Actually, from the close the day prior, the price has dropped 15.7%....while stocks marked fourth week of gains with most indexes making all time record highs.
The recent drop could also be attributed to continued institutional selling, based on the 13F filings, for the period ending 3/31/13, also closing 2 days ago as well.
Closing price on 03/31/2013: $1.80 Filers who had this stock in their top 10: 0 13F Filers holding this stock: 65 Aggregate shares on 03/31/2013: 16,565,342 Aggregate shares on 12/31/2012: 20,590,905 Percent change: -19.55% Funds creating new positions: 8 Funds Adding to an existing position: 26 Funds closing out their position: 23 Funds reducing their position: 32
stealthology said "The only reason they needed a new loan was because they COMPLETELY paid off their Wells Fargo loan early."
OCZ was in default on the Wells Fargo line of credit and was forced to pay the outstanding balance back. They also defaulted on a prior line of credit with Silicon Vally Bank.
The Hercules loan is a PIPE.
Companies are forced to pursue PIPEs when capital markets are unwilling to provide financing and face the reality that PIPEs represent the only available financing option.
PIPE issuers tend to have falling stock prices in the year prior to issue, low market capitalization, have never been profitable with long term negative operating cash flows and are about to run out of cash
Not surprisingly, PIPE issuers continue to perform poorly following PIPE financing.
Investment banking firms are willing to underwrite follow-on offerings for small, distressed public companies. Further, these companies lack the collateral and financial performance to qualify for bank loans.
This dismal post-PIPE performance of course raises the question of who buys PIPEs?
Purchasers may find PIPEs attractive for the following reasons:
-They can purchase shares at an attractive highly negotiated discount to the public market price.
- Often have terms for downside protections against market price declines, such as floating conversion prices, the issuance of additional shares for no more money etc..
- Provides market-beating returns, often by double digits, and are able to obtain these returns notwithstanding the poor performance of PIPE issuers
- Provides opportunity to acquire a sizable position without pushing the market price of a stock higher.
- To cover shares previously shorted at a guaranteed, no matter what lower price than market.
- Arbitrage, by shorting additional stock against the PIPE shares, the fund locks in the PIPE deal purchase discount.
On the other hand, PIPE offerings are highly dilutive and destructive to the existing shareholder base. Less
While OCZ has never had much success in the Enterprise sector (e.g. based on their 10Q/10K/CC transcrips filings for the last 2 years, " nearly, about, almost 20%) and given some recent news, it's not going to get better in the future.
Today, Seagate announced some significant internally developed Enterprise SSD solutions (Read this should finally put to rest the ubiquitous and unsubstantiated rumors that they had any interest in acquiring OCZ) .
In addition to their 600 and 600 Pro SATA SSDs, Seagate is also announcing its 1200 SSD aimed squarely at the enterprise market. While the 600/600 Pro use Link A Media's LM87800 controller with some degree of Seagate firmware customization, the 1200 uses a fully custom Seagate designed controller with ultra fast SAS 12 Gb/s performance.
Seagate also unveiled a Virident FlashMAX II based PCIe SSD simply called the X8. The X8 features a FusionIO-like architecture that moves all NAND management from the SSD to the host CPU cores in the server. Given how readily available (and sometimes underutilized) host CPU resources can be, the tradeoff is sometimes worth it. The X8 will be available starting on May 27th.
Last week, Micron also turned up the heat and announced it's sampling their new hot swappable 2.5" PCIe SSDs. The P420m has upto 1.4TB MLC capacity and can deliver 750K R IOPS. Micron specifies endurance as "50PB of drive life.
Actually the $10M financing lifeline provided by Hercules is clearly a PIPE.
Companies are forced to pursue PIPEs when capital markets are unwilling to provide financing and face the reality that PIPEs represent the only available financing option.
Such companies tend to have falling stock prices in the year prior to issue, low market capitalization, have never been profitable with long term negative operating cash flows and are about to run out of cash
Investment banking firms are willing to underwrite follow-on offerings for small, distressed public companies. Further, these companies lack the collateral and financial performance to qualify for bank loans.
Not surprisingly, PIPE issuers continue to perform poorly following PIPE financing.
This dismal post-PIPE performance of course raises the question of who buys PIPEs?
The answer is that hedge and venure capital funds constitute the vast majority of the investors.
