Overland Storage is running out of time in its attempt to transform itself from a tape vendor to a disk system vendor.
Overland has been losing money for years, and last quarter’s loss of $6.9 million left it with $5.4 million in cash. The vendor is betting its future on the Snap Server NAS business it acquired from Adaptec in June and disk backup products, but needs funding to stay alive. On its earnings conference call, CEO Vern LoForti said he hopes to raise $10 million in funding to keep the company going. But getting $10 million in today’s credit crunch isn’t so easy, and Overland has been trying to raise money for at least three months.
In an email to SearchStorage this week, LaForti indicated funding could be coming soon.
“As we indicated in our conference call, we are in discussion with a number of financing institutions concurrently,” he wrote. “We have various letters of intent in hand, and a number of the institutions are currently processing documents for our signature. As we get closer to closing, we will select the one that is most advantageous to Overland. We will publicly announce when the deal is closed. This is #1 on our priority list.”
It has to the top priority, if Overland is to survive. The 10-Q quarterly statement Overland filed with the SEC last week paints a bleak picture:
Possible funding alternatives we are exploring include bank or asset-based financing, equity or equity-based financing, including convertible debt, and factoring arrangements. … Management projects that our current cash on hand will be sufficient to allow us to continue our operations at current levels only into November 2008. [Emphasis added]. If we are unable to obtain additional funding, we will be forced to extend payment terms to vendors where possible, liquidate certain assets where possible, and/or to suspend or curtail certain of our planned operations. Any of these actions could harm our business, results of operations and future prospects. We anticipate we will need to raise approximately $10.0 million of cash to fund our operations through fiscal 2009 at planned levels.
Since it’s already November, the clock is ticking.