Procom Seeks Funds for Router, Switch
By ANDREW SIMONS
Officials at troubled Procom Technologies Inc. are looking for $12 million to $14 million to start a new company around two pieces of technology, a company official said.
Irvine-based Procom hopes to fund a router and a switch that allow for what techies call storage virtualization, a more efficient way to access stored data.
Traditionally, a server gets stored data by accessing a specific computer. With storage virtualization, several computers making up a storage network are seen as one.
“We hope to spin it off into a separate company,” said Alex Aydin, a vice president with Procom. “That’s why we’re looking for that much money.”
Procom has shopped the technology around to several OC venture capitalists, including Palomar Ventures and Crosspoint Venture Partners in Irvine, Costa Mesa’s Innocal Venture Capital and Corona del Mar’s Miramar Venture Partners. The company also hit up TL Ventures in Los Angeles.
None of the venture firms would comment on specifics of the technology or whether they planned to invest in it.
“It’s a deal we’ve looked at, but we’re not sure whether we’ll proceed with it,” said Randy Lunn with Palomar Ventures.
Procom makes devices for storing large amounts of data. The company’s products attach to a network and are made using several identical disks to ensure data is backed up. Procom’s four founders,Chief Executive Alex Razmjoo and vice presidents Nick Shahrestany, Frank Alaghband and Aydin,own a combined 37% of the company.
Any funding would come at a rocky time for Procom.
Late last year, the Securities and Exchange Commission notified Procom it was looking into $375,000 the company paid to Brighton Capital Ltd.,a fund run by Westminster, Hope & Turnberry Ltd. in the Bahamas. The money was paid to the fund for introducing Procom to Houston-based Montrose Investments Ltd., which bought Procom’s 6% convertible debentures last year.
Procom warned it might have to give back the $15 million to Montrose if regulators say the fee was improper. The company said it doesn’t know whether it will be able to recover the $375,000 it paid to Brighton.
Last November, Procom hired Bob Rankin as its chief financial officer from El Segundo-based DeCrane Aircraft Holdings Inc., which makes materials for the inside of luxury airplanes. Rankin replaced longtime financial chief Richard Johnson.
“We wanted to bring somebody on board who was a little more hands on,” Aydin said. “We were a small company and that’s what we need.”
But Procom forced Rankin out in March.
“He was really better suited for big companies,” Aydin said.
Procom is interviewing replacements, he said.
Rankin didn’t win many friends while
at Procom. He sought to get customers on credit to pay up.
“We have initiated tougher credit policy and collection processes,” Rankin said while serving as chief financial officer. “We felt it was prudent to take additional reserves against receivables. The company intends to move aggressively to attempt to collect these receivables.”
Along with other companies in the storage industry, Procom shareholders have seen a precipitous decline in the value of their stock, which has fallen 90% in the past 12 months. As of last week, Procom counted a market value of about $20 million.