Purchasers may find PIPEs attractive for the following reasons:
- Provides market-beating returns, often by double digits, and are able to obtain these returns notwithstanding the poor performance of PIPE issuers
-They can purchase shares at an attractive highly negotiated discount to the public market price.
- Often have terms for downside protections against market price declines, such as floating conversion prices, the issuance of additional shares for no more money etc..
- Provides opportunity to acquire a sizable position without pushing the market price of a stock higher.
- To cover shares previously shorted at a guaranteed, no matter what, much lower price than market.
- Arbitrage, by shorting additional stock against the PIPE shares, the fund locks in the PIPE deal purchase discount.
In this case, the interest rate being charged, certainly provides a market beating ROI, with no risk (e.g. secured by 100% of the company's assets).
Often PIPE offerings become highly dilutive and destructive to the existing shareholder base.
For example, in this PIPE, the initial Warrant conversion price of $2.18 has a floating conversion price provision.
From Item 1.01 in Form 8K filed on 3/12/13
In connection with the Loan Agreement, the Lender was granted a security interest in substantially all of the personal property of the Company and its domestic subsidiaries, whether now owned or hereafter acquired.
Pursuant to the Loan Agreement, the Company issued Hercules a warrant (the “Warrant”) to purchase a number of shares of the Company’s common stock equal to the quotient obtained by dividing $1.5 million by the exercise price of the Warrant which is initially set at $2.18 per share, resulting in 688,073 shares of common stock issuable upon full exercise of the Warrant. The $2.18 exercise price of the Warrant was set at the VWAP of the Company’s common stock for the 30-day period prior to the date the Warrant was issued. If the Company consummates a financing of at least $10 million in new equity or subordinated debt prior to May 31, 2013 in which the Company issues shares of common stock or securities that are exercisable or convertible into shares of common stock and the effective price per shares of common stock in that financing is less than the exercise price of the Warrant, then the exercise price of the Warrant shall automatically be reduced to equal the price per share of common stock in such financing and, as a result, the number of shares of common issuable upon exercise of the Warrant shall increase such that the product of the newly adjusted number of shares of common stock and the reduced exercise price per share will equal $1.5 million. Alternatively, if the Company consummates a financing of at least $10 million in new equity or subordinated debt prior to May 31, 2013 in which the Company issues shares of preferred stock or securities that are exercisable or convertible into shares of preferred stock of the Company, then the holder of the Warrant may elect to have the Warrant convert into $1.5 million shares of such preferred stock or such other securities at a price per share/security paid by the investors in such financing. The Warrant has a term of five years from the date of issuance.
OCZ Technology (OCZ) estimates FQ4 revenues of $65M-$70M, but expects positive gross margins, "an indication that the operating adjustments regarding restructuring and the restatement are behind the company. Gross margins will continue to improve in the coming quarters." Operating expenses are expected at $23M-$26M. (PR) [View news story]
to understand the financing, you need to read the term and conditions in the 8K, filed March 13, not the Hercules PR.
On March 11, 2013, OCZ Technology Group, Inc. (the “Company”), entered into a Loan and Security Agreement (the “Loan Agreement”) with Hercules Technology Growth Capital, Inc. (“Hercules” or the “Lender”), pursuant to which a term loan of up to an aggregate principal amount of $15 million and a revolving loan facility up to an aggregate principal amount of $15 million is available to the Company pursuant to the terms and conditions thereof.
The Company’s availability under the revolving loan facility is limited by reference to a borrowing base of eligible accounts receivable (less certain reserves) multiplied by an advance rate.
The Loan Agreement provides for an initial term loan advance of $10 million, which closed on March 11, 2013, and an additional term loan advance of up to $5 million, which is contingent upon the Company being current in its SEC filings and achieving certain revenue levels for two consecutive quarters. During the first year, the term loan will bear interest in cash at an annual interest rate equal to the greater of 12.50% or prime plus 8.75%.
The agreement also provides the Company access to a $10 million revolving loan facility which must be repaid in full on April 1, 2016. An additional $5 million of the revolving loan facility will be available to the Company upon the Company obtaining additional financing of at least $10 million. The loans under the revolving loan facility will bear interest at an annual rate equal to the greater of 9% or prime plus 5.25%.
Per the financial covenants, the Company must raise a minimum of $20 million in new equity or subordinated debt no later than January 31, 2014, of which $10 million in new equity or subordinated debt must be raised no later than May 31, 2013.
