Axcess furloughs employees, seeks funds
CARROLLTON, Texas - A month after putting employees on furlough, asset tracking and digital video product manufacturer Axcess Inc. in early November was still searching for an investor to keep the company afloat.
"We have not closed on the funding yet," said Allan Griebenow, president and chief executive officer of Axcess, in early November, shortly before press time. "But we remain optimistic."
Griebenow said the company was pursuing several options to provide the company with financing, including private equity placement. He declined to specify the amount of financing being sought.
The furlough, initiated in the middle of October, took the company's 20 employees off payroll. Still, many remain working for the company, said Griebenow. Product continues to be shipped, and technical support remains available.
"We're doing the best we can to prevent any kind of service interruption to our customers," he said. "As soon as we have the commitment that we need, we'll bring the employees back."
Signs of financial woes began earlier this year. According to the company's March 31, 2002 quarterly filing with the Securities and Exchange Commission, the company downsized its staff earlier this year and decreased advertising and marketing expenses.
The SEC filing also noted a lawsuit filed against Axcess in October 2001 by a former vendor, Barth Technologies, for $263,655, along with several other claims totaling $372,029.
Company officials at Axcess anticipated securing its most recent round of funding by the middle of October. Prior to that, Axcess garnered $1 million in financing in July, according to Griebenow.
The worker furlough also followed Axcess' shares being delisted from Nasdaq and moved to the Over-the-Counter Bulletin Board in September. According to a company issued press release, the company failed to comply with Nasdaq's rule requiring companies to have a minimum of $35 million in market capitalization.
"The problem we ran into in September was the bear market, for all intents and purposes, shut down investment in growth companies," said Griebenow.
Jack Mallon, managing director of Mallon Capital, characterized the asset tracking sector as a "money gobbler."
Axcess reported operating expenses used up $5 million in cash in 2001, according to its SEC filing and that the company "anticipates that its existing working capital resources and revenues from operations will not be adequate to satisfy its funding requirements for 2002."
"It's capital intensive," Mallon said of the asset tracking industry, due to a combination of research and development and the cost associated with putting together the network infrastructure needed to run asset tracking products.
"It's tough out there and there's a lot less being invested in the private equity world," said Mallon. "However, the security industry is garnering what little interest is out there and what little money is out there to invest."
Griebenow did not say how long Axcess would be able to continue without funding. "I don't think if we make (financing) by the end of October we'll immediately disappear," he said. "We'll continue to pursue our options."