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Nxt LSE:NTX London Ordinary Share GB0004397567 ORD 1P
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  +0.00p +0.00% 4.35p 0.00p 0.00p - - - 0.00 05:00:10
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Leisure Goods 1.9 -2.0 -1.1 - 18.56

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DateSubject
15/11/2010
14:50
ibstock: Dead..............., the share price, this bb, this company?? Is there anything scheduled soon??
15/10/2010
11:07
gnnmartin: I rather like the USB powered speaker, but I've not dipped in yet. NTX have been such a disappointment for so long that it is hard to believe in them even when the story sounds good. I'm interested by the share trading. Lots of buys, it seems, but the share price stays where it is. Could it be that some of those with whom shares are to be placed are feeding shares to the market makers at 3.5p? They may well feel a quick 0.5p profit on a 3p investment is worth while. Maybe they are applying for a few top up open offer shares too. Even if that is happening, it isn't obviously particularly significant. Nigel Martin
05/10/2010
16:10
aphrodites: SLG CHAIRMAN'S UPDATE REPORT SLGC has had to go through a number of legal loops before publishing this update note and I do apologise for the delay and also its length; there is a lot of reading. In view of the importance of this cash raising exercise to NXT's future my committee agreed that we should publish all the notes we have circulated to SLG members recently so that all ADVFN members are conversant with what has been going on behind the scene. Firstly, I thought it might be helpful for me to summarise a number of points to clear any confusion there might be about the deal structure. • Around 12 institutional investors have committed a total of £5 million investment in NXT in a contract negotiated and underwritten by Singer Capital Management. • A further £3m is sought by NXT from its private shareholders to bring the total raised to £8m. • The price at which shares are being offered to private shareholders is 3p - exactly the same price as the institutions have agreed to purchase. • Private investors are entitled to apply for a proportion of the shares being made available in proportion to their current share of the total currently issued. They are also entitled to apply for more shares in case all shareholders do not take up their allocation. Should this be the case further shares will be allotted on a pro rate basis. • Private shareholders may vote in favour of, or against the fund-raising, either by attending the AGM or in advance by proxy using the form sent in the post. A collective vote against the fund-raising by shareholders means that NXT will not secure the funds from institutions, will not be able to implement its new business plan, and will almost certainly have to be placed into the hands of receivers or administrators. • Private shareholders should perform their own research before applying for further shares. • The SLG and SLGC are not regulated by the FSA to give financial advice and none of our circulated notes should be considered as such. • All members of the SLGC are in favour of the fund-raising despite being disappointed by the price that had to be negotiated with the institutions. • If your shares are held in a nominee name different organisations have different ways of enabling you to vote at the AGM. Most do not automatically send out the forms which are necessary for you to vote. Normally they can arrange for forms to be sent to you if you write or call them. Such instructions must be made each time you want voting forms or to attend an AGM/EGM. Prior to the fundraising being announced the SLGC members were invited to be 'insiders' to the company and agreed to do so in order to represent shareholders as best we could. That meant that we could not buy or sell shares nor discuss what was being proposed outside of the SLGC. Now that the information is in the public domain we are no longer insiders and being the Chairman of SLG I feel it incumbent upon me to air my views on the current situation. Bearing in mind the significance of this deal my committee feels we should publish it for all MF and ADVFN members to read. It is with little consolation that I, like I am sure many other shareholders will agree, the progress reports and upbeat remarks from Peter Thoms (PT) were not as accurate as they could have been. I have asked myself that as an accountant was he aware of the reality of the situation facing NXT? Was he inexperienced at this level of business, and did he have the technological and commercial understanding to take the business forward? Was he able to make a true read on the Nissha situation and if he had a proper executive team advising him would things have been different? Were we wrong to interpret PT's remarks that Nissha would be the saving grace? These are all questions which I think it would be advisable for me not to comment on in public but to leave it to you to make your own judgement or perhaps even ask at the AGM. I think we were all under the impression that Nissha would be NXT's saving grace but in JL's opinion it is always too risky for any business to be so highly leveraged on the success or strategy of one customer. I think most of us were unable to see the wood for the trees because we were all given to believe Nissha products would be coming to market in 2010. JL has told me that he was concerned by this over-reliance on Nissha from the time he joined the board, and that he sought reassurance of the timescales to production. It seems that based on his knowledge of complex product development timescales he was unable to satisfy himself that there was a clear route to revenue in the timescale predicted by PT, and that is why he suggests that it could still be three years to substantial royalties. JL added that of course behind the scenes there could be technology developments which will not require NXT's support, firmware or bending wave algorithms, etc. but he does not have sight of these if they are occurring. A major weakness of the license model is that it is impossible to know what the licensees' customers, and their customers are doing in terms of commercial product launches. Therefore, it makes it even more difficult to plan forward on the likelihood of revenue. We were told that the cash crisis is not just related to Nissha - it is also due to the general failure to sign the new licenses that were forecast. JL's new business model enables the company to drive its technology into new applications with key end-product developers through component and module offerings combining transducer and electronic control. This will potentially enable an order of magnitude of greater profit margin to be made on the sale compared with the slim royalties of the licensing model. Very importantly, it