The Loan Agreement contains customary representations and warranties and affirmative and negative covenants including, among others, covenants regarding the maintenance of certain financial tests, covenants relating to financial reporting, compliance with laws, limitations on debt, liens, dividends, investments, mergers and acquisitions and sales of the Company’s assets.
The Loan Agreement provides for customary events of default. If an event of default occurs and is continuing, the Lender may terminate and suspend its obligation to make loans under the Loan Agreement, accelerate amounts due under the Loan Agreement, exercise remedies against the collateral and exercise other rights and remedies. In the case of certain events of default related to insolvency, the commitment of the Lender will be automatically terminated and all outstanding obligations of the Company will become immediately due and payable.
In connection with the Loan Agreement, the Lender was granted a security interest in substantially all of the personal property of the Company and its domestic subsidiaries, whether now owned or hereafter acquired.
OCZ Technology (OCZ) estimates FQ4 revenues of $65M-$70M, but expects positive gross margins, "an indication that the operating adjustments regarding restructuring and the restatement are behind the company. Gross margins will continue to improve in the coming quarters." Operating expenses are expected at $23M-$26M. (PR) [View news story]
Positive gross margins just means that they are above 0 (e.g. no longer negative).
We have drawn $10M against our credit facility and have approximately $10M of cash on hand......means they have no real cash (e.g. now running the company on borrowed money).
Operating expenses are estimated to be between $23 million and $26 million for the fourth quarter.....means they are running out of time (e.g $10M of borrowed money not anywhere near what they will need to cover cost of goods to produce product and opX).
An explosion near the finish line of the Boston Marathon shakes stocks up further, the S&P 500 (SPY) dipping to a new session low, -1.8%. [View news story]
Boston now reporting that dozens of people were injured, 2 dead, by two explosions near the Boston Marathon finish line. There are multiple reports of victims with missing limbs, bloodied heads and other extremely serious injuries. WBZ-4 reported at least a dozen victims with "grave injuries."
Also the 2 bombs that exploded were in trash receptacles and an unexploded bomb has been found. Federal officials also have surveillance photos of a man putting a backpack in trash can just prior to explosion.
An explosion near the finish line of the Boston Marathon shakes stocks up further, the S&P 500 (SPY) dipping to a new session low, -1.8%. [View news story]
All the Boston TV stations are broadcasting the scene live now (from the street and over head helicopters) . WBZ, had been broadcasting the event live all day, has video of the 2 explosions, as they occured.
While there are some users for whom the SSD itself is the big deal (e.g. usually for pure performance such as Gaming) for Enterprise customers the big deal associated with SSDs is that in a combination with ultra-high-capacity, ultra-low-cost HDDs, you can achieve a mix of simultaneously achieving lower cost and high performance.
After evaluating more than 4,000 actual customer production applications, a tier 1 enterprise storage systems and software provider, found that in 95% of them there was significant data/performance skew - where 20% or less of the data actually generated 80% or more of the I/Os.
Intelligent auto tiering is pretty much becoming a must-have technology and the whos, who in Enterprise storage all offer software defined hybrid storage.
With intelligent tiering software that can identify where the "hot" sub-LUN I/Os are coming from in real-time, a typical practical configuration might be 95% HDD and only 5% SSD.
As example, Microsoft recently acquired StorSimple because they have a very robust enterprise hybrid cloud storage solution.
The company has never made any money and per CEO comments at the Roth conference in March, does not expect that, in the foreseeable future, it will (e.g. expects run rate to continue in the $65M - $85M range while BE is $110M - $120M).
People seem to be blind to two very important things.
1. When you have no money and income, it's never a good idea to borrow money.
2. Prior to Ralph Schmitt being appointed as the replacement CEO, in October 2012, he was a member of the OCZ B.O.D. (e.g. whatever is, was on his watch).
Given the size of the company, can't believe the salaries and bonuses being paid to the senior executive team. Ralph even got a very healthy signing bonus to compensate him for leaving his CEO position at PLX Technology.
One lucky guy (e.g. the deal he helped put together, fell apart one month later).
Integrated Device Technology and PLX Technology announced that they have mutually agreed to terminate their merger agreement pursuant to which IDT would acquire PLX Technology (e.g. reason was an absence of a clear path for the parties to complete the proposed transaction).
dwdallam..to understand the financing, you need to read the term and conditions in the 8K, filed March 13, not the Hercules PR.
