Will Axxess Pharma Inc (OTCMKTS:AXXE) Recover Its Losses?
The stock of Axxess Pharma Inc (OTCMKTS:AXXE) has been having a tough year so far. Back in January the ticker reached a high of around 22 cents per share while just a couple of sessions ago it dropped to a new 52-week low of $0.0241. This means that investors who bought in at the start of the year could now be facing losses of over 80%. Is there at least some hope that AXXE could climb back up to its previous price ranges?
Well, during yesterday’s trading the ticker simply exploded surging upwards by more than 45% and closing at $0.0434 per share. The 6.4 million shares that changed hands throughout the session were among the biggest daily volumes registered by the company. Despite the impressive outcome the performance of the stock did show some hesitation as it closed below its opening price of $0.0441.
The likely catalyst for the sudden spike up the chart was the PR published by AXXE right before the start of the trading day. In it the company announced that they had hired Mr. Michael Gelmon B.A., LL.B., to assist them in business development and SEC compliance. Mr. Gelmon’s prior start-up company generated over $300 million in sales. The addition of Mr. Gelmon could mean that nearly a year after AXXE first announced their intention to uplist to the OTCQB marketplace they could finally manage to do so. According to the PR the management team has sent the audited financials to FINRA and expects the uplisting to occur within 3 weeks.
In addition to the rest of the encouraging news released in the past months one could wonder why has the stock been unable to form a more prolonged climb in the right direction. The answer is quite simple – AXXE is surrounded by red flags. Let’s start with the fact that the company has been constantly pumped by paid newsletters for close to 2 years now. Just for this year nearly 200 email alerts touting the stock have been sent. The latest touts came on July 5 and were sent by the affiliates of Stellar Media Group LLC – Penny Picks, Prepump Stocks, Penny Stock Newsletters. Of course they didn’t do it for free disclosing a $17,500 compensation for their services. AXXE have done their part in creating as much artificial hype as possible by paying $3000 to FN Media Group LLC for news coverage.
When a stock becomes the target of a paid pump it usually means that quite a lot of shares have been issued at discounted prices as a conversion of debt. If you take a look at the latest quarterly report filed by AXXE you will see that this is exactly the case. The company recently increased its authorized common shares form 100 million to 150 million which could signal that the conversions might continue for quite a while.
The financial results found in the report also fail to inspire much confidence. AXXE finished the first quarter of the year with:
• $23 thousand cash,
• $475 thousand total assets
• $4.8 million total current liabilities
• $20 thousand sales
• $747 thousand net loss
The company has stated that it expects revenues to experience a dramatic growth during the second half of 2015 but it remains to be seen if their projections will come true. In the meantime the lackluster financials and the ongoing paid pump may continue to depress the stock. It should be obvious that any trades involving the ticker must be preceded by extensive research.
