The stock price of Medbox Inc (OTCMKTS:MDBX) once again attempted to recoup its losses, only to decline and close back in red territory. The stock added 20% to its total value on Friday and then registered loss of over 8% on Tuesday’s trading session. The first quarter report released on Friday marks a spanner in the works.
The performance
The financial figures in the first quarter resulted in the sharp decline in Medbox stock in this week. As per the report, the company posted cash of $92,000. It stated that current liabilities were $10.2 million while quarterly net loss came at $4.4 million. The revenue in quarter was $66,000, which is still an improvement compared to negative $8,900 recorded in 1Q2014, as per the restated numbers for the period.
The problems
The reason behind the poor performance of the stock can largely be attributed to its revenue recognition errors that it reported in the previous months. Even SEC issued a probe on the matter following which investors’ confidence was badly shattered. Also, there were several class action lawsuits taken against the company by private law firms. All these factors hampered the reputation of the company.
The management
The problems were far more serious than it appeared, but Medbox founder Vincent Mehdizadeh shared a completely different view. He said that restatement process was not essential as the problematic issues and the question the SEC asked about the company and its operations were ‘easily addressable’.
The message
As per the latest report, Medbox Inc (OTCMKTS:MDBX)’s cost of revenue and gross loss in the quarter surpassed actual revenue almost four times. It is not favorable for the company. In addition the bottom line stands at a loss of more than $4 million in just one quarter. The performance looks unsettling, considering the recent matter of erroneous reports. As of now, a cautious approach should be adopted before investing in MDBX stock.