On March 11, 2013, OCZ Technology Group, Inc. (the “Company”), entered into a Loan and Security Agreement (the “Loan Agreement”) with Hercules Technology Growth Capital, Inc. (“Hercules” or the “Lender”), pursuant to which a term loan of up to an aggregate principal amount of $15 million and a revolving loan facility up to an aggregate principal amount of $15 million is available to the Company pursuant to the terms and conditions thereof.
The Company’s availability under the revolving loan facility is limited by reference to a borrowing base of eligible accounts receivable (less certain reserves) multiplied by an advance rate.
The Loan Agreement provides for an initial term loan advance of $10 million, which closed on March 11, 2013, and an additional term loan advance of up to $5 million, which is contingent upon the Company being current in its SEC filings and achieving certain revenue levels for two consecutive quarters. During the first year, the term loan will bear interest in cash at an annual interest rate equal to the greater of 12.50% or prime plus 8.75%.
The agreement also provides the Company access to a $10 million revolving loan facility which must be repaid in full on April 1, 2016. An additional $5 million of the revolving loan facility will be available to the Company upon the Company obtaining additional financing of at least $10 million. The loans under the revolving loan facility will bear interest at an annual rate equal to the greater of 9% or prime plus 5.25%.
Per the financial covenants, the Company must raise a minimum of $20 million in new equity or subordinated debt no later than January 31, 2014, of which $10 million in new equity or subordinated debt must be raised no later than May 31, 2013.
The Loan Agreement contains customary representations and warranties and affirmative and negative covenants including, among others, covenants regarding the maintenance of certain financial tests, covenants relating to financial reporting, compliance with laws, limitations on debt, liens, dividends, investments, mergers and acquisitions and sales of the Company’s assets.
The Loan Agreement provides for customary events of default. If an event of default occurs and is continuing, the Lender may terminate and suspend its obligation to make loans under the Loan Agreement, accelerate amounts due under the Loan Agreement, exercise remedies against the collateral and exercise other rights and remedies. In the case of certain events of default related to insolvency, the commitment of the Lender will be automatically terminated and all outstanding obligations of the Company will become immediately due and payable.
In connection with the Loan Agreement, the Lender was granted a security interest in substantially all of the personal property of the Company and its domestic subsidiaries, whether now owned or hereafter acquired.
Pursuant to the Loan Agreement, the Company issued Hercules a warrant (the “Warrant”) to purchase a number of shares of the Company’s common stock equal to the quotient obtained by dividing $1.5 million by the exercise price of the Warrant which is initially set at $2.18 per share, resulting in 688,073 shares of common stock issuable upon full exercise of the Warrant. The $2.18 exercise price of the Warrant was set at the VWAP of the Company’s common stock for the 30-day period prior to the date the Warrant was issued. If the Company consummates a financing of at least $10 million in new equity or subordinated debt prior to May 31, 2013 in which the Company issues shares of common stock or securities that are exercisable or convertible into shares of common stock and the effective price per shares of common stock in that financing is less than the exercise price of the Warrant, then the exercise price of the Warrant
shall automatically be reduced to equal the price per share of common stock in such financing and, as a result, the number of shares of common issuable upon exercise of the Warrant shall increase such that the product of the newly adjusted number of shares of common stock and the reduced exercise price per share will equal $1.5 million. Alternatively, if the Company consummates a financing of at least $10 million in new equity or subordinated debt prior to May 31, 2013 in which the Company issues shares of preferred stock or securities that are exercisable or convertible into shares of preferred stock of the Company, then the holder of the Warrant may elect to have the Warrant convert into $1.5 million shares of such preferred stock or such other securities at a price per share/security paid by the investors in such financing. The Warrant has a term of five years from the date of issuance.
Ashraf.......in order to score a hit of working capital to the tune of $30M you referred to the loan-shark like loan agreement with Hercules Technology Growth Capital.
At this time, only $10M has been loaned and not only will Hercules receive an extraordinary high 12.5% rate of interest, plus warrants, they have mitigated their risk with numerous covenants, as well as 100% security interest in all of the company's assets (Read: outlines exactly how and why the company will be liquidated for as little as $10M).
At least the shorts got it right and made money (e.g. shares down more than 80% from 52 week high and 25% Y-T-D).
How did they know?
