Small investment brings validation dividends

To Roger Branton, the recent $50,000 investment in his $16 million mobile phone technology company is worth infinitely more than the extra cash, at least in terms of what the company is really going after: Validation.

That's because the source of the investment in the company, Sarasota-based xG Technology, are individual attorneys from Blooston, Mordkofsky, Dickens, Duffy & Pendergast, a Washington D.C. law firm. The practice is a nationally known leader in working for telecommunications and wireless companies, both in civil court and in front of the Federal Communications Commission.

The fact that lawyers themselves bought shares of the firm, says Branton, xG's chief financial officer, is even sweeter. “It's a huge endorsement,” Branton tells Coffee Talk. “Anytime you get a lawyer to put his money where his mouth is, it's a big deal.”

The firm has represented xG on some cases before, going back to when the company was founded in 1999. The company is publicly traded on the London Stock Exchange; a recent closing share price was 28 cents a share. (See 7/02/09 Review.)

“We believe that the technology xG has developed represents a unique approach to addressing the need for more spectrum capacity,” attorney Hal Mordkofsky says in a statement. “[That] could prove to be an important development for the telecommunications industry.”

Validation like that, says Branton, is priceless for xG, which has spent close to the past 10 years in a race to become the first company to provide an inexpensive way to make mobile phone calls over the Internet. Its efforts have riled some competitors and have also spawned Web sites and blogs of doubters and cynics.

The members of the law firm bought their shares in a private stock placement held earlier this month, in total buying nearly 150,000 shares at 34 cents each. Overall, xG raised $6.6 million from the sale.