Aethlon Capital Completes Financing for Delphax Technologies Inc.

Aethlon Capital obtained expansion capital for Delphax Technologies Inc., a Bloomington, Minnesota, designer, manufacturer, and distributor of advanced digital print production systems. Under terms of the financing, Air T, Inc., of Maiden, North Carolina, will acquire a new class of Delphax series B preferred stock and provide debt financing in the form of a senior subordinated note.

Proceeds from the financing will go toward manufacturing and marketing the company’s newest printer, the elanTM , a high-speed, ultra-high-resolution digital inkjet printer that fires up to 700 million drops of ink per second in grids of 1,600 by 1,600 dots per inch—about 30 percent more than the human eye can discern.

“With this financing, we are ready to compete in the market for high-speed inkjet printers,” said Dieter Schilling, Delphax’s CEO. “This capital will be instrumental in bringing to market Delphax’s new inkjet product, the elan .”

Sima Griffith, Managing Principal at Aethlon, said: “We were pleased to complete this important financing for Delphax. It is always gratifying to be able to help entrepreneurial companies introduce innovative products.”

About Delphax Technologies
Delphax Technologies Inc. is a global leader in the design, manufacture, and delivery of advanced digital print production systems. For more than 35, Delphax Technologies has pioneered high-speed digital imaging innovations that improve throughput and enhance efficiencies for publishers, direct marketers, and other commercial print customers where cost and quality are important. Delphax Technologies is headquartered in Minneapolis, Minnesota. The company’s common stock is currently quoted over the counter under the symbol DLPX. Additional information is available on the company’s website at .

About Aethlon Capital
Aethlon Capital, LLC is a Minneapolis-based investment bank that specializes in mergers and acquisitions and raising capital for public and private companies. Aethlon’s clients are industry innovators who engage the firm to advise and represent them in the sale or financing of their business. For more information, visit: .

Investment by North Carolina firm design to drive Bloomington’s Delphax Technologies

An Article by the Star Tribune

by Neal St. Anthony


Delphax Technologies, then a black-and-white printing systems designer and manufacturer, essentially went dark in 2008, amid the Great Recession and lagging performance.

The Bloomington-based company delisted from the Nasdaq stock market.

The stock was a hot item for awhile in the 1980s. Delphax went public as Check Technologies, a printer of checks for the banking industry. But it was eclipsed by bigger players.

The company was renamed Delphax after it purchased the Delphax printing system of Xerox in 2001. Then-ailing Xerox was shedding ancillary businesses. And Delphax moved its operations to Toronto in 2003, headquarters of the Delphax business.

CEO Dieter Schilling, a longtime company operations manager who the board appointed the boss in 2006, moved the company back to Minnesota and drove the delisting to avoid the rising costs of being a public-reporting company.

That also reduced pressure for quarterly profits as Schilling set about deliberately retooling Delphax, which was just treading water, on a next-generation product line.

Since 2009, Delphax has committed virtually all of its cash flow on $20 million-plus in annual revenue to a next-generation color printing system that essentially has been a bet-the-company investment.

And Delphax, which employs about 80 people, has operated under the radar until now.

However, on Monday, Delphax will announce a $3.5 million investment by a North Carolina company whose CEO has Minnesota roots. Schilling says the cash infusion will give Delphax the working capital to ramp up production and marketing of its new Elan series of printing systems that already has some customers.

“We want to be a profitable, $60 million-to-$80 million company [within five years],” Schilling said.

Schilling retained Sima Griffith’s Aethlon Capital, a 25-year boutique investment bank that works with restructuring and expanding companies of up to $100 million in revenue.

The investor is North Carolina-based AirT Inc., a cargo-and-equipment services operation that also functions as an investment vehicle for CEO Nick Swenson.

AirT has a market value of $60 million and earned $3.1 million on revenue of $60 million during the six-month period ended Sept. 30.

Swenson declined to be interviewed last week before the Monday announcement. He is a Minnesotan who worked for a couple of years at Piper Jaffray, and for 15 years as an analyst and portfolio manager at Twin Cities hedge funds Whitebox Advisors, headed by Andy Redleaf, and Varde Partners, headed by George Hicks.

Swenson, through AirT, is one of the largest investors in Twin Cities-based Insignia Systems, a marketing services firm for retailers valued about $40 million.

Schilling said AirT’s inaugural $3.5 million investment is for a minority stake in Delphax.