The most important value that the short interest provides is that they are real time financial detectives and ferret out wrong doings (e.g. over statements, aggressive accounting etc.),
Had Bernie Madoff been a publicly traded company, the shorts would have found him out a long time ago.
All the regulators, class action attorneys do, is look backward and shift through the rubble of a lot of lost money.
OCZ: It's Dead And Done [View article]
The recent drop could also be attributed to continued institutional selling, based on the 13F filings, for the period ending 3/31/13, also closing 2 days ago as well.
Closing price on 03/31/2013: $1.80
Filers who had this stock in their top 10: 0
13F Filers holding this stock: 65
Aggregate shares on 03/31/2013: 16,565,342
Aggregate shares on 12/31/2012: 20,590,905
Percent change: -19.55%
Funds creating new positions: 8
Funds Adding to an existing position: 26
Funds closing out their position: 23
Funds reducing their position: 32
OCZ: It's Dead And Done [View article]
Additionally, will have to restate FY' 13 Q1 as well as FY' 12 and can't provide FY'14 guidance.
The train wreck fore-seen last Spring (e.g. promises made and unkempt, accounting irregular accounting etc.) is turning out much worst than expected.
OCZ: It's Dead And Done [View article]
OCZ was in default on the Wells Fargo line of credit and was forced to pay the outstanding balance back. They also defaulted on a prior line of credit with Silicon Vally Bank.
The Hercules loan is a PIPE.
Companies are forced to pursue PIPEs when capital markets are unwilling to provide financing and face the reality that PIPEs represent the only available financing option.
PIPE issuers tend to have falling stock prices in the year prior to issue, low market capitalization, have never been profitable with long term negative operating cash flows and are about to run out of cash
Not surprisingly, PIPE issuers continue to perform poorly following PIPE financing.
Investment banking firms are willing to underwrite follow-on offerings for small, distressed public companies. Further, these companies lack the collateral and financial performance to qualify for bank loans.
This dismal post-PIPE performance of course raises the question of who buys PIPEs?
Purchasers may find PIPEs attractive for the following reasons:
-They can purchase shares at an attractive highly negotiated discount to the public market price.
- Often have terms for downside protections against market price declines, such as floating conversion prices, the issuance of additional shares for no more money etc..
- Provides market-beating returns, often by double digits, and are able to obtain these returns notwithstanding the poor performance of PIPE issuers
- Provides opportunity to acquire a sizable position without pushing the market price of a stock higher.
- To cover shares previously shorted at a guaranteed, no matter what lower price than market.
- Arbitrage, by shorting additional stock against the PIPE shares, the fund locks in the PIPE deal purchase discount.
On the other hand, PIPE offerings are highly dilutive and destructive to the existing shareholder base. Less
OCZ: Game Over! [View article]
Today, Seagate announced some significant internally developed Enterprise SSD solutions (Read this should finally put to rest the ubiquitous and unsubstantiated rumors that they had any interest in acquiring OCZ) .
In addition to their 600 and 600 Pro SATA SSDs, Seagate is also announcing its 1200 SSD aimed squarely at the enterprise market. While the 600/600 Pro use Link A Media's LM87800 controller with some degree of Seagate firmware customization, the 1200 uses a fully custom Seagate designed controller with ultra fast SAS 12 Gb/s performance.
Seagate also unveiled a Virident FlashMAX II based PCIe SSD simply called the X8. The X8 features a FusionIO-like architecture that moves all NAND management from the SSD to the host CPU cores in the server. Given how readily available (and sometimes underutilized) host CPU resources can be, the tradeoff is sometimes worth it. The X8 will be available starting on May 27th.
Last week, Micron also turned up the heat and announced it's sampling their new hot swappable 2.5" PCIe SSDs. The P420m has upto 1.4TB MLC capacity and can deliver 750K R IOPS. Micron specifies endurance as "50PB of drive life.
OCZ: Game Over! [View article]
Companies are forced to pursue PIPEs when capital markets are unwilling to provide financing and face the reality that PIPEs represent the only available financing option.
Such companies tend to have falling stock prices in the year prior to issue, low market capitalization, have never been profitable with long term negative operating cash flows and are about to run out of cash
Investment banking firms are willing to underwrite follow-on offerings for small, distressed public companies. Further, these companies lack the collateral and financial performance to qualify for bank loans.
Not surprisingly, PIPE issuers continue to perform poorly following PIPE financing.