will also permit a much greater accuracy in planning and forecasting revenue. Looking back, the most infuriating part of all of this is that SLGC was a step ahead of the game. Following discussions with a group of SLG members, who between them represented over 5% of the issued share capital of NXT, SLGC sent a letter (see below) to the Chairman Ian Buckley on 12 July 2010 warning him we considered it necessary to place on record our serious concerns about Peter Thoms unsatisfactory communications with shareholders. This could have given rise to the possibility of our presenting a resolution to the AGM asking for the resignation of the CEO on the basis that the Board had a deliberate policy of keeping shareholders in the dark to prevent them from seeking accountability for actions taken and funds wasted. Shortly after sending this letter, the company announced that PT would be standing down to make way for JL. On reflection it appears that the subject of a CEO change had been building momentum for some time prior to our letter and swift action followed the end of the financial year. I believe that our letter and the concerns we raised helped reassure the Chairman Ian Buckley that he had made the correct decision to replace his CEO. Clearly, we had cause for concern and we were correct to question what we regarded as the inconclusive statements and apparent obfuscation of Peter Thoms. But unfortunately we were too late in our shot across the bows. Hopefully, JL will provide a lot more clarity about the business at the AGM and we will not be faced with the evasive remarks such as we have had to endure from PT. SLGC was aware of these shortcomings 3 years ago and has regularly raised the matter of succession planning at the meetings we have had with the Board. The big question of course was always, where would the new CEO come from? Well we all know now but it is at a price and almost too late! Then in mid August, a matter of weeks after JL's appointment as CEO, SLGC was invited to attend a get-to-know you meeting in Cambridge at which he outlined the way forward for the company and showed us an impressive prototype USB product containing the new Audium chip. We left assured all was well with the company and prepared an upbeat note of events to send to all SLG members. The note never saw the light of day! I suspect that JL was still in the process of getting to grips with the business at that time and it was only later that the serious reality of NXT's financial position came to light. SLGC was then invited to become an insider to be told of the fundraising and the rest is history. After discussions with JL he told me that he deeply regretted the unpalatable 3p placement and open offer price which existing shareholders now have to digest but the only other alternative to a quick fundraising would be to wind up the company. At a meeting with the company's broker the SLGC was informed that the institutions determined the price at which they were prepared to provide the refinance money to allow JL to deliver on his new business plan. Gartmore was ready to cut its losses and walk away and there was no other form of rescue plan on the table. The only words of consolation I can offer is that JL; in his own words, passionately believes NXT has a valuable world beating portfolio of IP which if properly exploited and marketed by a capable sales team under his direction as CEO, can deliver the shareholder value which has been evading us all for so long. To use his own words again, "I want to see this rise like a Phoenix from the ashes"! JL makes no bones about the fact that the due diligence he referred to in the announcement following his appointment substantially involved fully understanding NXT's IP and researching the market opportunities for it. Namely, to ensure that there was an array of applications that could use the technology in sufficient volume to create the growth prospect that would satisfy shareholders. He recognised that a new business plan was needed to accelerate revenue and gross profit generation, but believed from the information presented to him as a non-executive director, that the current business model would yield some level of stability. Faced with the reality of running the business, JL must have felt that an early fundraising was essential to secure the company in the short term and enable the innovative new plans to be implemented thereafter. So this leaves me with one big question. Would I in JL's shoes put my neck in a noose and risk my reputation to turn NXT into a profitable machine? The answer is, clearly NO I wouldn't, unless I really believed NXT's IP had the capability of allowing me to make a success of it. I have met the man. I have seen at first hand the Audium chip in action with BMR speakers and through a USB linked to a computer heard what it can deliver. JL understands the potential which NXT's sound and touch technologies are capable of. And he has the experience from his days in Oxford Semiconductor to put everything together and make a success of it. I have seen the presentation he made to the institutions and it is pretty convincing. It is more than his reputation is worth to try and pull the wool over their eyes and he has successfully persuaded around 12 institutional investors to back him, but with the placing price at 3p it clearly has been at a price. Remember, the institutions are no fools and they have guaranteed him the £5m he is looking for and in addition he has persuaded them to allow the existing shareholders to participate to the extent of around £3m. If the fundraising is approved we will now have a new team leading NXT forward and hopefully delivering what we all know the IP is capable of. I am a sizeable shareholder holding shares at an average price of 14.5p. I am prepared to back James Lewis and I shall be subscribing for my full entitlement under the open offer and will also apply for more. Please do not take this as a recommendation to follow my example. You should seek your own financial advice before deciding how you wish to proceed. I shall be putting Peter Thoms years at the helm behind me and I shall be looking forward to the shareholder value which I believe James Lewis is capable of creating. As the SLGC note said, this is a man in a hurry and we will be hearing a lot more from him. I know SLG comes in for some stick on the bulletin boards. I also know only too well how those on the SLGC committee give up days of their holidays, spend long hours travelling to and attending meetings with the Board, working on update notes to send out to SLG members, spending their own money on long telephone conversations with one another, the NXT Board and SLG members, and the frustration at times of not being able to be as free as we would all wish in communications. The responsibility of my committee has always been to reflect our member's