The only scenario, that can justify a raise with this steep discount (24% 5 days trailing) is a very new and very attractive opportunity which needed cash to close on and needed it quickly. It would be helpful and transparent to include details on the use of proceeds for the deal tied to this financing. This should be possible if the deal is near closure, diligence is done, and it is down to financing. If the deal is a cash and stock deal, this might also work in favor of the shareholders by supporting a higher PPS for the shares in consideration on the transaction. For future reference I strongly recommend GIG include this kind of sugar with the bitter pill in the PR next time as it makes it much more transparent and palatable. Transparency builds trust. Trust builds support. Support builds PPS. You can always have legal add the requisite 3 sentence caveats that said deal might not close due to yadayadayada and cya.
It is too steep of a discount and management knows it.
So yes, why so steep. Many possible reasons. Many possible combinations of reasons. What do we know and what do we suspect.
We know the company did not need the money to remain a going concern.
We know they are interested in growing gross revenue to the 100M+ level and transacting at a multiple.
I suspect they will make a near term acquisition that increases gross revs by 20M/yr. It looks like it will be a mostly cash deal (70/30) due to the stock deals not performing well for the sellers sitting on their shares still.
It would not be weird. I am actually expecting it to. It will be revenues not earnings this Q IMHO.
Finally got a chance to listen to the conference call. Some good detail on this transaction (1.2M invested for a 10% stake in Anagog) and a restatement of the logic behind this investment. Also spoke with IR last week which was helpful. Satisfied with the answers and info. Still hope they are more transparent on future PR and not wait for a quarterly reports to provide reasonable detail.
Added today as well. If it drops again tomorrow, will continue to add. It was a good Q4 and a good 2015. Expecting the same or better for 2016. Fundamentals, margins, and profits all pointing up. So averaging in this week.
Update. No response from GIG.
Response from counsel...paraphrased...
If it is not "Material" to the company's financial condition or projections, then SEC filing may not be required. If the announcing company is the one making the investment, then it has a good probability of being "Material"...this is a grey area. Many companies make private investments and do not disclose any details, most of the time they do not even disclose the investment.
...I still feel their PR should have provided additional details and am frustrated by the opacity of this transaction. Perhaps this will be addressed on Monday during the conference call. GLL.
I don't know. That is the point of all those questions. Gigoptix has not to my knowledge made a direct investment into another privately held company on an equity financing. It could be a great deal, it could be a terrible deal. I don't know. But with a little more information I (and we) could be informed investors and not acting on blind faith. I try hard to be an informed investor for every position I take.
I don't know if Gigoptix is required to file with SEC any information with regards to this deal. I also don't know what the timeline would be for that filing to be made if it is required. I suspect that my very competent corporate counsel would be able to provide those answers but he bills out at a pretty steep rate and he has a very active practice. I would rather just have my shareholder questions answered by the contact listed in their PR (Raluca) or by Avi (who is a pretty good guy). So far I have received no response from Avi or Raluca. Nor have I seen any changes on the PR sites of GIG and Anagog and no SEC filings associted with this. I will give it another day or two before soliciting outside advise w/regards to filing requirements (or lack thereof).
Like I said in my email, in general I trust Avi's judgement but the information provided on this transaction does not meet my standards. Does it meet your standards (anyone) or am I the only one expecting more transparency from GIG management with regards to this transaction. It is a bit different from anything they have done before.
Just sent the following email to Avi and Raluca. Will let you know if I receive a reply.
Dear Avi and Raluca,
Please be more transparent with your shareholders on the investment in Anagog's Series A financing made recently by Gigoptix. Anagog has no PR related to this financing on their website at present. Their only PR is a December 2014 financing of $1M (Seed round?). No news is available through several commonly used search engines. The PR available on Gigoptix website does not provide any details of the transaction as well. In general, I trust your decision processes and appreciate the growth of GIG but feel that you would best serve the company and its shareholders by being much more transparent about this transaction
In the spirit of transparency for your shareholders, please address the following questions:
Will Avi receive any compensation (stock, cash, other) associated with his joining their Board of Directors?
If so, what is this compensation?
What was the pre and post money valuation for this financing round?
How much did Gigoptix invest?
How many shares were purchased?
What rights and preferences are afforded the class of shares purchased?
Are current shareholders at the time of purchase going to receive any rights or preferences to purchase shares of Anagog in future financing activities?
Are you obliged to file this financing with SEC?
If so, when can we reasonably expect to see such a filing?
PS: Any and all responses will be shared with my fellow investors on the Gigoptix Yahoo message board.
CC: Ofer Tziperman, CEO Anagog
May the new year treat you kindly as well.
Looking forward to seeing how Gigoptix changes computing and data transfer over the coming years.
Good to see ya Profit. Nice to be in the black too. Wonder what those lightwavers are thinking by now. Thanks to a diversified strategy to grow earnings, GIG is getting some well deserved traction. While my position is about half yours PAYC, I am still pleased with the progress and have added to it recently. May continue to add if this Q is in line with estimates and expectations.
yeah I know huh.
I wrote up a big analysis rant then clipped it and saved to local. Nice to see the momentum with Gigoptix. GLLs.
Well I stated that if/when GIG was GAAP + and sustained I would add to my position. I have and may continue to do so. Thanks Avi and Raluca. Please continue to innovate and build your IP. I know you are paying bills and building revs on POTS level ASIC but your potential in photonics remains solid. Invest in it while remaining GAAP+ plz.
Held this a while back. Got out near break even. Glad I got out when I did. Still love the tech but their revs are ridiculously low. Can someone please explain to me what is wrong with their marketing strategy. Seriously thinking about getting back in at this valuation but have not followed for a while and scared by the very low revs. Thoughtful replies appreciated.