This dismal post-PIPE performance of course raises the question of who buys PIPEs?
The answer is that hedge and venure capital funds constitute the vast majority of the investors.
Purchasers may find PIPEs attractive for the following reasons:
- Provides market-beating returns, often by double digits, and are able to obtain these returns notwithstanding the poor performance of PIPE issuers
-They can purchase shares at an attractive highly negotiated discount to the public market price.
- Often have terms for downside protections against market price declines, such as floating conversion prices, the issuance of additional shares for no more money etc..
- Provides opportunity to acquire a sizable position without pushing the market price of a stock higher.
- To cover shares previously shorted at a guaranteed, no matter what, much lower price than market.
- Arbitrage, by shorting additional stock against the PIPE shares, the fund locks in the PIPE deal purchase discount.
In this case, the interest rate being charged, certainly provides a market beating ROI, with no risk (e.g. secured by 100% of the company's assets).
Often PIPE offerings become highly dilutive and destructive to the existing shareholder base.
For example, in this PIPE, the initial Warrant conversion price of $2.18 has a floating conversion price provision.
From Item 1.01 in Form 8K filed on 3/12/13
In connection with the Loan Agreement, the Lender was granted a security interest in substantially all of the personal property of the Company and its domestic subsidiaries, whether now owned or hereafter acquired.
Pursuant to the Loan Agreement, the Company issued Hercules a warrant (the “Warrant”) to purchase a number of shares of the Company’s common stock equal to the quotient obtained by dividing $1.5 million by the exercise price of the Warrant which is initially set at $2.18 per share, resulting in 688,073 shares of common stock issuable upon full exercise of the Warrant. The $2.18 exercise price of the Warrant was set at the VWAP of the Company’s common stock for the 30-day period prior to the date the Warrant was issued. If the Company consummates a financing of at least $10 million in new equity or subordinated debt prior to May 31, 2013 in which the Company issues shares of common stock or securities that are exercisable or convertible into shares of common stock and the effective price per shares of common stock in that financing is less than the exercise price of the Warrant, then the exercise price of the Warrant shall automatically be reduced to equal the price per share of common stock in such financing and, as a result, the number of shares of common issuable upon exercise of the Warrant shall increase such that the product of the newly adjusted number of shares of common stock and the reduced exercise price per share will equal $1.5 million. Alternatively, if the Company consummates a financing of at least $10 million in new equity or subordinated debt prior to May 31, 2013 in which the Company issues shares of preferred stock or securities that are exercisable or convertible into shares of preferred stock of the Company, then the holder of the Warrant may elect to have the Warrant convert into $1.5 million shares of such preferred stock or such other securities at a price per share/security paid by the investors in such financing. The Warrant has a term of five years from the date of issuance.
OCZ Technology (OCZ) estimates FQ4 revenues of $65M-$70M, but expects positive gross margins, "an indication that the operating adjustments regarding restructuring and the restatement are behind the company. Gross margins will continue to improve in the coming quarters." Operating expenses are expected at $23M-$26M. (PR) [View news story]
On March 11, 2013, OCZ Technology Group, Inc. (the “Company”), entered into a Loan and Security Agreement (the “Loan Agreement”) with Hercules Technology Growth Capital, Inc. (“Hercules” or the “Lender”), pursuant to which a term loan of up to an aggregate principal amount of $15 million and a revolving loan facility up to an aggregate principal amount of $15 million is available to the Company pursuant to the terms and conditions thereof.
The Company’s availability under the revolving loan facility is limited by reference to a borrowing base of eligible accounts receivable (less certain reserves) multiplied by an advance rate.
The Loan Agreement provides for an initial term loan advance of $10 million, which closed on March 11, 2013, and an additional term loan advance of up to $5 million, which is contingent upon the Company being current in its SEC filings and achieving certain revenue levels for two consecutive quarters. During the first year, the term loan will bear interest in cash at an annual interest rate equal to the greater of 12.50% or prime plus 8.75%.
The agreement also provides the Company access to a $10 million revolving loan facility which must be repaid in full on April 1, 2016. An additional $5 million of the revolving loan facility will be available to the Company upon the Company obtaining additional financing of at least $10 million. The loans under the revolving loan facility will bear interest at an annual rate equal to the greater of 9% or prime plus 5.25%.