views and to act as a communication link with the Board. Some SLG members expect more but in this age of regulation and law enforcement the Board of NXT cannot divulge share price sensitive information unless we are made "insiders". And when we were invited this time to be made "insiders" I can tell you that I had to think long and hard about whether I should accept that responsibility. Being made an insider in a penny stock usually means the need to raise cash and bad news for the share price. But in this case to refuse would mean my resignation from SLGC. To accept would mean being locked into my shares and unable to sell until the information was in the public domain. I and all of my committee accepted the responsibility to represent our SLG members. The personal cost of which has been substantial to all of us. I personally expected to see a cash raising at around 8p a share and I understand that JL and Kate Barnes had hoped that this price might be achievable. Once the ball was rolling and the desperate financial plight of the company was known the institutions, especially Gartmore, were able to dictate the price. I understand that at one time a placement price of 1p was demanded and also to exclude existing shareholders from any fundraising! Singers, JL and Kate Barnes were not prepared to accept this and were able to strike the better deal we have before us now, which is the best they could achieve. Many will think that Peter Thoms has a lot to answer for. But I am not going to let his management of the company make me lose sight of the potential that this company's technology really has when properly managed. JL says the technology has "world beating potential". He believes that there is a roadmap of future applications for it that will serve to strengthen the company's position as a deliver of superlative solutions for consumer electronics. Attaining that capability is dependent on this funding round being successful. If he fails his reputation will be in tatters. But I have told him that I would like to see him invest more of his own money to prove to shareholders that he is confident of achieving his task! Hopefully, we shall be able to arrange a pre-AGM meeting of SLG members on 18 October (venue yet to be agreed) when my Chairmanship and the membership of the SLGC committee can be discussed. However, we are discussing with JL the relationship he would like to have with our shareholder group going forwards. When we have something concrete we will come back to members. One thing I would like to emphasise to ADVFN subscribers, especially those who chose not to be members, is that a representative shareholder body allows a direct communication and the establishment of a good working relationship with the Board. But as I emphasised above we are not treated any differently to other shareholders. In view of the important developments of recent days I have also published below the letter SLGC sent to Ian Buckley in July and the recent update note to SLG members. If after digesting this note any non-members wish to join SLG please do contact me. Good luck to all those who live with the NXT dream. Regards Bob Sansom NOTE SENT TO ALL SLG MEMBERS 23-9-10 Dear SLG Members, We attach two important documents for your attention. One follows meetings between SLGC, NXT and Singers Capital Markets, their corporate advisors, following our being made "insiders". These will be of interest to you following today's announcement of NXT raising £7.5m by means of a £5m placement with institutions and a £2.5m open offer to private investors at 3p. We would add that we have not been party to the placement document and only received notice of the allocation price early yesterday morning. Therefore, you should read our document as an advisory notice and certain comments may well change as further information is made available to us. Firstly, I would draw your attention to the hard hitting letter we sent Chairman Ian Buckley on 12 July 2010. As you will see we accused the NXT Board of ongoing obfuscation, management by the seat of the pants and three years of failure to deliver products. Our fear then was further cash calls without any insight into the business plans as a whole. Soon after this letter was sent an announcement was made of Peter Thom's departure as CEO and his replacement by James Lewis. It has been apparent to SLGC for some time that NXT was continuing to fail to deliver the promised break-even and move into profitability and more importantly its business plan lacked the incisiveness to produce shareholder value. When David Mackay was Chairman we attempted without success to get shareholder representation on the Board and we were threatened then with a resignation of the Board if we pursued that course of action. In our recent letter we warned of a likely demand from some SLG members for a change in CEO (the nature of this would have been a shareholder resolution presented to the AGM which would have resulted in a vote of no confidence in Peter Thoms). We are now aware that James Lewis was faced with similar misgivings about the company's future and viability if it continued under its current business strategy. Without significant change in direction he saw no profitable future for the company and no other alternative than to wind the company up and sell its Intellectual Property. However, he did see a highly vibrant future if NXT was able to raise sufficient cash to enable him to implement significant change to the business strategy. These changes would allow NXT to be in control of its own destiny by getting directly involved in the supply chain and allow it to have the resources and expertise necessary to exploit fully available opportunities. He sees the present reliance on selling licenses and relying on low rate royalty income as a business destined to failure. In the short time James Lewis has been on the Board of NXT he has delivered enormous changes but he has been frustrated by the inability of the company to change direction without the necessary financial resources to support it. What we are not certain of is whether Peter Thoms was prepared to support the changes that were needed. Even if he was, we understand the City was not prepared to provide the financial wherewithal if he stayed as CEO of the company. So we are faced with a company staggering forwards hand to mouth, going nowhere and ultimately being wound up or, under the guidance of our new CEO, a company with a new business plan and direction which he believes will return shareholder value. James Lewis is placing his reputation on the line in his belief that with the support for the fundraising he can deliver the goods. Unfortunately, faced with the need to raise more cash James Lewis has found that institutions always demand more than their pound of flesh and the heavily discounted 3p placing and rights issue is the