Microsoft Corporation (Nasdaq: MSFT) is buying Israeli digital pen company N-trig. The company has developed a chip for a digital pen and computer screen interface. No financial details about the acquisition have been disclosed but market sources believe that Microsoft will pay $200 million for the Kfar Saba based company. N-trig declined to comment.
Microsoft already owns a stake in N-trig and is by far its largest customer, responsible for 79% of revenue. N-trig has recently been financially-troubled after failing to meet the financial conditions of a loan that it took and a "going concern" warning was attached to its 2014 statement.
N-trig is led by CEO Dan Inbar who took over from Amichai Ben-David 18 months ago. The company has 170 employees. Founded in 1999, N-trig changed its business model in 2011 to focus on digital pens. This led to a fall in revenue. The company has raised $130 million over the year in eight financing rounds so that the acquisition by Microsoft will not yield major profits for its investors.
In 2011, when revenue peaked, the company's value was estimated at $200-300 million, when there was talk of a Nasdaq IPO that never materialized. Last year N-trig cancelled a planned IPO on the Tel Aviv Stock Exchange (TASE).
As of June 2014, N-trig had lost $117 million and it had a negative cash flow of $4.4 million from ongoing operations in the first half of 2014. The company had less than $5 million in cash and equity of just $12 million.