NEW YORK (TheStreet) -- Shares of xG Technology (XGTI) were falling 60.1 to 88 cents a share on heavy trading volume Friday after the wireless technology company announced the pricing of its public offering.
xG Technology priced the 2.55 million Class A units in its public offering at $1 a unit. Each Class A unit consists of 0.5 of a Series A Warrant to purchase one share of common stock at an exercise price of $1 a warrant.
The company priced the 2.45 million Class B units in the public offering at 99 cents a unit. Each Class B unit consists of one pre-funded Series B Warrant to purchase one share of its common stock and 0.5 of a Series A warrant.
xG Technology also priced the 2.55 Series C warrants and 4.95 million Series D warrants in the offering at 1 cent a warrant. Each Class C warrant is included in the price of a Class A unit and enables the buyer to buy one additional Class A unit. Each Class D warrant is included in the price of a Class B unit and enables the buyer to buy one additional Class B unit.
The company said it plans to use the net proceeds from the offering for general corporate purposes.
TheStreet Ratings team rates XG TECHNOLOGY INC as a Sell with a ratings score of E+. TheStreet Ratings Team has this to say about their recommendation:
"We rate XG TECHNOLOGY INC (XGTI) a SELL. This is based on a variety of negative investment measures, which should drive this stock to significantly underperform the majority of stocks that we rate. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- XGTI's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 92.21%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Communications Equipment industry and the overall market, XG TECHNOLOGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- XGTI's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.43 is very weak and demonstrates a lack of ability to pay short-term obligations.
- 43.49% is the gross profit margin for XG TECHNOLOGY INC which we consider to be strong. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -605.65% is in-line with the industry average.
- Net operating cash flow has significantly increased by 59.67% to -$1.82 million when compared to the same quarter last year. In addition, XG TECHNOLOGY INC has also vastly surpassed the industry average cash flow growth rate of -22.14%.
- You can view the full analysis from the report here: XGTI Ratings Report