It has been a busy few months for investors at Vringo, Inc (NASDAQ:VRNG). The company announced a settlement from its long-time litigation with ZTE, and the company has substantially expanded its product portfolio. Vringo is helping to expand its focus from being a company solely focused on monetizing its Intellectual Property to helping make sure that it has a diverse product portfolio. Vringo appears to still be worth an investment with the continued strength of its IP portfolio and its ability to expand its product portfolio.
Vringo has been involved in much high profile litigation over the last few years. One of its main pieces of litigation did not work out so well for the company when it sued Google (NASDAQ:GOOG) (NASDAQ:GOOGL) over its AdWords system. While Vringo won at the district court level that judgment was overturned at the appeals court level and the Supreme Court refused to take the case. However, a recent development has helped to rebuild confidence within Vringo's investment portfolio. That is the company's litigation vs. ZTE inc, which resulted in a $21.5 million lump sum settlement to settle worldwide litigation. For a full view on the agreement, I recommend this article by a fellow Seeking Alpha author. That article goes much more in depth into the agreement between Vringo and ZTE.
The agreement with ZTE is important because it suggests that the company will have a much easier time being able to bring other defendants to the table. In the legal world one victory sometime helps to create a snowball effect into other victories. I would expect that since Vringo has now successfully forced a company to license its patent portfolio, we will see Vringo be able to force other companies to the table. This also will be important due to the fact that it could lower the litigation costs as courts have already shown a willingness to uphold the patents and enforce injunctions based upon them. I would expect for Vringo to announce additional litigation based upon the patent portfolio that it acquired from Nokia.
We don't need to simply speculate about upcoming litigation. We do know that Vringo is already engaged in other litigation vs. large corporate opponents. I also would expect for Vringo to continue to look at other opportunities to be able to in-license potentially valuable patents which could help create other opportunities for litigation.
Vringo recently announced an agreement to acquire all of Fli Charge, which is a company that is attempting to develop systems for the wireless charging of cellphones and other devices. This is potentially a very promising area for the company to be expanding into and should help allow Vringo create a product portfolio that will hopefully develop a needed revenue stream. The acquisition of Fli Charge also could help give Vringo a new patent portfolio that it should be able to monetize. The patent portfolio at Fli Charge also appears to be robust which should help to provide the needed patent protection surrounding its products.
Fli Charge has had some promising recent developments which suggests that the company could be very promising for Vringo. One of the major developments was that Fli Charge partnered with MITO corporation to commercialize aftermarket automotive power and charging solutions. This agreement will help the companies try to develop a solution for helping to charge devices inside of the car. Fli charge also is focused on consumer electronic devices, which presents an important commercialization opportunity for Vringo. For more information regarding all of Fli Charge's product offerings please look at this document. The addition of additional products will be promising for Fli Charge, but the real value will come once the company is able to take this promising technology and convert it into constant revenue streams for Vringo.
Fli Charge also is very important for another reason, however, in that it helps to move Vringo out of the "patent troll" category. One of the primary threats facing any company that monetizes its IP is legislation that will help to limit the ability of patent trolls to litigate within the United States. However, having actually technology surrounding its patents should help to make sure that Vringo will not be subject to such legislation.
Finally, another interesting subsidiary at Vringo is Group Mobile. Group Mobile is a distributor of only rugged laptops and rugged mobile devices. These devices are primarily designed to be able to be used within the field primarily by government officials. Group Mobile is focused on trying to obtain contracts for government officials and for the needs of various governmental agencies. This line of products is expected to continue to grow in demand, which should increase the value of Group Mobile. This is an area that is potentially a high growth area for rugged mobile devices and laptops. The market is not limited to just the government and could include corporations with employees who need the devices for use within the field. Group Mobile should be an interesting subsidiary to watch for Vringo and could help drive substantial growth going forward.
One of the main concerns when looking at a company like Vringo is the financial situation. While Vringo is not currently operating at a consistent profit, it does have a substantial cash runway of $27 million which should help the compan fund its operations for four years at the current cash burn rate. Having this much cash on hand also should make any potential investor confident that the company will not need to dilute shareholders in the immediate future. Why is this important? As an investor you don't want to invest in a company only to see your investment further diluted which also hurts the share price of the company.
The financial situation also is promising because it helps provide Vringo with the cash that it will need should the company decide to pursue any additional opportunities. With its proven ability to monetize its intellectual property, it would not be surprising to see Vringo consider obtaining additional IP assets.
Vringo is poised to have an exciting 2016. After being able to finally wrap up its litigation vs. its longtime nemesis ZTE and closing the acquisition of Fli Charge, the company is finally poised for growth. Vringo's ability to monetize its IP portfolio should help lead the way for more IP settlements and more opportunities to acquire additional IP assets. With a large cash runway, investors do not need to be afraid of dilution while at the same time Vringo will have the cash assets that it needs in order to be able to jump on any opportunity that comes its way. Vringo is a stock to watch in 2016.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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