Wireless product distributor Intellicell Corp. was the industry’s top stock story last week when its stock quadrupled in value after a series of company announcements designed to turn around the struggling firm.
The company Nov. 20 completed a private placement of $1.5 million in convertible debt, appointed a new chief executive officer, John Swinehart, and a new chief financial officer, David Kane. Intellicell’s former CEO, Ben Neman, remains chairman and president.
Intellicell’s stock had been trading at very low levels for the last several months. On Sept. 3, it was valued at only 25 cents. The stock closed Nov. 24 at $4.37.
Much of the credit for this value spike goes to the company’s revised business strategy, which stated plans to focus its wireless handset distribution process using an Internet-based sales and distribution channel.
Also of note was the appointment of Swinehart to lead that effort. Swinehart brings 18 years of experience to his position, including eight years specializing in distribution accounting at PriceWaterhouse and, more recently, 10 years as chief operating officer of Allied Broadcast Equipment.
Finally, Intellicell’s $1.5 million private placement, which takes the form of three-year notes expected to be converted to equity at the company’s next shareholder meeting, will leave the company debt-free. The notes will convert into 1.5 million shares of common stock and warrants to buy another 1 million shares of common stock at $1 per share.
These actions were taken to save the struggling company from shutting down. For the quarter ended Sept. 30, Intellicell reported a net loss of $840,000, or 19 cents per share, on revenues of $4.1 million, compared with a net loss of $2 million, or 46 cents per share, on revenues of $20.5 million for the corresponding quarter last year.
The company had total assets of $3.67 million at the time, down $7.74 million from the end of last year, and total shareholder equity fell $2.23 million to $1.81 million.
“We have taken great strides implementing our previously announced cost-cutting measures and look forward to our fresh start with no bank debt, a renewed capital position and strengthened management team,” said Neman.
