Inventergy Global Inc. (INVT), the patent licensing company run by CEO Joseph Beyers, is raising up to $10.25 million in a private placement of common stock and warrants arranged by Chardan Capital Markets.
The Campbell, California based company said in a filing with the Securities and Exchange Commission it plans to issue 5 million units consisting of a common share and a warrant to purchase a common share priced at $2.05 a share. It expects to bring in about $9.2 million from the offering after expenses. Chardan's fee will be 8% of the amount raised or up to about $820,000.
Shares of Inventergy gained 8 cents or 5.15% to $1.63 a share today. They’ve traded between 71 cents and $4.70 over the past year.
The capital raise comes as Inventergy struggles to bring in revenue from its licensing business. In the second quarter, Inventergy posted revenue of $1.44 million, down from $4.5 million, a year earlier. In the second quarter, the company’s general and administrative expenses increased to $1.79 million from $1.16 million, a year ago.
At June 30, Inventergy had an accumulated deficit since inception of $57.73 million and had negative working capital of $10.27 million. As of August 11, the company had remaining cash of just $469,389.
Inventergy recently announced an amendment to its $11 million debt and revenue sharing agreement with Fortress Investment Group. The amended agreement deferred the beginning of its monthly note principal amortization repayment until September 30. Secondly, it suspended the company’s obligation to maintain a $1 million minimum cash balance until September 30. Thirdly, it allowed Inventergy to use up to $250,000 of revenue earned from patent sales and exclusive licenses to make certain specified payments.
In addition, the amended agreement means that after Inventergy has paid back its debt obligations to Fortress, the company may then satisfy its remaining $11.3 in revenue share obligations by paying Fortress: $8.5 million, if paid on or before September 30; $9.5 million, if paid before December 31; or $11.3 million, if paid thereafter.
In return, Fortress received a seven-year warrant to purchase 1 million shares of the Inventergy common stock with an exercise price of $2.005 a share.
Inventergy said it intends to use about $5.5 million of the net proceeds from the offering to redeem outstanding shares of preferred stock, approximately $1.2 million for payment to a seller of patents and the balance of the net proceeds for working capital and general corporate purposes, including the recently-launched Inventergy Innovations program.
Inventergy said if the net proceeds from this offering are less than $5.5 million, it will use all of the net proceeds from the offering to redeem the outstanding shares of preferred stock. If the net proceeds from the offering are more than $5.5 million and less than $9.2 million, the company will it use about $5.5 million of the net proceeds to redeem outstanding shares of preferred stock and the balance of the net proceeds for working capital and general corporate purposes, including the recently-launched Inventergy Innovations program.
Through Inventergy Innovations, the company has signed agreements with four startup companies to help monetize their patents. So far, Inventergy has entered into definitive agreements with four companies — Pabellon Power Inc., Inoue Office Co. Ltd., GTX Corp (GTXO) and Lopoco Inc., and a letter of intent for a partnership agreement with one other company, to obtain exclusive rights to the commercialization of some or all of the technology and intellectual property of these firms and to share the proceeds of the commercialization efforts with these companies.
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