11. Subsequent Events

On July 14, 2014, Inventergy, Inc. filed a complaint (Inventergy, Inc. v. GENBAND, Inc.) alleging patent infringement of 5 patents owned by Inventergy, Inc. against GENBAND, Inc., in the Eastern District of Texas, Tyler Division (where GENBAND is headquartered). The lawsuit seeks damages and costs, pre- and post-judgment interest, attorneys’ fees and the award of a post-judgment royalty. Inventergy, Inc. has not yet served the complaint, in favor of newly expanded discussions with GENBAND.

On August 8, 2014, Inventergy, Inc., a wholly-owned subsidiary of the Company closed on an unsecured loan of $500,000 (with an effective date of August 1, 2014) from First Republic Bank (the “Unsecured Loan”). The Unsecured Loan accrues interest at a rate of 1.3% per annum and such interest is due and payable on a monthly basis with the first such payment due on September 1, 2014. The Company will pay to First Republic Bank the principal amount of the Unsecured Loan plus all accrued but unpaid interest on or before November 1, 2014. The Company may prepay the principal of the Unsecured Loan at any time prior to expiration of the term of such Unsecured Loan. If the Company does not make timely payment of any amount due and payable to the lender, the Company will be charged 10% interest on the unpaid portion of the regularly scheduled payment. Our Chief Executive Officer and Chairman of our Board of Directors, Joseph W. Beyers, has individually guaranteed payment of the Unsecured Loan. Such guarantee has also been secured by assets owned individually by Mr. Beyers. Upon an event of default (which includes failure to make any payment under the Unsecured Loan) the interest rate due and payable on the Unsecured Loan will increase by 8% and First Republic Bank may declare the entire unpaid principal and interest under the Unsecured Note and all accrued but unpaid interest immediately due.