Axion International Holdings Inc. (OTCBB:AXIH) Sinks After the Conference Call

Axion International Holdings Inc. (OTCBB:AXIH) is one of the OTC companies that enjoy a relatively healthy support from their shareholders. We should say that this is somewhat understandable considering the fact that unlike other small cap enterprises that rely on nothing more than wishful thinking, AXIH actually have a product that they’ve been manufacturing and selling for some time now.

Unfortunately, if you take a look at the stock chart for the last three years, you’ll see that it hasn’t been all plain sailing. Back in February 2011, for example, the ticker was hovering around $1.75 per share whereas a about a month ago, it was struggling to keep its head above $0.50. As many of you probably know, the reason for the rather horrific performance has been the net losses that the shareholders have had to endure.

Although AXIH have had their railroad ties and their other infrastructure products on the market for quite some time, they have been unable to sell them at a profit and this has resulted an accumulated deficit of around $39 million as of September 30. Many investors got scared away by the negative bottom line and fled but the more loyal shareholders were starting to see the light at the end of the tunnel when at the end of November AXIH announced that they have acquired a new recycling enterprise. Things really took off when on December 3, the new daughter company signed a contract which will secure around $42 million in additional revenue over the next three years.

Predictably, buying pressure sent the ticker on a winning spree and a few weeks later, it reached $1.30 per share. A consolidation seemed inevitable and on Monday and Tuesday AXIH displayed an expected correction. Many people thought that after the pullback, the ticker is ready for another rally, but that wasn’t the case. In fact, at 14% in losses and a dollar volume of nearly $730 thousand, yesterday’s performance was quite disappointing. But what caused it?

The prime suspect is the conference call which took place on Tuesday afternoon. As we mentioned in our previous article, the management team decided to shed some light on the details around the major milestones that have been reached over the last couple of weeks and organized their first ever call that doesn’t concern a new quarterly report. We listened through it and we can say that while there’s definitely good news, some small details could make investors a bit hesitant.

The people running the company talked about the recycling subsidiary and said that the new source of revenue will bring the company one step closer to a positive cash flow. They also discussed the $42 million contract and although they still seem reluctant to name their partner, they said that the deal is a massively important step in the quest to secure a brighter future for the company.

All in all, the management team seemed quite optimistic about AXIH‘s operations and, considering the recent developments, there are certainly some things to get the investors’ hearts racing. Shareholders, however, had a few doubts.

Quite a lot of questions were asked about the share structure and the management team had no other choice but to confirm that if all the warrants and options are to be exercised, the number of outstanding shares could triple. What’s more, virtually all of the warrants can be turned into common stock at prices reaching as low as $0.40.

Was this the reason for yesterday’s drop? We’ll probably never know and the unpredictable chart movement from the last couple of days means that the next sessions might present some more nasty surprises. That’s why careful consideration of the risks and a lot of due diligence are absolutely essential before putting any money on the line.

Another ticker that didn’t do too well during yesterday’s session is Olie Inc (OTCBB:OLIE) which slipped and fell by around 30% after the incredible 536% run from Tuesday. Endeavor IP Inc (OTCBB:ENIP) has also had better days. The ticker dropped by around 9% just a couple of days after the pumpers decided to revive the multi-million dollar promotion that started back in November.