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xG Technology Inc (NASDAQ:XGTI) Looks Set For A Strong 2017

xG Technology Inc (NASDAQ:XGTI) Looks Set For A Strong 2017
Written by
Chris Sandburg
Published on
February 2, 2017
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xG Technology Inc (NASDAQ:XGTI) is a company that we have looked at on a number of occasions here at Insider Financial. The company has had a bit of a rough 12 months, and really took a hit heading into the close of last year, but over the last couple of weeks, has started to pick up some serious traction. As such, we expect 2017 to be a far better year than 2016 for xG Technology and its shareholders.The last time we looked at xG, it had just regained NASDAQ compliance, and we highlighted this as a pivotal point for the company mid-January. At that time, shareholders were a bit despondent from a sentiment perspective, with the despondence rooted in the potential for a reverse split. However, as is generally the case in this end of the market, a reverse split, while tough to shoulder for shareholders, is necessary to maintain compliance.Anyway, compliance is now in the rear view mirror, and going forward it is all about driving value-add. Something that, in our opinion, the company managed to achieve during the latter half of January.First, xG announced the closing of an acquisition that saw it pick up a company called Vislink Communication Systems. This is something we looked at in a little more detail in previous coverage, but by way of a quick introduction to Vislink, its specializes in what is called screen to screen wireless broadcasting. Screen to screen is exactly as it sounds – the transmitting of visual and audio outputs from one screen to another, enabling things like the live broadcast of sports events, concerts, that sort of thing.This sort of live broadcasting fits neatly with xG's current product offerings, and so we see this closing as a real upside driver going forward. Not only because the company can now start to pitch a fresh offering to new potential customers (and in doing so, expanded its base) but also because it now has an upsell product for its current customer base; one that should enhance offerings to said clients.So, that deal closed, and we saw some upside on the announcement. Additionally, however, the company also reported that it had paid off debt from 2016 acquisition of an entity called Integrated Microwave Technologies (IMT). xG picked up the latter for $3 million back at the beginning of 2016, having borrowed $2.7 million from a company called Skyview. This debt is now repaid, and IMT has become an integral part of xG, and has demonstrated its importance as a key revenue driver going forward. Just as with the Vislink closing, the Skyview debt repayment injected some upside into the company, which brings us to our final most recent catalyst – the initiation of a sales rollout for one of IMT's most innovative products, called Dragonfly.When things like drones record videos, they need a transmitter that fires the signal to a receiver at the display-end of the connection. Dragonfly is at the cutting edge of the technology that underpins these transmitters, with a 2 mile line of sight range, practically no latency, a size comparable to a credit card in width and height and high definition broadcast quality.With the screen to screen offerings that have come about on the Vislink acquisition, and the transmission capabilities of the Dragonfly technology, xG is a real force in this space as things stand. The product began shipping to customers as of February 1, so we should be looking to gain some insight as to the quantitative impact of this shipping when first quarter financials hit press.On that note, cash as of September 30 came in at $1.8 million, which when weighed against debt of around $5 million isn’t great, so we're probably looking at some sort of raise to fund growth during the coming quarters. We don't consider it prohibitive to an exposure at this stage, but it should be taken into consideration before committing capital.We will be updating our subscribers as soon as we know more. For the latest updates on XGTI, sign up below!Disclosure: We have no position in XGTI and have not been compensated for this article.

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