result. SLGC realises that this price will result in an enormous dilution of shareholder value and it is extremely unhappy that such a low and unjustified price was demanded by institutions to raise this money. However, James Lewis is convinced that he has the necessary vision and skills to return significant shareholder value with this new addition of funds. The five members of SLGC are supportive of James Lewis' desired approach and believe the business experience he gained from Oxford Semiconductors will provide us with the CEO shareholders have been looking for to lead this company forward into profitability. We do have one caveat and that is the Chairmanship of Ian Buckley. He sat over the period while Peter Thoms was CEO, and was also in charge of the remuneration committee, and failed to see that money was being poured down the drain without questioning the direction the business was going. We have raised this issue with JL and he said that ideally he would prefer not to have any further disruption to the Board. Ian Buckley has been most supportive and has allowed him to get on with the job in hand. JL anticipates having the appointment of two strong non-executive directors to the Board in coming months and is being assisted in this task by key institutional investors. We believe it is correct to ask all SLG members if they are happy for Ian Buckley to remain as Chairman or if you believe we should be asking him to stand down. NOTES & COMMENTS FROM TODAY'S SLGC MEETING WITH JAMES LEWIS AND KATE BARNES AT 9am. AND OBSERVATIONS. (1)Singer Capital Markets has seen the need to recapitalise the company for some time, something Peter Thoms was not prepared to consider. With the arrival of JL this became a real option which Singers helped to support. (2)Both Singers and JL had worked very hard to ensure the best price was obtained for the cash raising exercise. They realised that 3p (a 90% discount to the current stock price in the market) would be very unpalatable to existing shareholders but the Board had to accept that the price represents the current climate for raising funds for companies wanting to restructure. (3)SLGC gather from discussions with JL that should the cash raising exercise fail he was unlikely to stay with the company. (4)A significant number of new institutional investors have agreed to join this placement. (5)Gartmore was the corner-stone to the placement but would maintain a holding slightly less than 29.9% (6)Everything possible had been done by Singer's and JL to protect the interests of the private investors including resisting pressure that no open offer should be made to them and that the company should be moved to the AIM. (7)0.525 shares would be offered for every share held by PI's. (8)A price of 3p will result in 250m new share being issued to raise £7.5m. Of these just over 83m will be available to current investors. (9)Clearly there is a significant dilution, however, the company will be well capitalised with cash resources to effect the sales focussed business plans. (10)The addition of an Audium based suit of products gives the company considerable scope to expand its traditional markets. (11)Once the market has settled we might see a different risk premium being associated with the company. The SLGC is not recommending a particular course of action and we recommend shareholders should take independent financial advice before making their investment decisions with respect to NXT. UPDATE NOTE SENT TO ALL SLG MEMBERS Dear SLG Member, I am writing to inform you that the SLGC committee was invited by James Lewis (JL) CEO of NXT to attend a meeting in London on 9 September 2010 and a further meeting on 22 September for an update. We were asked first to agree to be made "Insiders". "Insider" is the term associated with persons who are given share price sensitive information to do with a company and agree to keep this confidential and not to buy or sell shares in that company until the information becomes public knowledge. The meeting was held at Singer Capital Markets, NXT's corporate advisor's premises, in One Hanover Street London. Before we report on the content of the meeting I would like to draw your attention to the attached letter which SLGC sent to Ian Buckley (IB), Chairman of NXT, on 7 July 2010. You will see this hard hitting letter highlighted a number of serious concerns which the SLGC considered necessary to place on record about Peter Thoms (PT), then CEO of NXT, and his unsatisfactory communications with shareholders. This also followed a threat by a hard core of sizeable SLG members representing over 5% of NXT's equity to present a resolution to the AGM asking for the resignation of the CEO on the basis that the Board had a deliberate policy of keeping shareholders in the dark to prevent them from later seeking accountability for actions taken and funds wasted. Shortly after sending this letter, the company announced that PT would be standing down for JL. Whilst it did change the dynamics of the letter sent to IB we would like to keep SLG members informed of where the SLGC has been active behind the scenes. JL has also informed us that he sees a role for the SLG in the future although in light of recent events we will need to consider how beneficial this might be for all parties. REPORT ON MEETING Overview The central topic discussed was the intent of NXT to raise additional funds via a placing of new shares. At the time of the meeting we understood the intent of the placement was to raise circa 7 million pounds. During the discussions JL talked about why it was necessary to take this step and to outline the way in which the additional funds will be deployed within a re-focussed NXT. The SLGC has attempted to capture the detail of that discussion in this note to SLG members. Summary •Former business plan of relying on licensees to push technology and receiving low rate royalties and one off licence fees fundamentally flawed. •The former management team didn't have the required experience and breadth of capability to envision an alternative business plan that could take the company to profitability and enable it to be in control of its own destiny. The recent and current economic climate highlighted these shortcomings. •Without a significant change in approach the Company will run out of cash unless cuts are made deep into its core competence, and will lose the support of institutional shareholders. Its survival would demand that it would need to be sold, as a whole or in part, or have some or all of its IP sold. •JL firmly believes he has the skills, experience and leadership necessary to turn the business around and that the fundraising will allow him to achieve this and accelerate growth. JL's business plan articulates the opportunity of replacing cents of royalties with substantially larger gross profit margins on sales of its IP in the form of