Shortly after the market opened yesterday, the stock price of Attitude Drinks Incorporated (OTC:ATTD) jumped up on a comment by the company, maybe still under the effect of the last unregistered sale of securities.
Despite the early surge, ATTD closed the last trading session with a loss: 15.38% down from the previous close at $0.011 for a share. The trading volume of 7.50 million shares was the largest for the past several months, but still there are some support levels that remained untouched. ATTD could also not overcome the $0.015 resistance level.
The latest press release of Attitude Drinks came out yesterday and it concerned a letter sent by the FDA to another protein beverage maker, saying that their “milk” labels could potentially mislead consumers. According to the press release, ATTD’s Ready-to-Drink beverage ” meets the standard of identity of real milk” . Therefore, the FDA’s action is quite welcomed by the company and would benefit its own product.
That comment was, however, not inspiring enough for the share price to keep or overcome the higher level, and ATTD fell down shortly. The day before yesterday also provided for a trading session with a a larger than the average trading volume. An SEC filing stated that ATTD has entered into a Subscription Agreement for a convertible debt financing up to $1,000,000. The interest rate on that debt should be 10% and the notes are due 18 months after their issuance.
Also, one stock purchase warrant will be issued for every share that would be issued assuming full conversion of the notes on the closing date of the agreement at a conversion price of $0.02. The exercise price of those warrants is currently set at $0.02, though it is subject to later reduction. ATTD states it will use the net proceeds of this financing, among other things, for inventory, product production and payment of some debts.
The additional dilution risk that this financing imposes on the stock, together with the over $12 million in current liabilities (among these are more convertible notes for over $5.5 million) could not be such good news for traders. Actually, the amount looks meager for the company’s debts and operating expenses. Thus, it still remains questionable if ATTD could bring its development to a successful end.
