NXXI stock performed yesterday another acrobatic jump up. The price gained 82.35% on a volume of over 6.7 million shares, which is more than six times the average for the stock. Just like in most of the previous jumps this week, the daily volatility of the price was large and the market was not consolidated. Finally, the stock closed the market at a price of $0.062 for a share.
This Monday, the CEO of Pharmachem Laboratories, Inc., another manufacturer of nutritional ingredients, filed with the SEC his holdings of Nutrition 21, Inc. He currently owns 7,830,700 shares, or 7.5% of NXXI outstanding shares, all of the shares being purchased in several transactions conducted since the end of July. A week before that, another filing announced that 7.7 million shares have been issued to an institutional investor, who now owns 10.8% of the company’s common stock.
The dilution seems not to bother investors and it sounds plausible that they could be expecting some news to come out soon, as it has been quiet around Nutrition 21 since the beginning of May. Then, the results of a human clinical study were announced, according to which the company’s Chromax chromium picolinate improved memory function in elderly adults with early memory decline.
But this is not all of the dilution that may come over Nutrition21’s shareholders. In the middle of July, a special shareholder meeting increased the number of authorized shares of common stock from 150,000,000 to 500,000,000. As the company is in an extremely week cash position, not being able to meet its urgent obligations, investors’ reaction was conceivable and the stock price fell rapidly down.
Further possible dilution hides in the heavy indebtedness of Nutrition 21, which consists mostly of convertible preferred stock.