That could become a majority stake in the printing company if Swenson chooses to exercise rights he gets as part of this deal to buy more stock over several years.

“With this financing we are ready to compete in the market for high-speed inkjet printers,” Schilling said.

Delphax, a thinly traded stock on the local over-the-counter market, is valued at less than $2 million.

It still has more than 250 hopeful shareholders. And Schilling is betting on the Elan series printers to drive sales and value in the company. The Elan 500, the first machine of which was sold in 2014, is marketed as a high-speed, vibrant-color inkjet printer for small-to-midsized publishers, direct-mail marketers and other customers. It is priced about $600,000 per machine, compared with $750,000 for the HP Indigo 7000 and up to $2.2 million for products made by Xerox, Konica Minolta and others.

“The middle-market customers, the $3 million-to-$10 million [revenue] printing companies, can’t afford what companies with up to $100 million in revenue can afford,” Schilling said. “That’s our market. And some of them will eventually buy two Elans.”

The Elan equals or exceeds the more expensive machines of larger competitors because of its quality, reliability and innovation, Schilling said.

The Elan 500 costs less partly because Delphax avoided the expense of developing its own permanent printing head. It licenses replaceable heads more economically for its Elan product from industry-leader Memjet of San Diego. And Delphax shares in customer revenue with Memjet on sales of replacement printheads and ink.

Schilling said Elan customers so far include CompuMail of Concord, Calif.; National Print Portfolio of Quebec, Canada and Primedata of Ontario, Canada.

Which Factors Help Entrepreneurs Succeed?

Early market moves, outside expertise can help.

September 30, 2015
by Sima Griffith – Guest Commentary Twin Cities Business

Fourteen years after founding Eyebobs, which manufactures and sells high-quality, fashionable reading glasses, Julie Allinson received a major investment earlier this year from Norwest Equity Partners (NEP). This investment news was significant for several reasons, the most notable that less than 1 percent of businesses seeking funding receive venture capital or private equity capital. For an entrepreneur like Allinson, attaining access to NEP’s investment funds, connections and business-development expertise is a giant step toward the success she has painstakingly pursued.

As an investment banker specializing in raising capital and selling businesses, I keep a close eye on those who own businesses with promising market opportunities. They serve as valuable role models for other, often younger entrepreneurs concerned about financing and the many challenges of growing their businesses. And financings such as Eyebobs’ serve as pricing models for what entrepreneurs in similar businesses might receive when they sell all or a portion of their companies.

During my 25-year career, I have watched hundreds of CEOs build their businesses, and I have seen numerous iterations of success and failure. The winning companies almost always have a proprietary product or service that they are selling to a large and growing market, and they are developed and nurtured by talented entrepreneurs who follow three common strategies:

They move quickly to take their product or service to market to gain an early-mover advantage,while incorporating valuable feedback from their beta customers into their next-generation product. A good example comes from the men in northwestern Minnesota who were among the first to build snowmobiles. Their company, Hetteen Hoist & Derrick, became Polaris, which is now a powersports corporation that generated $4.5 billion in total sales in 2014.

They let outside experts complement their team. Smart entrepreneurs raise smart money from partners with industry expertise and avoid becoming overly worried about “diluting” their ownership with outside capital. They not only hire outside advisors to complement their management team, they know that providers of capital are often also providers of sound guidance. When they get good advisors, they listen to them. They know their own weaknesses and are willing to base some of their actions on the feedback the advisors provide. An example is Josh Hochschuler, the founder of Minneapolis-based Talenti Gelato, who wisely sought out and listened to Steve Gill, the CEO of Millennium Import, who not only brought capital, but also sales, marketing and production expertise to Talenti, which then became a multimillion-dollar company that was recently purchased by Unilever.

They invest in technology, people and systems. The best entrepreneurs face challenges with intelligence, perseverance and ingenuity. I’ve served as a judge for EY’s Entrepreneur of the Year awards for the Upper Midwest. The award recipients overcame diverse challenges, including regulators withholding approval of their products and a lack of funding. One of the award-winning companies started its own software university to train its next generation of developers. Others depended on family members and second mortgages on their homes to fund their businesses.

Does following these three strategies guarantee success? Of course not—but few companies can succeed without them. Most entrepreneurs also need to innovate, navigate challenges and be prepared to alter their market strategies. TCB

Sima Griffith is co-founder and managing principal of Aethlon Capital, a Minneapolis-based investment bank representing business owners in the sale or financing of their companies.