Securities and Exchange Commission (SEC) filings show that, in this latest fundraising, U.S. Venture Partners chipped in $10.9 million, Norwest Venture Partners added $3 million, and New Enterprise Associates (NEA) came in with $2 million.
All of this has made for a complicated, and more diluted, equity structure for the public company. By issuing new stock, Occam will dilute the current stockholders. The new preferred stock also holds special preferences, making the common stock a more risky proposition.
And, yes, the fundraising will continue. Occam says it will bag another $4 million from outside investors by early January by selling more Series A-2 shares. Those shares carry a liquidation preference of 150 percent of the original purchase price. The Series A-2 holders also get in line before common stockholders should there ever be a liquidation or dividends paid.
After that, Occam will conduct a "rights offering" for its common stock holders, which gives those shareholders the right to buy a slightly different class of shares (Series A) under similar terms that were previously given to the private investors. Occam isn't yet sure how much money that particular offering will raise.
The development of the coming third-generation digital loop carrier system demanded that the company raise more cash. With the $16.1 million just raised, Occam has about $18 million in cash and equivalents, according to its chief financial officer, Howard Bailey.
Occam does have a slight technology edge in its market, and its investors hope the new cash infusion will help the copmany make it to profitability (see Triple Play Promise at IOCs). The company's Broadband Loop Carrier (BLC) systems offer any service (POTS or DSL) on any line through the use of digital signal processing technology.
Offering data ports at close-to-POTS prices is just one reason 3G DLCs such as Occam's are piquing the interest of carriers, according to Heavy Reading Analyst at Large Graham Beniston. Occam's gear can also serve as a VOIP gateway into the remote terminal, which carriers see as a way to migrate from TDM Class 5 switches to VOIP softswitches, Beniston writes in his latest report, "Next-Generation DSL Equipment: The Path to Profitability."
How does Occam's brand hold up? The recent survey by Heavy Reading shows the difficulty startups have in receiving name recognition by carriers. Occam and its closest peers, Catena Networks Inc. and Calix Networks, were recognized, respectively, by 26.8 percent, 26.8 percent, and 25 percent of respondents in the product category. But Occam was recognized by more carriers as a leader in price, performance, quality/reliability, and service/support.
Table 1: 3G DLC Survey Results
|Vendor||Recognition||Price||Performance||Quality and Reliability||Service and Support|
|(number of responses)||(56)||(33)||(36)||(36)||(34)|
|Occam Networks Inc.||26.80%||12.10%||11.10%||11.10%||8.80%|
|Catena Networks Inc.||26.80%||0.00%||2.80%||0.00%||0.00%|
|Source: Heavy Reading|
All told, Occam has raised at least $80 million since it began life as a startup. But the company only carries a $34 million market cap, as its shares have traded below $0.20 since November 5.
Last week, Occam reported sales of $4.2 million for the nine months ended September 30, a 282 percent increase from the year-ago period (see Occam Q3 Revenues Rise). But the company is still in the red, having lost about $10.1 million in the last six months.
— Phil Harvey, Senior Editor, Light Reading
Archives of Related Light Reading Webinars:
For more on this topic, see the Light Reading Insider report: Broadband Access: Last Mile, Last Chance?. Annual single-user subscriptions to Light Reading Insider – which include access to the current report, the complete archives, and each of the monthly reports issued over the next 12 months – are available for $1,250.