Cash-strapped storage management software company Tricord Systems Inc said it has closed a $3m private placement of restricted securities and warrants. Under the terms of the agreement, the Plymouth, Minnesota-based company issued three million shares of restricted common stock at $1 per share, in addition to one warrant per share with an exercise price of $3.50 per share, expiring in five years. Rod Canion, a founder and former chief executive of Compaq Computer Corp was the lead investor in the funding. Concurrent with the investment, Tricord said several key management roles are being filled with J David Cabello, former senior VP and general counsel of Compaq, assuming the same role at Tricord. Kathleen Clark, a former marketing executive at Compaq, will become VP of marketing at Tricord and Lewis Schrock, another former marketing executive at Compaq, will be director of product marketing. All three took part in the investment, as did Tim Harris, former Compaq vice president. Tricord said Canion has agreed to be available to advise the management team on strategy and product direction. The private placement answers some pressing questions for Tricord, which needed cash badly as it transitions itself from an Intel-based server company to a software vendor. All $2.6m of revenue booked in its last quarter (down 61.3% year-over-year) was server related and that business continues to dwindle down to nothing. Meanwhile, revenue from the new software products isn’t expected to materialize until the second half of 1999. In October, Tricord said it was looking for any and all opportunities to stay in solid financial health, citing deals with strategic partners and OEMs, straight investments, pre-paid royalties against the new products or even an outright merger as possibilities. In the meantime, the company has been keeping its burn rate very low and had cash of $3.3m as of September 30 compared to $3.7m at December 31, 1997. Tricord stock closed Wednesday at $2.1875, up $0.1875. In September, the shares had fallen below the Nasdaq closing requirement for continued listing. The exchange had warned the company that if its shares didn’t show a closing bid price of at least $1 for ten consecutive trading days by December 10, it would be de-listed.
