August 8, 2003 -- Morristown, NJ colo provider Access Integrated Technologies has filed with the Securities and Exchange Commission for an initial public offering of common stock, marking the first planned IPO for a data center services company in more than two years.
The filing is modest, seeking to raise approximately $6 million to fund Access IT's acquisition of a software company and perhaps a future expansion of its data center network. It also might appear speculative to many investors, as Access IT's auditors recently expressed doubts about its viability as a going concern.
The market for data center company IPOs has been dead since Loudcloud (now Opsware) went public in March 2001. But shares of publicly-traded providers have gained traction in recent months, and recent technology IPOs have performed strongly.
Access IT, which was founded in 2000 as Access Colo, is based in Morristown, NJ and operates nine data centers in eight states. It lost $4 million in 2002 on sales of $4.2 million. The company is expanding into delivery of digital feeds for pay per view entertainment events at movie theaters.
As part of that expansion, Access IT plans to pay more than $5.5 million to acquire Hollywood Software, which it calls "leading developer of proprietary transactional support software for movie distributors in the U.S."
Access IT is counting on the public stock sale to provide $2.6 million of the $5.5 needed to complete the Hollywood deal. The company plans to sell 1.15 million shares at about $5 a share, according to its SEC filing, along with warrants for another 100,000 shares for the underwriter, Joseph Gunnar & Co.
Additional proceeds will be used to fund operations and perhaps even an expansion. "We intend to continue expanding our IDC footprint by acquiring additional existing, operational IDCs from third parties," the company says in its SEC filing.
The offering price appears to be based on the potential for future performance. "At March 31, 2003, the pro forma net tangible book value of our company was $2.87 million, or approximately $0.56 per share," the company says in its filing, adding that "net losses and negative cash flows are likely to continue for the foreseeable future."
The SEC documents also report that the Access IT's financial condition has "resulted in a going concern explanatory paragraph in the report on our consolidated financial statements for the years ended March 31, 2002 and 2003 from our independent auditors."
As of July 15, Access had 40 customers paying average monthly fees of approximately $8,000. The company's four largest customers account for 60 percent of its revenues.
Access IT currently operates data centers in Jersey City, NJ (111 Pavonia); Manhattan (75 Broadway); Brooklyn, NY; Little Rock, Arkansas; Manchester, New Hampshire; Portland, Maine; Waco, Texas; and Wichita, Kansas.