Obtain Financing By Leveraging Your Company’s Top-Line Revenues

OVERVIEW

Excerpt from an Article By Brian Ballo

Despite interest rates being lowered to historical levels, companies remain severely challenged in obtaining corporate financing. In the wake of the Credit Crunch, lenders have imposed stricter lending requirements, while equity investors will only invest at much lower valuations than just a few months ago. As a result, many well-managed middle market companies which do not qualify for (additional) business loans, and/or do not want to dilute shareholder equity at today’s lower valuations, are frustrated by their inability access capital for growth and recapitalizations.

One attractive and innovative financing solution that CFOs at middle market companies might consider is obtaining lump sum capital in exchange for giving the investor a monthly fixed percentage of the company’s top-line (GAAP) gross revenues for a finite period of time, or perpetually. This form of financing, traditionally known as Royalty Financing, is commonly used by software companies that license their intellectual property in exchange for the discounted present value of future licensing fees, as well as by life science and film companies that take present royalties in exchange for future distribution rights.

Until recently, collateralizing debt obligations with top-line revenues, was not used as a main stream corporate finance tool, and there was no secondary market for such securities to provide a liquidity channel for investors. However, after three years of development, Entrex, Inc., based in Chicago, along with Bank of New York/Mellon, are institutionalizing the Entrex Capital Market System for revenue-based securities, and launching an exchange for the trading of this type of security.

These securities are known as Top-Line Income Generation Rights Certificates (aka TIGRcubs™). A TIGRcub™ security can operate as a substitute for either debt or equity securities....

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This is not an offer, or a solicitation of an offer, involving the sale of securities.  Securities are offered through Corporate Finance Securities, Inc., a SEC registered broker-dealer and FINRA member firm.