An Orange County technology company is looking to raise $25 million in an initial public offering,and keep some new shareholders happy.
Laguna Niguel-based GenuTec Business Solutions Inc., which makes software and runs a network allowing customers to send mass voicemails, recently filed to go public on Nasdaq under the symbol “GENU.”
The underwriters for the offering are Ladenburg Thalmann & Co. in New York and Newport Beach-based Roth Capital Partners LLC.
The company plans to use the proceeds to pay down at least $5 million in debt, hire more people, buy more equipment and potentially acquire other companies, according to a filing with the Securities and Exchange Commission.
GenuTec has about $20 million in debt to pay off by 2010.
The offering also could assuage stockholders in message service company Smart Development Corp., which GenuTec acquired nearly a year ago for close to $17 million.
According to the filing, if GenuTec doesn’t go public,or have an “effective” registration statement,by Nov. 15, it will default on a pact with Smart Development shareholders.
“We may seek a waiver from this requirement if we believe that we will not complete our offering before Nov. 15,” the company said in its filing. “But our lenders may not consent to a waiver.”
If GenuTec doesn’t get the offering off the ground by Nov. 20, the stockholders can demand compensation for their shares,a bill that would exceed $6 million.
GenuTec, which has grown via acquisitions, saw sales hit $9.7 million, up 41% from a year earlier, in the six months ended March 31. The company was profitable in the period, growing net income to $847,000 from $161,000 a year earlier.
For the 12 months ended Sept. 30, GenuTec reported sales of nearly $15 million. The company lost more than $1.5 million in the period as it racked up acquisitions.
GenuTec has developed its own software that harnesses the Internet and telecommunications networks to send out and track phone messages and bolster e-mail marketing.
Customers can sign up to have a pre-recorded message sent out to multiple numbers.
A residential real estate brokerage might skip cold calling and send out a pre-recorded message to targeted neighborhoods.
“Interested prospects simply press a key while listening to your message, and they are instantly connected to you on the phone call,” GenuTec said on its Web site.
The company hopes to win business with governments looking to do mass notifications during emergencies.
Until now, most emergency notification companies have been small and geared toward reaching emergency services workers, the company said.
But GenuTec has about 100 servers and nearly four dozen data pipes that can handle more than 31,000 phone lines, according to its filing. It can send out millions of messages in minutes.
“After the 2004 Florida hurricanes and 2005’s Hurricane Katrina, the need became more evident for an effective mass public notification system,” the company said. “We expect demand for our services and solutions to increase within the U.S., and to develop worldwide.”
The threat of terrorism also could bring demand, according to GenuTec.
“In early 2003, after the release of the 9-11 Commission Report, which identified a need for public emergency notification, we identified an opportunity to expand into the mass public emergency notification segment of the voice messaging industry,” the company said.
GenuTec made four buys from 2004 to early this year to fill out its product lineup.
In 2004, the company spent $14.2 million on Irvine’s Sound Media Group Inc., which provided voice messaging services to political campaigns.
Sound Media landed a contract with the John Kerry campaign that year but was dumped after the campaign learned the calls were routed through Canada, according the Milwaukee Journal Sentinel.
For GenuTec, the Sound Media buy “established an operating infrastructure” for sending emergency notifications, the company said.
Last September, GenuTec paid $16.7 million for Smart Development, which helped the company “fully automate” emergency notification services.
That same month, GenuTech spent $655,000 on some of Simtel Corp.’s assets, including contracts for emergency notification services to cities and other governments. Software maker GenuTec hopes to raise $25 million by going publicIn January, GenuTec paid $1.7 million on 151 contracts from Community Alert Network Inc., which provides emergency notification services.
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PUBLIC DOMAIN: Recent public offering filings
August: Irvine-based memory module maker Netlist
Inc., $58 million
August: Laguna Niguel-based messaging company
GenuTec Business Solutions Inc., $25 million
August: Anaheim engineering services company
Willdan Group Inc., $29 million
May: Aliso Viejo-based medical device maker
SenoRx Inc., $86 million
April: Irvine-based medical device maker Alsius
Corp., $40 million
April: Newport Beach-based chipmaker Jazz
Semiconductor Inc., $105 million
