(By Balachander) Vringo Inc. (NYSEAMEX:VRNG) tanked 12.95 percent in Friday early trade after software developer for cellphones priced a registered direct offering of its shares at a discount of 17 percent to the stocks' previous closing price.
The New York-based company expects gross proceeds of roughly $45 million from the sale of around 10.34 million shares at $4.35 apiece.
Vringo offered the shares directly to five existing institutional investors without a placement agent or underwriter.
"We are entering court mandated settlement discussions with Google (NASDAQ: GOOG) on Tuesday, and trial is scheduled to begin the following week, on October 16," said Vringo CEO Andrew Perlman. "Upon closing the financing, the company will have over $55 million of cash, and Vringo will be in a position of strength."
Vringo shares jumped on Wednesday after a federal judge reportedly ordered settlement discussions with Google over pending patent litigation.
The company alleged that Google has infringed on patent technology Vringo purchased from Lycos Inc. Google used the patented technology by filtering and presenting search and search advertising results based on a combination of an item's content relevance to a search query; and click-through rates from prior users relative to that item.
Vringo's intellectual property portfolio consists of eleven patents, eight of which were acquired from Lycos Inc., as well as over twenty patent applications.
The complaint alleges that Google has adopted the patented technology with its use of Quality Score, according to regulatory filing from Vringo. Also, after adopting the patented technology, Google's market share significantly grew and its profits from search advertising considerably outpaced those of other pay per click advertising providers. Google also allows third party publishers, for example AOL, IAC, Target and Gannett Media, to display advertising search results in response to search queries made on the third party websites.
Shares shed 67 cents, or 12.76 percent, to trade at $4.59 on Friday.