components. •JL is investing some of his own money in this placing and he made it abundantly clear that he only invests money and effort where he recognises the opportunity for multiple returns on his investment. •The key areas of business growth going forward will be Audium/BMR and haptics. NXT will be directly involved in the supply chain and will be able to interface/influence all areas of the supply chain, from component, sub system and product manufacturers to brands and sales channels. General During the meeting the main concern that JL highlighted was that the former business plan relied almost entirely on licensees bringing products to the market. In addition, revenues generated by NXT mainly stemmed from "cents" royalties per unit of product manufactured and sold by third parties, and the occasional large license payment. This business plan made it difficult to access the markets, as NXT had no direct influence over how its IP was being used and it therefore had little control over its destiny. JL was of the view that the former plan could not generate any meaningful long term value for the company and would leave it vulnerable to the consequences of under-capitalisation, and may force either the sale of the company or of some of its IP. You will have seen from the results that NXT only had £100k cash left on the balance sheet at year end. JL informed us that the Audium IP acquisition and additional head-count to enable ongoing development has contributed to this position (see 'Financial' section), but has resulted in the appointment of a highly experienced CTO. We can also tell you that JL hasn't been drawing any salary, expenses or consulting fees from the business since April. JL firmly believes that NXT has the prospect of a very healthy and profitable future but only if it commits itself now to a new business model that places it in the supply chain so that it receives the significantly higher profit margins this approach will yield (dollars rather than cents per unit). Instead of relying on low rate royalties JL wishes NXT to get directly involved in the supply chain for: (1)Components – Haptic Exciter, audio exciter, BMR and Amplifier chip. (2)Modules – Audio amp module and haptic controller module. (3)Platforms – audio solution and haptic solution that reduce the customer's design efforts and time to market. The company needs to maximise revenue and profits and only by spanning the supply chain will this be achieved. During our meeting JL went to great lengths to emphasise that he has the necessary business experience to revise the current strategy and deliver a "New Plan" which will involve product development and sales. For this he requires a new management team with the appropriate experience to take the vision forward. JL built Oxford Semiconductor Ltd from a 2-man start-up company in 1992 to a 150 person company with $50mil revenue and provided the original business angel investors with an exit return of 100 times their original investment. There is no doubt in his mind that he can successfully turn around NXT's fortunes although he was not prepared; neither would the company's solicitors allow him, to estimate the level of growth he anticipates can be achieved from current levels. However, he believes that if he is successful in raising his targeted level of funds via this placement and rights issue it will take a maximum of 3 years to achieve profitability. He suggested that with the full amount of funds at his disposal this time frame would be brought forward. We are of the opinion that he has been advised to be selectively conservative in his forecast. JL emphasised that in the short time since he joined the company in October 2009 much had been achieved as per an extract from his presentation below: Demonstrated capability and credibility Oct 09 James Lewis joins NXT board as non-executive director. Apr 09 James Lewis sets up opportunity to acquire Audium amplifier IP and Kate Barnes closes Audium deal. May 10 James Lewis consults on Audium/BMR product range development. Integrates teams and kicks-off first design. Jun 10 James Lewis demonstrates working Audium/BMR platform to NXT board. Jul 10 James Lewis starts development programme for haptics platform products. Writes business plans for audio and display product families. Aug 10 James Lewis takes over as CEO to turn business around and deliver shareholder value. Reorganises business and launches products. This is clearly the sign of a man in a hurry to get NXT focussed. JL then presented a commercial vision for exploiting NXT's technology and how he intends to deliver immediate solutions. This will initially involve redeploying headcount, taking approximately 10 heads out of the business (primarily in HK) and once the company is stable, a re-build process will commence to bring in the required skill set necessary to deliver his business plan. He emphasised the current quality of many staff but said he will be introducing a structure that demands team work and accountability enabling people to take pride in the business, and to be rewarded for their contribution. He particularly complemented Dave Lindberg who joined the company in March and will drive sales in Asia, and mentioned Ed Brown who will join the team as Head of USA Sales. He will not be working full time but on a contract basis. JL said he had worked with him in the past and he described his abilities as exceptional. He will be refocusing the role of the Hong Kong Office for Far East sales and local supply chain management, but expects the UK operation to grow as the brain centre of the business. The US operation will focus on sales and technical support. The new business plan will be delivered by a high calibre sales and technical support team who will target blue-chip companies in consumer and hi-tech products, to demonstrate the high quality sound and touch technology products that NXT can deliver. Then NXT will work with customers to deliver solutions to meet their requirements. The aim is to have compelling demonstration modules which can easily be tailored to meet customer's demands. In the short-term he will be addressing agile, early adopter companies first and anticipates 4 design wins in Q1 of calendar year 2011. The design win with Sound Science for the first Audium product is an excellent example of this approach, highlighting the importance he gives to getting into the market place with working products early. NEW BUSINESS MODEL The aim now is for NXT to have much greater contact and access with all routes to the consumer market which will allow it wider access, greater influence and higher revenue growth. JL demonstrated a new reference speaker system which combined the audium chip with BMR speakers and connected with USB to a lap-top computer. The sound quality and volume was excellent and this is the basis of the recently announced