Traders Unfazed by Medbox Inc (OTCMKTS:MDBX)’s Authorized Share Increase
Yesterday Medbox Inc (OTCMKTS:MDBX) managed to pull to a third consecutive green close. The company’s share price climbed over 5% and MDBX stopped at $0.133 by the closing bell. Traders were obviously undisturbed by the series of filings that the company put up over the last few days, given the price movement.
On October 5, MDBX announced that the increase of the company’s authorized shares cap from 110 million to 410,000,000. Everyone who has been monitoring OTC stocks long enough knows what usually happens in relatively short order after a company increases its authorized shares, especially when it uses such a generous multiplier.
If anyone is wondering what prompted that move, a part of the answer is contained in the previous two 8-K filings published by MDBX. Both of those went public on October 2. The first one revealed that MDBX was amending existing warrant pricing. The exercise price of the company’s July 2014 warrants for the purchase of 6.3 million shares was lowered from a range of $4.93 – $0.29 all the way down to a fixed exercise price of $0.06.
The second 8-K modified a couple of share purchase agreement and the terms of a convertible debenture. Under the old terms, the debentures could convert into common stock at a 49% discount from the lowest volume-weighted average price 20 days prior to conversion. It seems that with MDBX spending most of last month over $0.10 per share, the massive discount was not a good enough offer. Under the new terms conversion can happen at the same 49% discount, using the VWAP not 20 but 60 days prior to conversion, essentially allowing the noteholder to get much cheaper shares.
It seems all of this blew over the head of MDBX shareholders ad the company closed green over three consecutive sessions, with all those filings publicly available. It remains to be seen how the changes will affect MDBX‘s share price in the long run.
