Cognitive radio network vendor xG Technology said underwriters of its initial U.S. public offering of common stock and warrants exercised their over-allotment option, boosting the company's gross IPO proceeds by more than 15 percent over initial estimates to nearly $8.47 million.
When the IPO closed on July 24, xG estimated it would receive gross proceeds of about $7.36 million. The IPO pricing was $5.50 per share and $0.01 per warrant.
Sarasota, Fla.-based xG is focused on developing cognitive radio solutions to help wireless broadband network operators make more efficient use of existing spectrum allocations. Though the company has been pushing its technology since 2005, it appears that xG's frequency-agile radio technology is finally ready for primetime and, it no doubt hopes, broad acceptance.
Schmitt (Image source: xG Technology)
Its current customer engagements are in rural telecommunications and defense, but xG said it is targeting numerous industries worldwide, including "telecommunications, cable, defense, and public safety, and markets ranging from rural to urban areas and expeditionary deployments."
The company does have some serious telecom industry chops. For example, its executive chairman is industry veteran George Schmitt, perhaps best known in the wireless industry for heading GSM-operator Omnipoint Communications Services, which was acquired by VoiceStream, which in turn was acquired by Deutsche Telekom and turned into T-Mobile US (NYSE:TMUS).
XG's carrier-class xMax cognitive radio network system uses spatial processing to enable interference mitigation. Though xMax is technically frequency agnostic, it is currently designed to operate within the 902-928 MHz license-free band.
The vendor contends mobile operators could turn to its xMax system in the unlicensed 902–928 MHz ISM band rather than purchasing costly licensed spectrum. "In addition, we believe that our xMax cognitive radio technology can also be used to provide additional capacity to licensed spectrum by identifying and utilizing unused bandwidth within the licensed spectrum," said xG.
The company expects to realize net losses for the immediate future but estimates it will begin generating revenues sufficient to cover its cost of our operations before year's end thanks to delivery of new voice and data products to customers.
Proceeds of the recently completed offering will be dedicated to general corporate purposes, including working capital, product development, marketing activities, expanding an internal sales organization and further developing sales channels, funding the set-up of contract manufacturing production lines and other capital expenditures, said xG.
The company now trades on Nasdaq as well as the Alternative Investment Market of the London Stock Exchange, the latter being where xG's shares first began trading in 2006. Feltl and Company and Aegis Capital acted as the book-running managers for xG's IPO.
- see this xG release
- see this Nasdaq overview
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