of financial reports due to significant errors in revenue reporting. This issue led to numerous private law firms launching class action lawsuits against MDBX and the SEC launching an investigation into the matter.

With the restated filings out, there seems to be a lot for investors to frown about. While it's advisable that everyone read the filings on their own, some significant issues deserve to be singled out:

  • original 10-Q for Q1 2014: $331,000 in net revenues
  • restated 10-Q for Q1 2014: negative $8.9 thousand in net revenues
  • original annual 2012 net revenues: $2.59 million
  • restated annual 2012 net revenues: $1.17 million
  • original annual 2013 net revenues: $5.22 million
  • restated annual 2013 net revenues: $2.06 million

The massive percentile differences between erroneously stated figures and reality, of course, mean far greater net loss as well. The cumulative net loss the company logged in 2012 and 2013 is not $900 thousand as previously reported, but a whopping $5.54 million in the restated filing.

The deadline for the class action lawsuits to attract lead plaintiffs is Monday, March 23. The errors in revenue reporting are no chump change sums and there's no telling where MDBX might end up once the lawsuits get going and more people read up on the newly restated balance sheets.

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