WorldGate raises $17.5 M

WorldGate Communications [1] 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. [2] 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 [3], 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.