Inventergy Global Inc (NASDAQ:INVT) investors woke up this morning to a 14% pop in the value of their shares, after the IP licensing and innovation company provided an update to investors regarding its recently signed debt amendment to its debt repayment terms and letter of intent (“LOI”) with Fortress Investment Group. The Company clarified that the potential deal with Fortress eliminates all of its structured debt (over $23 million) and reduces its expenses by nearly $1.3 million per quarter in exchange for a revenue sharing agreement with Fortress.
Joe Beyers, Chairman and CEO of Inventergy, said, “Although we’ve closed more than $7.5 million in patent monetization transactions, this is only a fraction of the value of our patent portfolio. Our recently announced non-binding LOI to partner with Fortress is a huge step forward for us as it allow us to simultaneously clean up our balance sheet and debt structure while potentially providing us with substantially enhanced resources for patent enforcement. We believe partnering with Fortress will help Inventergy to realize the true value of our assets. Large companies in the mobile handset and infrastructure markets may face a much more formidable opponent when facing patent enforcement actions. The completion of this non-binding LOI provides Inventergy with substantial operating flexibility to not only tightly support the Fortress-funded patent monetization activities, but also allow us greater freedom to focus on our fast-growing Inventergy Innovations subsidiary.”
Beyers continued, “Due to our size and limited cash resources, our previous strategy was based on a combination of patent sales to cover operating and debt servicing expenses, combined with ongoing licensing efforts. This process can be difficult when litigation is required as part of the enforcement efforts, due to litigation’s drawn out and time consuming nature. With the deeper Fortress relationship outlined in the LOI, we can now avoid selling our patent assets at discounted values and focus on licensing and related enforcement efforts, thus preserving Inventergy’s valuable portfolios. Inventergy has a rich technology patent portfolio consisting of more than 760 worldwide patents acquired from industry leaders including Panasonic (OTC PINK: PCRFY), Nokia (NYSE: NOK) and Huawei (SZSE: 002502). The portfolios contain a handpicked set of worldwide assets that are a combination of standards essential patents (SEPs) and valuable implementation patents. We currently have signed letters of intent and definitive agreements ready to sign adding up to well within the 8-figure range for licensing and patent sales transactions. However, once we complete the definitive agreement with Fortress, we believe the heightened patent licensing efforts with telecommunications device and infrastructure companies and telecommunications service providers can result in greater value to Inventergy shareholders than our prior ‘go-it-alone’ strategy.”
Inventergy’s patent assets are applicable to at least four significant primary market segments, on which Inventergy is keenly focused. Capturing the appropriate value from just a part of these markets will significantly bolster Inventergy’s financial position and in turn help the Company achieve its primary goal of generating shareholder value. These four core segments include the following:
1. Mobile Handset and Other End User Devices: In 2015, Inventergy notified the majority of the worldwide mobile handset providers stating that the company owned more than 180 patents in 15 families which the Company believes may be essential to 3G and 4G/LTE mobile communications. Inventergy’s total mobile handset related portfolio consists of approximately 320 patents in at least 40 families worldwide. Inventergy estimates the addressable market for these patents to be at least 8.5 billion units over the next five years. Inventergy has offered a license for its SEPs in this segment for 15 cents to 30 cents per device, depending upon configuration. During the past year the Company has been in direct discussions with nearly 86% of the world’s handset market. While the discussions were productive, Inventergy’s management believes that strong financial support from a company like Fortress with more than $70 billion under management will be a key factor in obtaining fair value for licensing these valuable assets along with the rest of the Inventergy portfolios.
2. Mobile Infrastructure (Cellular Base Stations): Cellular base stations provide the gateway for mobile user voice and data communications. Inventergy estimates based upon Infonetics reports that the cumulative revenue for these systems to be in excess of $107 billion over the next five years. This estimate does not include another significant market segment of small and femtocell base stations. Inventergy currently owns approximately 390 mobile infrastructure patents in approximately 50 families applicable to this market segment.
3. IP Multimedia Subsystem (IMS) and Voice over Internet Protocol (VoIP): These markets consist of IMS infrastructure equipment and software providers which provide the backbone for rich media communications and are forecasted to have cumulative sales of approximately $25 billion over the next 5 years. The VoIP service providers such as cable operators are projected to generate more than $100 billion in applicable revenue over the next five years. The Inventergy portfolio includes approximately 280 IMS/VoIP patents in more than 50 families. Inventergy has closed two transactions in this market and has established a solid base royalty rate for this market segment.
4. Cellular Service Providers: This market consists of telecom operators and service providers. Based on IDC and Infonetics reports, there are more than 1.4 billion subscribers served by approximately 50 telecom operators in the geographies covered by the Inventergy patents. The applicable revenue of these firms as estimated by Inventergy, based on Infonetics reports, is well in excess of $100 billion annually.
The aggregate relevant annual revenue of potential licensees in these four key segments is well in excess of $200 billion, providing Inventergy with very robust target licensing markets to which the Company can potentially sell or license its existing patents.
The market estimates detailed above are based on published reports from IDC Research, Inc. and Infonetics Research. (Original Source)
Inventergy Global, Inc. operates as a intellectual property company, which is engaged in identifying, acquiring and licensing the patented technologies of market-significant technology leaders. The company is headquartered in Campbell, CA.