Per the financial covenants, the Company must raise a minimum of $20 million in new equity or subordinated debt no later than January 31, 2014, of which $10 million in new equity or subordinated debt must be raised no later than May 31, 2013.
The Loan Agreement contains customary representations and warranties and affirmative and negative covenants including, among others, covenants regarding the maintenance of certain financial tests, covenants relating to financial reporting, compliance with laws, limitations on debt, liens, dividends, investments, mergers and acquisitions and sales of the Company’s assets.
The Loan Agreement provides for customary events of default. If an event of default occurs and is continuing, the Lender may terminate and suspend its obligation to make loans under the Loan Agreement, accelerate amounts due under the Loan Agreement, exercise remedies against the collateral and exercise other rights and remedies. In the case of certain events of default related to insolvency, the commitment of the Lender will be automatically terminated and all outstanding obligations of the Company will become immediately due and payable.
In connection with the Loan Agreement, the Lender was granted a security interest in substantially all of the personal property of the Company and its domestic subsidiaries, whether now owned or hereafter acquired.
OCZ Technology (OCZ) estimates FQ4 revenues of $65M-$70M, but expects positive gross margins, "an indication that the operating adjustments regarding restructuring and the restatement are behind the company. Gross margins will continue to improve in the coming quarters." Operating expenses are expected at $23M-$26M. (PR) [View news story]
We have drawn $10M against our credit facility and have approximately $10M of cash on hand......means they have no real cash (e.g. now running the company on borrowed money).
Operating expenses are estimated to be between $23 million and $26 million for the fourth quarter.....means they are running out of time (e.g $10M of borrowed money not anywhere near what they will need to cover cost of goods to produce product and opX).
You do the math.
An explosion near the finish line of the Boston Marathon shakes stocks up further, the S&P 500 (SPY) dipping to a new session low, -1.8%. [View news story]
Also the 2 bombs that exploded were in trash receptacles and an unexploded bomb has been found. Federal officials also have surveillance photos of a man putting a backpack in trash can just prior to explosion.
An explosion near the finish line of the Boston Marathon shakes stocks up further, the S&P 500 (SPY) dipping to a new session low, -1.8%. [View news story]
OCZ: Bankruptcy Within 6 Months? [View article]
Glad to hear that you were not bulled comments by the yahoo board.
Unfortunately, there are a lot of sheep there, that have lost fortune
Beware their their talking points.
Denial (e.g. all in fine, you only have a loss if you sell etc.)
Anger (e.g. not legit, it's the shorts/MMs, it's the market, it's rigged etc.)
Bargaining (e.g. news tomorrow, it's a takeover canidate / positive catalysts coming, prayer etc.)
Depression (e.g. defensiveness, apprehension, perceives reality differently etc.)
Lastly......Acceptance (it is what it is) but I'll attack (OK you're right, I'm wrong).
OCZ: Bankruptcy Within 6 Months? [View article]
After evaluating more than 4,000 actual customer production applications, a tier 1 enterprise storage systems and software provider, found that in 95% of them there was significant data/performance skew - where 20% or less of the data actually generated 80% or more of the I/Os.
Intelligent auto tiering is pretty much becoming a must-have technology and the whos, who in Enterprise storage all offer software defined hybrid storage.
With intelligent tiering software that can identify where the "hot" sub-LUN I/Os are coming from in real-time, a typical practical configuration might be 95% HDD and only 5% SSD.
As example, Microsoft recently acquired StorSimple because they have a very robust enterprise hybrid cloud storage solution.
OCZ: Bankruptcy Within 6 Months? [View article]
People seem to be blind to two very important things.
1. When you have no money and income, it's never a good idea to borrow money.
2. Prior to Ralph Schmitt being appointed as the replacement CEO, in October 2012, he was a member of the OCZ B.O.D. (e.g. whatever is, was on his watch).
Given the size of the company, can't believe the salaries and bonuses being paid to the senior executive team. Ralph even got a very healthy signing bonus to compensate him for leaving his CEO position at PLX Technology.
One lucky guy (e.g. the deal he helped put together, fell apart one month later).
Integrated Device Technology and PLX Technology announced that they have mutually agreed to terminate their merger agreement pursuant to which IDT would acquire PLX Technology (e.g. reason was an absence of a clear path for the parties to complete the proposed transaction).
