On over 2.5 million share volume, NXTH surged 53.49% up yesterday, raising questions about the reason for the sudden high demand. The closing price was $0.33 for a share, which was also the highest price during the day. The shares got overbought and some investors even expect long-term appreciation for the stock.
The only paid promotions for NXTH for this year have been disclosed in February and in March. At that time, the stock traded much higher, reaching levels of above $2.25 for a share. Though, it seems that afterwards the disappointing financial results, the heavy indebtedness and the high dilution risks have made the stock unattractive for long-term investors.
For shorters, however, the fundamentals were not so important. On Thursday and Friday last week almost half of the total trading volume was shorted and yesterday the portion of shorted shares exceeded 50% of the trading volume.
NXTH started the severe decline after the next sale of secured convertible notes and warrants at the end of February. Then, the company raised nearly $5 million in net proceeds, but added another 6.5 million to its outstanding warrants. At the end of June a total 26.3 million warrants were outstanding with an average exercise price of $0.72. The total number of new shares that have been registered and can be sold on the market under that latest debt financing exceeds 13 million.
Thus, the modest reaction of the market to the latest press releases announcing market expansion for the natural sweetener SUSTA TM, NXTH lead product, does not surprise. The company’s aggressive marketing campaign, involving paid with shares of common stock celebrities, to increase the sales and the popularity of its product did not have notable results.
Year-over-year, sales dropped down by over 80% during the second quarter and the much higher interest payments due to the new debt also contributed substantially to the over $900,000 net loss realized for the first half of the year.
