"The total cash at our disposal in the end of Q3, and the personnel and cost cutting measures taken in the beginning of Q4 are enough to lead to profitability and positive cash flow without the use of external resources," Viryanet (Nasdaq:VRYA) (VRYA) CFO Albert Gabrielli estimated early in November 2001.
It now appears that in spite of his optimism, ViryaNet, traded both in New York and Tel Aviv according to a $10 million market cap, is now planning a financing round.
Financial data company Dolev & Abramovich says ViryaNet, a provider of management solutions for service technicians and engineers, is to launch a $12 million PIPE funding round, to be led by Tamir Fishman. PIPE, Private Investment in Public Equity, is a financial tool that enables a public company to privately issue a share package to institutional investors.
ViryaNet would not comment when asked whether it deemed it wise to issue with share price at an all time low. Companies that take the PIPE route are usually struggling companies that will not successfully raise funds from the public.
The shares ViryaNet will issue to the institutional investors do not have to be listed for trade for several months, possibly as many as six.
Since the share might tumble below its current 40 cent level in these six months, investors will then be able to buy it for an even lower price. In such a case, investors receive more stock to make up for the sum of their investment.
"In spite of the unstable economy, our goal is to gain Q4 operating balance, deducting any one-time expenses, and achieve positive cash flow in Q1 2002," said Gabrielli.
Salomon Smith Barney agreed with the company's estimates, and is also predicting bottom line balance in the year¿s fourth quarter.