Medbox Inc (OTCMKTS:MDBX) Jumps on Old News
After putting up a press release yesterday morning, Medbox Inc (OTCMKTS:MDBX) managed to climb 48% up by the closing bell. The trigger for the move was obviously the PR, even though it communicated information that was available about a week ago.
MDBX informed shareholders the company completed a new $4.5 million financing deal with its “existing lenders”. The release quotes CEO Jeff Goh, who stated that the new financing is a sign of investor “confidence in Medbox”.
This round of financing was detailed in an 8-K filing that went up on August 19. This is an excellent read for potential shareholders and gives the full picture of why lenders so readily agreed to sign the financing deal. The financing will use convertible debentures. The issue is, all of them are quite toxic.
The 8-K states that debenture holders can choose to convert into common shares at a 49% discount from the lowest volume weighted average price of MDBX stock over the last 30 days prior to conversion. Keeping in mind that those convertibles are for millions of dollars and MDBX is priced at under a dime at the moment, with the embedded discounts, this could mean an awful lot of new shares being issued in the future.
Judging by the general attitude of traders on discussion boards, they seem to be more willing to play the price spike than they are persuaded MDBX is getting back on track. The company reported just under $60 thousand in Q2 revenues and a net loss of $11 million for the same period.
