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Public Occam Raises Private Money

Light Reading
News Analysis
Light Reading
1/30/2003

How strange are things these days? Well, you might want to take a look at Occam Networks Inc. (OTC: OCCM).

The public company, no longer listed on Nasdaq and now trading in the obscure over-the-counter market, raised $12 million in venture funding through a private placement of its Series A stock, the company said Wednesday.

The company went back to venture capital in order to remain liquid as it continues losing money. The funding was revealed in tandem with Occam's fourth-quarter and year-end earnings conference call, which may have set a new record for brevity, lasting a total of eight minutes [ed. note: One should not increase, beyond what is necessary, the number of entities required to explain anything. -- Occam's Razor].

While recapitalizing a company that trades in the over-the-counter market isn't exactly a first, it's a rare play for venture firms usually focused on Silicon Valley startups. Three venture capital firms -- Norwest Venture Partners, U.S. Venture Partners, and New Enterprise Associates (NEA) -- were among those chipping in for more Occam shares, according to filings Occam made with the Securities and Exchange Commission (SEC).

Apparently, just because the company got some money doesn't mean the executives are in any mood to talk. After the conference call, Occam executives took the standard Regulation FD out -- citing SEC rules, they declined to answer questions regarding the number of people it employs, how many paying customers contributed to its revenues, and how many revenue-generating customers it has for its broadband loop carrier product [ed. note: cf. Occam's Razor].

During the brief call, most of which was taken up by the reading of SEC disclosures, Occam's executives said the company has increased revenue every quarter since its December 2001 merger with Accelerated Networks (see Occam's Merger).

Occam reported an actual loss of about $6.3 million on fourth-quarter revenues of $1.3 million in its earnings press release. The company lost about $32.7 million on revenues of about $2.4 million for the full year 2002.

— Phil Harvey, Senior Editor, Light Reading

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metamucil
metamucil
12/5/2012 | 12:45:16 AM
re: Public Occam Raises Private Money

The truth is Phil if you wanted to discuss Material Information in a non-public way, that creates a violation of Reg FD. The way to ask those questions is to participate in the conference calls. I noted no questions on their conference call.

For receiving information in violation of Reg FD, the reporter has no penalty. For providing information in violation of Reg FD, executives face fines and jail.

If you were them what would you do?

metamucil
DCITDave
DCITDave
12/5/2012 | 12:45:14 AM
re: Public Occam Raises Private Money
I did try to buzz in and ask questions, but my line didn't respond. Not sure what the technical issue was there.

Anyway, I don't think the things I wanted to know were covered under Reg FD. They were merely items that would show how the company arrived at its earnings numbers -- all of which will be in the SEC filings anyway.

At the very least, Occam should have put a few more details in its press release.

ph
Steve Saunders
Steve Saunders
12/5/2012 | 12:45:12 AM
re: Public Occam Raises Private Money
It's pretty hard to get your question in when:

1) the call lasts 8 minutes
2) they don't accept your question

This looks like an example of a company hiding behind the SEC's skirts.
steve
steve
12/5/2012 | 12:45:02 AM
re: Public Occam Raises Private Money
Companies have enormous latitude on what they can disclose (beyond SEC/GAAP requirements).

Conventional wisdom says they should disclose more to have a smart shareholder base and informed analysts. However, they obviously have no expectation of stock price movement any time in the near future so why bother with excess disclosure.

These transactions are becoming much more common, but I would stay away from trading the common stock as the preferred overhang is likely to crush the common.

btw, Reg FD doesnt govern what you disclose, its purpose is to insure that all disclosed information is dissemenated equally and not selectively (ie to one research analyst). Thats why it is Reg F(ull) D(isclosure)
FREDLOOS
FREDLOOS
12/5/2012 | 12:44:48 AM
re: Public Occam Raises Private Money
Occam riffed away last week. In deep trouble. I know more but can't tell.
moose
moose
12/5/2012 | 12:44:46 AM
re: Public Occam Raises Private Money
Hey LR,

The private placement was announce on December 19. All of a sudden it's news? Must be a slow day, or maybe too much Christmas cheer last month.
DCITDave
DCITDave
12/5/2012 | 12:44:31 AM
re: Public Occam Raises Private Money
Righto. But the initial announcement didn't name investors, which was a new (not previously reported) fact. Also, the story was about covering what the company accomplished in its quarter and what it said (and didn't say) on the call, so the funding mention is fair game.

ph
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