OCZ: Bankruptcy Within 6 Months? [View article]
On March 11, 2013, OCZ Technology Group, Inc. (the “Company”), entered into a Loan and Security Agreement (the “Loan Agreement”) with Hercules Technology Growth Capital, Inc. (“Hercules” or the “Lender”), pursuant to which a term loan of up to an aggregate principal amount of $15 million and a revolving loan facility up to an aggregate principal amount of $15 million is available to the Company pursuant to the terms and conditions thereof.
The Company’s availability under the revolving loan facility is limited by reference to a borrowing base of eligible accounts receivable (less certain reserves) multiplied by an advance rate.
The Loan Agreement provides for an initial term loan advance of $10 million, which closed on March 11, 2013, and an additional term loan advance of up to $5 million, which is contingent upon the Company being current in its SEC filings and achieving certain revenue levels for two consecutive quarters. During the first year, the term loan will bear interest in cash at an annual interest rate equal to the greater of 12.50% or prime plus 8.75%.
The agreement also provides the Company access to a $10 million revolving loan facility which must be repaid in full on April 1, 2016. An additional $5 million of the revolving loan facility will be available to the Company upon the Company obtaining additional financing of at least $10 million. The loans under the revolving loan facility will bear interest at an annual rate equal to the greater of 9% or prime plus 5.25%.
Per the financial covenants, the Company must raise a minimum of $20 million in new equity or subordinated debt no later than January 31, 2014, of which $10 million in new equity or subordinated debt must be raised no later than May 31, 2013.
The Loan Agreement contains customary representations and warranties and affirmative and negative covenants including, among others, covenants regarding the maintenance of certain financial tests, covenants relating to financial reporting, compliance with laws, limitations on debt, liens, dividends, investments, mergers and acquisitions and sales of the Company’s assets.
The Loan Agreement provides for customary events of default. If an event of default occurs and is continuing, the Lender may terminate and suspend its obligation to make loans under the Loan Agreement, accelerate amounts due under the Loan Agreement, exercise remedies against the collateral and exercise other rights and remedies. In the case of certain events of default related to insolvency, the commitment of the Lender will be automatically terminated and all outstanding obligations of the Company will become immediately due and payable.
In connection with the Loan Agreement, the Lender was granted a security interest in substantially all of the personal property of the Company and its domestic subsidiaries, whether now owned or hereafter acquired.
Pursuant to the Loan Agreement, the Company issued Hercules a warrant (the “Warrant”) to purchase a number of shares of the Company’s common stock equal to the quotient obtained by dividing $1.5 million by the exercise price of the Warrant which is initially set at $2.18 per share, resulting in 688,073 shares of common stock issuable upon full exercise of the Warrant. The $2.18 exercise price of the Warrant was set at the VWAP of the Company’s common stock for the 30-day period prior to the date the Warrant was issued. If the Company consummates a financing of at least $10 million in new equity or subordinated debt prior to May 31, 2013 in which the Company issues shares of common stock or securities that are exercisable or convertible into shares of common stock and the effective price per shares of common stock in that financing is less than the exercise price of the Warrant, then the exercise price of the Warrant
shall automatically be reduced to equal the price per share of common stock in such financing and, as a result, the number of shares of common issuable upon exercise of the Warrant shall increase such that the product of the newly adjusted number of shares of common stock and the reduced exercise price per share will equal $1.5 million. Alternatively, if the Company consummates a financing of at least $10 million in new equity or subordinated debt prior to May 31, 2013 in which the Company issues shares of preferred stock or securities that are exercisable or convertible into shares of preferred stock of the Company, then the holder of the Warrant may elect to have the Warrant convert into $1.5 million shares of such preferred stock or such other securities at a price per share/security paid by the investors in such financing. The Warrant has a term of five years from the date of issuance.
OCZ: Bankruptcy Within 6 Months? [View article]
At this time, only $10M has been loaned and not only will Hercules receive an extraordinary high 12.5% rate of interest, plus warrants, they have mitigated their risk with numerous covenants, as well as 100% security interest in all of the company's assets (Read: outlines exactly how and why the company will be liquidated for as little as $10M).
OCZ: Bankruptcy Within 6 Months? [View article]
How did they know?
The most important value that the short interest provides is that they are real time financial detectives and ferret out wrong doings (e.g. over statements, aggressive accounting etc.),
Had Bernie Madoff been a publicly traded company, the shorts would have found him out a long time ago.
All the regulators, class action attorneys do, is look backward and shift through the rubble of a lot of lost money.