Major News Propels Axion International Holdings Inc. (OTCBB:AXIH) Skyward

There’s little doubt in anyone’s mind that Axion International Holdings Inc. (OTCBB:AXIH) is one of the more solid enterprises on the OTC Markets. Unlike other companies that rely on nothing more than interesting business plans and wishful thinking, AXIH is an operating entity and it offers some interesting solutions.

Indeed, “interesting” and “railroad ties” are probably two notions that you rarely put in the same sentence, but AXIH say that their ECOTRAX line of products are made from durable recycled plastic which means that they are more environmentally friendly and more resistant to wear and tear. The technology is patented and the company has an exclusive license, the product line and the customer base are expanding with every quarter and with all these factors in mind, you’d probably think that AXIH is an extremely successful venture.

On paper, it should be, but unfortunately, the chart at the beginning of the article suggests otherwise. The reason for the less than impressive stock performance can be found in our database. If you check it out, you’ll see that throughout the years, the ticker has been the target of numerous promotional campaigns. We received around twenty emails between August 2011 and November 2011, there was another campaign back in February 2012 and if you take the time to check out the historical prices, you’ll see that the pumpers didn’t do the ticker any favors. Club Penny Stocks received $10 thousand and tried to give the price another boost last month, but probably because of AXIH‘s dreadful history, they failed to attract any significant trading volumes.

The pumpers have, without a doubt, played a role in the stock’s descend, but we should say that the company’s SEC filings also fail to inspire confidence in investors. The current business plan was put in place back in 2008, but, as evident from the latest 10-Q, profitability has so far been a mirage. Here are the figures as of September 30:

• cash: $599 thousand
• current assets: $4.8 million
• current liabilities: $3.6 million
• quarterly revenue: $1.2 million
• quarterly net loss: $1.3 million

Over the last couple of months, the management team have been hard at work trying to turn things around. They borrowed some money, set up a new wholly owned subsidiary, and acquired a recycling facility located in Ohio. This means that they are expanding their operations further and, it would appear that the plan is working.

About an hour before yesterday’s opening bell, they issued a press release which informs us that AXIH‘s recycling subsidiary has signed a contract with one of the largest thermoplastics enterprises in the U.S. The management team prefer to keep the name of their partners a secret, but they did tell us that the contract is for a term of three years and that it’s worth a total of $42 million. This means that, if AXIH manage to stick to the plan, they should secure an additional $12 million in annual revenues for the next three years.

To put that into perspective, 2012 sales amount to around $5.3 million while in 2011, they managed to register less then $4 million. The contract is indeed a great piece of news and, as you can see from the chart at the beginning of the article, investors responded. The share price went up by around 8% which is respectable, but the volumes were even more impressive.

Even so, there are still some risks involved. We read in the SEC filings that there are some convertible notes and quite a lot of preferred stock which can be turned into common shares at prices, lower than the current one. What’s more, the revenues coming from the new partnership will be a welcome addition to the future financial statements, but they can not guarantee a positive bottom line. Investors will be disappointed if the losses continue which is why you should be careful to consider all the risks before making your final decision.

Poly Shield Technologies Inc (OTCBB:SHPR) also experienced a positive session yesterday when the ticker registered some increased volumes and hit a new 52-week high of $1.15. Invivo Therapeutics Holdings Corp (OTCMKTS:NVIV)’s shareholders, on the other hand, weren’t quite so lucky. Their stock slid by around 13% and finished the day at $1.74 per share.