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Saturday, November 26, 2022

Major Reversal on MedboxInc (OTCMKTS:MDBX)

MedboxInc (OTCMKTS:MDBX) continues to move up steadily on excellent volume after founder P. Vincent Mehdizadeh penned a letter to shareholders.

According to Mehdizadeh, within the last 18 months he secured a credit line through a financial institution by pledging Medbox stock and used a large portion of the funds to loan to the public company. Since that point in time, a margin call occurred on the loan when the share price decreased to under $3 per share, causing a forced liquidation of shares to repay the credit line.

“Medbox was not in a position to pay back my note so these involuntary sales were transacted by my bank to recoup the loan, stated Vincent Mehdizadeh, Founder and Majority Shareholder of Medbox, Inc. “The credit line has been fully satisfied as of today’s date. In addition, I have ceased any and all trading activity on my regularly scheduled trading plans until further notice. I am also looking into re-investing into the company to recoup some of the shares I was forced to liquidate over the last couple weeks. I am still a long-term believer in this company and feel Medbox is positioned perfectly to be a leader in this new industry.”

The stock had been in decline as several lawsuites were filed against MDBX; the complaints allege that during the Class Period, Defendants issued materially false and misleading statements regarding the Company’s financial results for the fiscal year ended December 31, 2013 and each of the interim financial periods ended September 30, 2013, December 31, 2013, March 30, 2014, June 30, 2014 and September 30, 2014. Specifically, Defendants overstated Medbox’s revenues by recognizing revenue on customer contracts before it had been earned. As a result of these false statements, Medbox’s stock traded at artificially inflated prices during the Class Period, reaching an intraday Class Period high of $93.50 on January 8, 2014.

Medbox Inc (OTCMKTS:MDBX) has created a free standing vending machine that dispenses packaged pot. The Company touts its cashless inventory control system whose biometric thumbprint scan and Company-issued debit card ensure that only those with prescriptions can get access to the product inside.

MDBX has been very successful in creating massive buzz for their Company and capturing Investors sentiment with the dream of Cannabis legal in every state with dispensary’s on every corner each with a Medbox Dispensing System.

They have also been hugely successful getting their brand into the national media with features on MDBX in CNN, ABCNews, Reuters, BBC, Fox Business, Bloomberg TV, CNBC, Associated Press, NPR, and company has been featured in articles appearing in Newsweek, Bloomberg BusinessWeek, Los Angeles Times, Chicago Tribune, and the Wall Street Journal, as well as over 30 other news agencies around the world.

Medbox has been awarded United States & Canadian Patents concerning the software and hardware related to their medicine dispensing systems.

The shell was incorporated in the 90’s originally in Nevada as Rabatco, Inc. They soon changed their name to MindfulEye Inc and focused on selling downloadable movies through a network of shopping mall kiosks. This ended in failure and in October of 2011 they changed their name to Medbox and entered the red hot pot sector.

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The man behind MDBX is Pejman Vincent Mehdizadeh who according to many online sources has a sordid criminal history that includes breaking and entering, solicitation, trespassing and credit card fraud.

Apparently he was raided back in 2007 for running a dispensary, and in a related lawsuit “he was accused of posing as a lawyer and a real estate agent at different times,” but as Mehdizadeh said ”he’s just a middle-class child of immigrants whose dreams for college got derailed when his parent divorced and then suffered a series of economic reverses. Towards the end of high school, the bottom fell out, forcing him to scrap school and hit the streets.” He claims that against all odds he turned around a failing legal referral business and earned a good living, all the while caring for his elderly parents.

Mr. Mehdizadeh partner is Bruce Bednick, a chiropractor from Arizona who currently serves as the Company’s president. The two of them have an eye on a higher exchange and recently successfully up-listed the stock from the pinks to fully reporting OTCBB.

Currently trading at a whopping $180 million plus market valuation MDBX lacks real fundamentals such as any significant revenues to date. They also have a weak financial situation with $1.3 million in the treasury compared to $5 million plus in short term payables. These kinds of numbers are not consistent with an up-list to a major exchange and rather point to significant dilution on the horizon.

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There are plenty of reasons for pot stocks to heat up again; according to a recent report from MMJ Business Daily, 2015 is expected not only to see more investment dollars flow into the market but it could even outpace the growth rate seen in 2014. States like Nevada, Illinois, Massachusetts, Oregon, and Alaska have all been identified as industry drivers this year. Furthermore, the rise in “big money” from some major investment funds has just started to hit the sector.

The major catalyst however for 2015 is expected to be the rescheduling of marijuana out of its current Schedule I classification. In October U.S District Judge Kimberly Mueller heard testimonies during a five day evidentiary hearing aimed at determining if the Schedule I dangerous drug is unconstitutional.

The ruling is expected to come sometime later this year and many expect to see a domino effect for the entire pot sector culminating in treasury issuing rules and regulations for working with marijuana businesses. Once they are able to use banks the entire business is expected to really take off.

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Disclosure: we hold no position in MDBX either long or short and we have not been compensated for this article.

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