Sound Science product. The move now is to make wireless speakers using this technology which will allow the speakers to be placed in a room and to be functional for 9 months without the need to change the batteries. JL said that current wireless/battery operated speakers needed to be recharged so regularly they tended to be placed near power supplies for this purpose. Discussions at the IFA show in Berlin had revealed a real desire for what the Audium technology could offer in this respect and JL described the possibilities as truly 'game changing'. JL wanted his team to start working on this application of the Audium/BMR technology straight away. The present structure of the business only really allows the team to work on products sequentially, i.e. finish one, start another. The fundraising would allow several developments to be worked on simultaneously, greatly increasing the ability to exploit current opportunities. JL stated that he was impatient to develop these opportunities and to take advantage of windows of opportunity in the market. The reference platform for the Audium/BMR speakers uses square BMR speakers which NXT can have manufactured under a fab-less model, and sell under the company's own brand, delivering significantly higher profit margins than the license arrangement with Shinhint. At present NXT relies on Shinhint to sell its other (circular and HARP) BMR speakers and receives a royalty payment per unit sold. However NXT cannot ensure that Shinhint's sales force actively promotes BMR speakers over conventional speakers, which they also sell. As part of the change to the business model, and through regular reviews, partnerships with some licensees are expected to change to enable NXT to optimise its revenue and profit generation. If NXT are proactively generating sales of BMR speakers then JL's business model ensures maximum return on the resource deployed. Kate Barnes (KB) said that last year NXT sold 8.8m speakers but the average royalty was only 15 cents. JL said the business cannot exist on such small margins and the model must change for the company to survive and prosper. HAPTICS On the haptics front JL was clearly disappointed about the failure of Nissha to deliver any form of haptic product to the market in the year to date. It was clear that NXT have no control over when products from the arrangement with Nissha will come to market. KB said that the company had expected to receive royalties from this arrangement by now but that none had come through, although consulting payments are received each time NXT provides Nissha with additional demonstrator or proof-of-concept devices. The ability of the company to get products to market in a timely fashion has long been the issue with the NXT Business Model. Whilst the company's board has recognised the shortcomings in this model they have not been able to revise it sufficiently in the appropriate timescales with the management they had in place. The problems with the former business model are very manifest with NXT's haptic technology. NXT have been totally in the hands of others for products to come to market and have no influence over the timeframes or targeted market sectors and prospects. JL has recognised this problem and has put plans in place for NXT to exploit opportunities with its haptic technology. He will employ a direct sales approach from NXT to product manufacturers, to demonstrate what can be achieved and to solve their haptic challenges and then supply the haptic solution platforms to enable them to enter production. JL was clear that NXT can adopt his proposed direct sales approach with non display screen and large screen haptics. We then questioned what the situation was with smaller screens covered by the Nissha licence. JL said that NXT could still operate a direct sales approach for haptic solution platforms, i.e. control module and exciters, and direct companies to Nissha for the haptic screen. MARKET OPPORTUNITIES JL highlighted that in 2009 over 46 million PC speaker sets (1 amplifier and 2 speakers) were shipped, with this market forecast to grow significantly year on year over the next 4 years. He said that these offered NXT immense opportunities to market their new Audium led products. His strategy with this, and other market areas, would be to target niches in the markets and then dominate them. JL then outlined the anticipated time horizon for break-even and beyond which he believes can be achieved with the change in approach. He highlighted the fact that under-capitalised businesses always under-perform and stressed that NXT needed the money from this fundraising in order to grow the business effectively. He believes that a 3 year timescale would be the maximum needed to achieve profitability but we would expect this would be with higher revenue and costs and therefore the ability to grow the business at a far faster rate than would be achievable at present. Without doubt James Lewes is staking his reputation and the experience he gained from his Oxford Semiconductor success to turn NXT into a profit making business. Interestingly, he is taking control at a time when more NXT backed products are coming to market. He also brings with him one vital ingredient in the form of Audium (the mindset as well as the assets) which he clearly believes, especially when combined with BMR, will set NXT aside from its competitors and can produce products which he views are real 'game changers'. The combination of patented technologies in transducers and in the electronic control solution (e.g. BMR + Audium amplifier in audio applications) is a unique attribute that differentiates NXT in the competitive landscape. With haptics on the horizon JL knows he has an opportunity to make not only good returns for the institutional investors who back him but he undoubtedly expects to add to his own personal wealth. FUND RAISING (will need to modify based on outcome) JL said he wanted to raise £7.5m to deliver his business plan. Institutions were being approached to raise £5m by way of a placing and there would be an open offer to existing shareholders to raise a further £2.5m. Singer Capital will be underwriting the deal. Gartmore will be corner-stoning the placing by contributing at least a further £2m of funds and other institutions have been approached to put up the other £3m. JL intends to contribute £50k and KB £10k. JL also told us that when he does start drawing a salary from the business it will be substantially lower than the package which was paid to former CEO PT, and much more appropriate in his mind to a company at the developmental stage of NXT. It was very clear that JL had been proactive in taking this stance. KB also revealed that other staff, herself included, have also taken pay cuts. If NXT successfully raises the full £7.5m the funds will be used for the following: Working Capital £700k Management £500k over 2 years. Restructuring £500k (including redundancies) Fees - Underwriting £800k Growth £4.5m JL views the old way of leadership and management at NXT has failed and is history. Productivity is now up, motivation is up and delivery is up. FINANCIALS When reviewing the results, especially the cash flow statement, members should be aware of the following: Final lease payment (utilisation of provisions) £173k Purchase of intangible assets £232k Purchase of plant and equipment £170k The intangible assets and plant and equipment include the acquisition of Audium IP and assets, the Immersion license and internal development programmes for haptics IP, as well as parts to build and test prototype technology demonstrators. These amounts above would have had a significant impact on the cash position of the company and we would expect that there have also been additional costs incurred surrounding the development of the Audium technology, by way of the headcount involved comprising Chris Travis (now CTO), and one full-time plus one occasional consultant. This consideration is borne out by the increased operating costs for the 2nd half of the year. SLGC CONCLUSION SLGC left the meeting in no doubt that JL is a man with a clear vision for NXT. We have here a dynamic, enthusiastic and determined CEO who would appear to be able to take the Company in a forward direction that previous management were unable to do. We have a businessman with a proven track record and the ability to drive revenue growth. He is staking his reputation on turning NXT around and we feel he would not haven taken the role unless he was convinced he could deliver the goods. Clearly there are questions to be asked as to why it has taken as long as it has to appoint a suitable person to take the company forward, but we realise that having the right person was critical. Following the presentation the consensus amongst members of the SLGC was that on the information provided they were positive about JL's recommended approach. Whilst it is clear there will be dilution for private shareholders the bigger issue is whether the approach being considered is likely to deliver a larger increase in share price to existing shareholders than an issue with a bigger proportion of private funding. The risk going the private route would be that there would be a far lower take-up and the sponsoring broker would be left carrying greater risk than they would be prepared to accept. We feel that there will likely be sufficient opportunity for those shareholders wanting to maintain their % shareholding or even increase it to do so in the way the placing is being structured with the open offer. The key factor is whether the institutions put up the other £3m to go with the £2m that Gartmore is committing to. At the time of writing this note all we know is JL has been delighted with the response he has received from the institutions he has presented to. Our intention is to time the release of this note with the publication of the results and the fund raising. We would advise all SLG members to seek their own professional advice before making any investment decisions. We trust this note will be of interest to all SLG members. Yours truly. Bob Bob Sansom Chairman SLG Group LETTER TO CHAIRMAN IAN BUCKLEY 12 July 2010 Attention I Buckley Esq. Chairman NXT Limited. Dear , As you are aware, James Lewis has been discussing the matter of shareholder communications with SLGC. We hope the result of these discussions will improve the quality and depth of detail in announcements and RNS's and to reflect the steady input from our "membership". While we are expecting good news on licenses and progress of royalties with the committed BMR TV's etc., and we expect a detailed update on plans for haptic and Audium, SLGC has been under pressure from a hard core of SLG members with significant shareholding to send this letter to you now to draw your attention to the unsatisfactory statements that have been made by Peter Thoms and also in recent RNS's. In addition, while we appreciate that you are in the "close" period this should not be used as an excuse to restrict altogether ongoing discussions and requests for clarification on certain matters. Firstly, Peter stated last year that "We are entering an entirely new phase, both with our branded products and with our business partners. We see our products increasingly garnering attention from consumers and potential partners – and we're thrilled to be bringing such a broad array of products to market in 2010". We question why shortly after this statement it was followed by such a depressing set of interim results and little to no progress has been announced on any material licenses or contracts. Secondly, although NXT refers to its "Development Road Map" there is no attempt by Management to effectively communicate this to shareholders. For example, there has been no update on the prestige car, home entertainment device by a major Japanese branded (MJB), 13 TVs, and progress with Nissha or haptics. NXT shareholders are generally aware that the launch dates of products are subject to licensee changes but regular trading updates containing references to these products would remove the uncertainty which has become a constant criticism of NXT's communication weaknesses. I am sure James Lewis has copied you into the recent correspondence we have had with him regarding the very poor quality of information contained in your last two RNS's. When replying to our last list of questions Peter advised that reports prepared by the company are subject to review and revisions by your advisors and the effect of these reviews is probably to shorten the release to encourage investors, journalists and analysts to read them. We find this admission quite astounding and totally at odds with what shareholders want. We have expressed our concern to James about the previous Audium announcement and as you are probably aware, we have been in discussion with him to develop a "Question and Answer" paper on the Audium chip development from information we have gathered from sources in the public domain. It was our intention to publish this on Motley Fool so that shareholders might be better informed about its development and its potential as a new revenue source for NXT. In our opinion the addition of the Audium chip in NXT's technology armoury could have extremely beneficial implications to its bottom line. However, there has been a failure to communicate this message to the market and shareholders. It appears NXT has now reinvented itself with a spin-off technology (haptics) and sub-contracted the company's future to a small number of licensees in the hope that it will bring success. There are worries that you could now be compounding the problem by entering into yet another field of technology (semi-conductors). This is much the same thing which