Now I understand, Herb Chen should be investigated because he owns over a million shares of TXCC and is down well over a million dollars on his investment. The BOD is facilitating a scam so that they will lose all the money they have invested in Transwitch and damage their reputations by being associated with a failed company. It all makes perfect sense, if you are a BOZO like yourself.
Its very easy to explain. While the company is consistantly inking deals with a growing number of smaller companies, they probably wont reach breakeven until at least Q3 at the earliest when HDplay starts shipping to larger customers with larger orders. The immediate concern is cash and the market is concerned that the company will not have enough to make the bridge through to Q3/Q4.
The company has been counting on the cash from the sale of the legacy telecom patents to bridge the gap to profitability. So far that has not happened. Right now the company owes Bridge Bank $2.4mm on its revolving credit facility which matures on April 4th. The company is in discussions with them at this time to extend those terms but there is no guarantee that Bridge Bank will agree to new terms. Worst case scenario, Transwitch will have to declare bankruptcy because they dont have enough cash to pay that facility off and still fund operations. The delisting issues the company faces with Nasdaq over the price compliance and shareholder equity rules are other annoying problems but not nearly as dire as their cash problem.
Right now (actually for some time) all the market wants to see is proof that the company has put their financing issues behind them. Until there is an announcement that at least some of the patents have been sold and/or the Bridge Bank credit facility has been renegotiated, the shares will languish. The design wins are important but the market wants to see that the company will be around long enough to actually see those revenues.
In the last CC Ali/Bosi commented that they expected Q1 cash burn to be about $1 million, or same as Q4 2012. That depended though on inking/collecting some cash from new licensing deals which was stated to be about the same $$ amount (though from a greater number of customers) as announced last December. TXCC has also collected another ~$500k (I think that is correct) from the December deal, with a million or so more to come. It is possible no new deals were completed. It is also possible that the smaller of the patent deals has yet to be closed. In any event, the two sets of licensing deals (if the 2nd group gets completed as talked about...perhaps a very big IF) would generate the cash the company originally said they needed and the main bulk of the patents would simply provide a nice cushion.
I did not get the impression at all from the last CC that there was much concern, if any about a near term cash crunch.....and though it wasn't discussed Ali and crew obviously knew the Bridge Bank deal had to be rolled over by April 4. Perhaps, as Ochs noted, the partial pay down in the loan to Bridge to a previous level is just part of process. Who the heck knows??
Just to add to my above post, if you look at the number of outstanding shares currently listed in the 10K it is about 1.5mm more than was listed at the end of Q4 (37.5mm vs 36.1mm). Obviously the company sold 1.5mm shares to Aspire between 12/31/2012 and late March 2013 and they likely they did it on the last run up. If they sold those shares for an average of $.85, for example, that would have netted the company another $1.2mm-$1.3mm. This is going to be a close call and the stock price certainly reflects that.