After a continued bearish run for nearly one year, Exxe Group Inc (OTCMKTS:AXXA) share price has finally begun taking a turn for the green zone. The company’s most recent press releases which have followed six months of continued silence have assured shareholders once again that the value proposition of increased value is again feasible given especially the cash generating propensity of these projects. The result has therefore been in line with expectations.
Exxe Group’s share price has experienced a surge over the past week. As previously stated, this follows a year of continued decline in price. Between May and November, their share price suffered a decline from trading at a price just shy of $.40 to trading at below $.01, a capital loss of over 95%. Furthermore, this was accompanied by a corresponding reduction in trading activity as the number of shares traded reduced from over 50 million to just over 5 million, except for two peaks in August and October. This price action can be seen in the chart below:
The December period has thus brought good tidings to the group as the share price continues to rise. Just last week, the price rose from $.0069 to their current price of $.0131, an over 89% capital accretion shown in the chart below:
As previously stated, above surge has been driven by the firm’s most recent announcements. The cash flow generating projects which are being undertaken by Exxe Group are therefore value adding to investors – discussed later – and are expected to drive growth over time. After causing the above price action, it became clear to us the need to evaluate these projects.
Overview of AXXA
Before reviewing these projects, let us have a feel of the firm’s history as well as what the firm has been engaged in the past.
Exxe Group was founded back in 2006 and incorporated in Barrie, Canada. Since then, it has grown to a diversified investment company, growing their portfolio holdings – through acquisitions – in the following sectors: technology, media, real estate, and financial services.
The firm’s investment profile entails acquiring controlling equity and actively managing interests in undervalued companies thus ensuring their accelerated growth through the provision of capital and management expertise. In doing this, they seek to achieve a higher valuation at which point they sell the stock, seem ably after propping the assets and streamlining their operations for continued value creation by the buyer.
Boost to Assets Under Management
Exxe Group announced that their new strategy is pegged on acquisitions in two main sectors: real estate and technology, media and telecommunications. Their private equity investments in these areas will see them achieve maximum value generation and unlock shareholder value. Finally, this is meant to see them execute their continued expansionary strategy and the current transaction is but one way in which this will be achieved.
Through a $19 million transaction, Exxe Group is set to double their assets under management as well as achieve a cash-generating acquisition. This recently announced transaction will see the firm acquire a two-level Penthouse in South Beach, Miami, Florida as well as several 5-star residences located in New York which includes a 5000+ square foot gala reception space at a landmark tower.
Through a memorandum of understanding gotten into by Exxe Group, the firm is expected to execute the above transaction by 6th December. Upon completion, AXXA will have access to four luxury condominiums located in the East Side of Manhattan. The views of New York’s skyline and utter luxury associated with these residences as well as a profile of individuals who have held them in the past – such as Bill Gates, Derek Jeter, Harrison Ford, and Sophia Loren – also provides the premium feel to them. Given this, the residences are mostly occupied throughout the year – as they appeal both to high net worth individuals as well as large institutions such as the United Nations (due to proximity to the headquarters) – thus generate revenues of about US $700,000 in rent. This will ensure the firm’s risk profile is reduced.
Exxe Group expects to execute this transaction through a mix of equity and debt, raising 50% of the total sum through debt. Currently, therefore, the transaction has been structured to see private investors onboard with private lenders having flexible repayment terms thus allowing for the reduction in Exxe’s risk profile. Moreover, the revenues generated – which the firm expects to be quite stable – will be pivotal to clearing this outstanding debt over time.
The South Beach Penthouse
Further to the above, the firm has acquired a 1,200+ square foot Penthouse in Miami using a mix of cash, privately structured capital investments as well as loans.
This facility is further meant to see them raise $100,000 in rental incomes. Its high occupancy further ensures that the firm doesn’t miss any expected revenues during the period which the accretion in the asset’s value is expected.
Given the above investments, it is clear why the share price has continued to rise over the past two weeks. The cash generated from the above transactions – just shy of US $1million – will ensure the firm’s top lines are solidified, consequently solidifying the bottom lines. As a result, the above surge is warranted and should the firm continue to execute their growth strategy, further capital gains will be expected from AXXA.
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Disclosure: We have no position in AXXA and have not been compensated for this article.