WorldGate Communications has secured a private placement of $17.5 million led by Satellite Asset Management LP.
WorldGate said it will use the funds to expand R&D and to broaden its line of "Ojo" broadband videophones, and to provide additional working capital. Motorola Inc. is the product's primary distributor.
"Now, with this funding, we have solidified our financial flexibility and capacity to continue the R&D effort, make further advancements in the promise of video telephony, and greatly improve our competitive positioning," said WorldGate Chairman & CEO Hal Krisbergh.
That positioning will only become more important as the company finds itself in fierce competition with other suppliers.
Viseon, for example, has broadened its strategy well beyond equipment and into content delivery. Through a subsidiary called ViseonMedia, the company is preparing to test a service that delivers personalized news and entertainment to the VisiFone device.
As part of WorldGate's transaction, it issued 4,666,664 shares of common stock at $3.75 per share to participating investors. The company also issued five-year warrants to purchase a total of 1,633,333 shares of common stock, with an exercise price of $5 per share.