Roundup: Axios Announces Completion of Debt Financing, RM2 Faced Challenges in 2015

Axios Mobile Assets Corp. has closed on a Cdn$3,000,000 principal debt financing. The indebtedness bears interest at a rate of 9.5% per annum payable quarterly in arrears and matures on July 22, 2019. The terms of the debt provide that only interest is payable for the first 18 months and thereafter payments of principal and interest will be made.
The debt is subject to a four month hold period which expires on November 23, 2016.

The proceeds from the offering of Debentures will be used to grow the Company’s inventory of pallets, for working capital and for general corporate purposes as the Company continues to expand and roll-out its pallet solution to new customers.

Axios Mobile Assets Corp. is a supply chain logistics company that is rapidly becoming a key supplier of pooled pallets, primarily to the perishable food industry. The Company’s proprietary pallet-based tracking and information system delivers actionable data to help improve supply chain visibility and food safety. Unique attributes of the system include lower total cost, high biosecurity standards, real-time data and lighter weight. Axios is the only pallet pooler in the world with SQF certification in the Provision of Sanitation and Hygiene Services category.

 

RM2 Faced Serious Challenges in 2015

“RM2 faced serious challenges in 2015 related to the production metrics at the Canadian facility,” Chief Executive Officer, John Walsh, commented in RM2’s 2015 annual report, dated June 30, 2016. “These challenges impacted both production volumes and cost per unit (“CPU”), constraining our ability to develop further penetration with our target customers.

“The manufacturing partnership agreed with Zhenshi Holding Group Company Limited announced in April, will, we believe, solve both of these issues. Pallets from China are expected to be available for deployment in North America in the first quarter of 2017. We remain committed over the long term to North American production. We have good cause to be highly confident of profitable deployment of pallets delivered from China, all of which are earmarked for customers in North America in 2017. We expect a healthy balance between outright sales, leasing, and rentals of pallets.

“Our new COO, Kevin Mazula, has deep and extensive manufacturing and supply chain manufacturing experience, including working in China, Europe, and North America. Kevin is responsible for the transition of those manufacturing assets being transferred to China and the subsequent commissioning and running of those assets there.”

In 2015, RM2 produced more than 292,000 pallets, up from around 30,000 units in 2014. The Company completed its capex programme regarding manufacturing with the purchase of additional fabrication and coating equipment in line with forecasts. Total manufacturing assets account for approximately US$ 35.0 million.

RM2 deployed around 230,000 pallets through rental agreements and sold roughly 30,000 pallets. Revenue from the sales was $3.7 million. Rental revenue for 2015 was $2.7 million, with key rental customers located in the U.S. and the United Kingdom.

According to the report, a significant portion of the available inventory at was allocated to the supply chain of Loblaw, Canada’s largest retailer, at year-end, following the agreement announced in March 2016 that Loblaw has begun accepting RM2’s pallets in its supply chain. RM2 noted that its economic performance is still significantly impacted by the early inefficiencies of the manufacturing process in Canada.

Source: RM2