Microcomputer manufacturer CompuLab is planning a Nasdaq IPO. If the offering is successful, senior executives at TechnoPlus Ventures Ltd. (TASE:TNPV), a technology holding company with a 14.6% stake in CompuLab, will be awarded large bonuses. The TechnoPlus share zoomed 70% today, boosting the company's market cap to NIS 17 million.
CompuLab filed a prospectus yesterday showing its intention of raising up to $24.2 million, at a company value and share price yet to be determined. This is not the first time that the company has considered a US IPO, but the idea has never been carried out up until now. Six months ago, TechnoPlus reported that it had contracted with an investment banker to consider the sale of its holdings in CompuLab.
The underwriter advising CompuLab in its IPO is Maxim Group. The underwriter will receive a 45-day option to buy additional shares, and will be allocated options for the purchase of shares amounting to 5% of the offering. After the IPO is completed, CompuLab is slated for trading on the Nasdaq secondary index under the ticker symbol CPUL.
Developing computers without fans
The company intends to use the proceeds from its IPO for several purposes, including the reinforcement of its marketing and sales apparatus for its existing products and development of its Internet of Things (IoT) market ($7 million), leveraging the company's cooling technology for additional products ($2 million), investment in R&D for new products and technologies ($2 million), and expanding its US presence, establishing physical representative offices in Europe, and assembling production capacity in the US ($5 million).
CompuLab, a veteran company active since 1992, develops and produces computers with no fans. In its prospectus, the company says that it has been operating in the microcomputer fields for 17 years. In January 2016, CompuLab launched the Airtop - a computer designed to be its flagship product. This powerful computer can be used as a work station, server, or for running heavy games. It is kept cool without a fan. The company operates in two other fields: small computers without fans and computers on modules (CoM), which are installed in other devices, such as medical devices, transportation systems, military systems, robotics, etc.
CompuLab has 78 employees in Yokneam, 24% of whom work in engineering and technical support. The company posted $22 million in revenue in 2016, 12% less than in 2015 and 6% less than in 2014. $12.9 million of its revenue came from the sale of microcomputers. The prospectus also cites a decline in the number of units sold in 2016: both computer on modules (CoM) and microcomputers.
At the same time, in contrast to its net losses of $614,000 in 2014 and $120,000 in 2015, CompuLab posted a $1.4 million net profit in 2016, after the company cut its operating and financing expenses.
CompuLab's EBITDA totaled $3.8 million in 2016. As of the end of 2016, CompuLab had $618,000 in cash, compared with a $6.3 million bank debt listed as being short-term. The company has access to a $3.9 million line of credit from Bank Leumi (TASE: LUMI).
In the framework of its prospectus, the company is obliged to list its principal competitors. CompuLab says that these include huge companies like Intel, Dell Computers, HP, Lenovo, and others.
CompuLab cofounder, chairman, and CEO Gideon Yampolsky is also the company's controlling shareholder with a 70.8% stake before the IPO. The CFO is Yuval Yanai, who served in the same position at Given Imaging. CompuLab says that its eight most senior executives received an aggregate $894,000 in salary in 2016, including Yampolsky's $178,000 salary and $63,000 for TechnoPlus's two directors. Despite severe criticism by the company's minority shareholders, TechnoPlus's shareholders' meeting last year approved bonuses for the company's senior executives in the event that the company sells its CompuLab stake. TechnoPlus CEO Chen Katz will receive 1.85% of TechoPlus's proceeds from a sale, CFO Noa Matzliach 0.4%, chairman Yanir Farber (son-in-law of TechnoPlus shareholder Menachem Einan) 1.5%, and vice-chairman Eyal Rosenthal 1.25%. CompuLab's IPO will be considered an "exit event" allowing bonuses to be paid.
TechnoPlus is controlled by veteran fund Infinity Private Equity (20.3%); Shlomo Tisser, controlling shareholder of the Villar International real estate company (13.3%); and the Einan family's EFG Investments (10.2%). Eto Capital Markets has an 11.3% minority holding.
Published by Globes [online], Israel Business News - www.globes-online.com - on June 14, 2017
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