happened several years ago when NXT embraced 20/20 speech recognition with disastrous results. We have been informed that Non-Executive Director James Lewis will be leading a team of three ex Audium employees to provide the necessary experience. All four will be employed on a consultancy agreements and this will obviously require additional funding in addition to that required for NXT's core business activities. We can only speculate that the recent weakness in NXT's share price is indicative of the Board holding out its hat for yet another rights issue, possibly to fund the Audium development in BMR speaker led products. The latest RNS concerning the 3M/Quanta agreement to introduce DST into notebook/netbook products is another example where an enormous number of questions have been left unanswered. It gives the impression that our CEO does not know whether we will be receiving royalties or not. The fact that this information was in the public domain for a month before NXT made any announcement also conveys the impression to shareholders that NXT management are not on the ball. The SLGC must inform you that there are transparency issues that are causing shareholders much frustration with the Board. Shareholders feel they are being left in the dark and the recent fact that they have had to continually ask so many questions in order to obtain clear and adequate statements regarding company developments emphasises this point. This situation leads to the continual speculation that the Board has a deliberate policy of keeping shareholders in the dark to prevent them from later seeking accountability for actions taken and funds wasted. Under the new UK Corporate Governance Code Section E 1 Dialogue with Shareholders it states under the Main Principle that: There should be a dialogue with shareholders based on the mutual understanding of objectives. The board as a whole has responsibility for ensuring that a satisfactory dialogue with shareholders takes place. I have been asked to convey to you the very unsatisfactory feelings of this hard core of SLG shareholders and my committee. They have expressed their concerns that the NXT dialogue with shareholders is one of ongoing obfuscation. These shareholders feel they are being treated like a donkey with a carrot dangling in front of them. NXT simply changes the carrot every few years in the hope that the shareholders will keep plodding forward and continue to support rights issues. Truly, this appears to many shareholders to be management by the seat of the pants and we feel it can no longer be tolerated. If shareholders are faced with further cash raising on the back of Audium developments without a better insight into the business plans for the company as a whole then we could well be looking at a demand from some SLG members for a change in the CEO. SLG supported NXT with a life-line when it was on its knees and it had to make that rescue rights issue three years ago. The business plan then was at the best sketchy. Since then shareholders have been faced by three years of failure to deliver products like for example the much heralded headset which has proven to be far from a ready market technology. Any further slippage on haptics and delay in launching Audium led products is likely to result in shareholders removing their support. But more importantly I hope SLGC does not need to be the catalyst in recommending removing that support. Yours sincerely, Bob Sansom Chairman Shareholders Liaison Group.
01/10/2010
10:22
bluebelle: lisa I know it's not really your sort of 'death or glory' stock but take a look at CLIG - the complete antithesis of this in that it has the best, most transparent corporate governance of any AIM stock I've ever seen. I reduced my equity holdings a few months ago but not this, I have added and it's now my largest single holding. They are moving to the main market at the end of the month which will be good for their business itself and also IMHO for the share price - great dividend too although now smaller as a % following the recent rise. It's not going to be an 'ASOS' - that really explosive phase has probably gone - but fwiw, I think there's a lot more to come.
25/9/2010
07:37
kammi1: LISA what sadistic pleasure do you take to upset shareholders who have already lost so much due to the share price drop?You need to get a life and go out more.You sad sad person. Kammi
09/9/2010
08:26
warmsun: Pathetic share price as it is (and has been), the chart is starting to look a little better :-)
18/8/2010
08:40
warmsun: It's had a slight positive effect on the share price.....nice to see, for a change!
21/7/2010
07:12
knarf: Every bit helps although the share price could be a tad higher,about 90p to break even.
25/3/2010
14:27
riverend1: Lisa No surprise in that you haven't told us your average buy and average sell price. Actually I was being totally honest about my average price, it is 12p whether you care to believe it or not. I did have some shares in 2007 but nowhere near as many as I have now and the vast majority I own were bought at 8p in the rights issue, hence why my average is 12p With respect to my post from 2007, which you have trawled back to find for some reason, my vitriol was directed at a specific poster whom I seem to recall kept predicting big moves in the share price and then gave himself a self congratulatory pat on the back when it moved half a pence (hardly a big move). On an occasion when it did move significantly he had offered no prediction. He was just a ramper with no substance, much like you used to be, and it was he who I was cheesed off with, not the company or share price thereof which you have tried to imply. So I could sell out today and make a small profit. If the share price falls below 12p and I sell I'll make a loss. I have no reason to lie, if my average share price was 60p I'd be honest about it. I'm not asking you how many shares you held, just your average buy and sell price but you seem reluctant to share that for some reason. I suspect the reason is that whilst you try and convey the impression you made a good call selling your stock, the harsh facts are that you bought far far higher than you sold at. If you sold at prices higher than today you made a good decision to sell - well done. I suspect your big error was buying at too high a price in the first place. I bought the vast majority of my holding at 8p and I'm comfortable with my investment. Best of luck with your investments elsewhere. Riverend
26/2/2010
19:07
el-tel: just spotted this from an article on todays results which might explain why the share priced dropped so little today But any impact on the share price was limited by a £1m placing at 13p a share with Nissha, several institutions in London and the directors.
NXT share price data is direct from the London Stock Exchange
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