Vringo Inc. (VRNG) Inks Letter of Intent to Acquire m-Wise Assets

By @ibtimes on

Vringo Inc., a provider of video ringtones and personalization solutions for mobile devices, today announced it has signed non-binding Letter of Intent (LOI) to acquire substantially all of the assets of m-Wise Inc. (MWIS.OB).

Per the LOI, Vringo will issue m-Wise 1.9 million shares of its common stock; provide m-Wise’s management with a retention package comprised of options to purchase 500,000 shares of common stock; and assume and pay over a two-year period certain of m-Wise’s expenses and related costs in the amount of $615,000. In addition, Vringo will issue a five-year promissory note for $320,000 convertible into 200,000 shares of its common stock for certain services provided in connection with the transaction.

m-Wise’s platform is designed for content owners and service providers to manage, deliver and monetize mobile entertainment, content and applications; the platform has been used in more than 300 applications across more than 50 mobile networks by more than 50 international content and media providers.

For the nine months ended September 30, 2010, m-Wise reported sales of $2.1 million, gross profit of $1.2 million and a net loss (including non-cash, stock-based expenses and options accounting) of $0.8 million.

Vringo said it anticipates cost savings and operational synergies from combining m-Wise’s business with Vringo’s core business. Vringo expects the m-Wise acquisition to be cash flow accretive with the potential to reduce Vringo’s overall burn rate in the first full year of combined operations.

“This business combination makes tremendous sense for Vringo,” Jon Medved, Vringo’s CEO stated in the press release. “By adding m-Wise’s rich back-end server technology to Vringo’s proven video application ability, we can generate significant product, customer and cost synergies. We intend to use the m-Wise platform to release multiple new video and other mobile consumer services to our growing family of content and carrier partners. We also expect to acquire revenue and margin contribution as a result of this transaction, which would bring us that much closer to profitability.”

Zach Sivan, m-Wise’s CEO, emphasized the potential of the collaborative efforts and resources of the companies.

“We are excited about the prospects of joining with Vringo to provide a rich end-to-end mobile application service platform to an expanded list of customers and directly to consumers. Mobile services are moving to the cloud, and video is the coming tsunami which will drive the entire mobile market. Together with Vringo’s creative and market leading video team, we expect to ride this huge wave to our mutual benefit,” Sivan stated in the press release.

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