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DSS Announces Acquisition Of IP To Launch Hardware And Peripherals Business

Stocks in this article: DSS

TYSONS CORNER, Va., Oct. 14, 2013 /PRNewswire/ -- Document Security Systems, Inc. (NYSE MKT: DSS; "DSS"), a leading developer and integrator of security technologies, today announced that it has acquired two patent portfolios that will enable DSS to develop proprietary, patent-protected hardware and peripherals that incorporate core DSS security technologies.

The portfolios, which were acquired during the third quarter of 2013 from two different owners, cover key aspects of semiconductor manufacturing and the use of low-power Bluetooth peripherals.  The acquisitions support efforts by DSS's R&D and Digital groups to develop dedicated devices and peripherals that run AuthentiSuite, DSS's digital platform for brand protection.  

On September 23 rd, DSS announced its first sale of AuthentiSuite with MedTech Wristbands, a leading provider of wrist identification and access control solutions designed for the leisure and entertainment markets. DSS anticipates additional sales of AuthentiSuite by the end of 2013.

Robert Bzdick, President of DSS said, "These new portfolios will protect our AuthentiSuite franchise and provide us with flexibility to develop patent protected solutions that meet with some of our customers' needs.  It opens news doors and gives us a head start on our internal R&D."

The portfolio acquisitions represent new licensing opportunities for DSS and bring DSS closer to its stated goal of having at least seven technology management investments by the close of 2013.

Jeff Ronaldi, CEO of DSS stated, "These acquisitions reflect our interest to diversify our product suite and our technology licensing opportunities.   These assets provide us with immediate patent protection in areas where we are developing AuthentiGuard and the ability to license these technologies on their own or with our broader portfolio."

The portfolios were acquired for a total purchase price of approximately $2.5 million and a portion of the costs of acquiring and monetizing both portfolios was provided by private investors who were not previous equity owners of DSS or Lexington Technology Group, the predecessor of DSS Technology Management. DSS does not anticipate the need to raise additional capital to pursue monetization of these acquisitions.

DSS filed an S-3 on October 11 th, 2013 registering the common stock underlying approximately 4.9 million warrants to purchase DSS stock at a price of $4.80 which were issued to shareholders of Lexington Technology Group through the merger with DSS, completed on July 1 st 2013.  In addition to registering the stock underlying these warrants, DSS registered up to fifteen million shares of common stock which could be used to raise capital through the future sale of equity.  Once the shelf is made effective, DSS may seek strategically to sell its common stock by pulling shares off the shelf in one or more offerings, in amounts, and at prices, to be determined.  DSS has no immediate plans to do so based on current market prices.

Peter Hardigan, COO of DSS stated, "As a public company, we intend over the long term to use our balance sheet to fund all our acquisitions, however at this point in time, it makes sense to share risk with private investors focused on the monetization part of our business as we diversify our IP investments.  Raising capital at these levels is not something we want to do. We believe that the stock price will recover as we continue to execute on our goals."

Further details of the acquisitions will be reported during DSS's third quarter 2013 earnings call.

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