Look For Under Pressure DSS Stock To Get A Boost From New IP Leadership Following
Corporate Merger Along With Improved Third Quarter Results
CHICAGO, Dec. 3, 2012 /PRNewswire via COMTEX/ -- Lexington Technology Group Inc.
(LTG) recently appointed veteran IP executive Jeff Ronaldi as chief executive
officer of the company, as it prepares for a merger with Document Security
Systems Inc. (nyse mkt:DSS). Ronaldi will continue as CEO following the merger.
Ronaldi, a former board advisor to Lexington, replaced Will Rosellini, who now
assumes an advisor role to LTG's wholly owned subsidiary, Bascom Research, LLC.
Ronaldi has spent the last ten years specializing in monetizing patents. Ronaldi
brings expertise in leading successful patent lawsuits, including winning a $50
million verdict for Shelbyzyme against Genzyme and a $20 million willful
infringement verdict versus Citrix Systems Inc. in 2012. He also managed a
venture capital group for SPX Corp, in which he was behind a patent infringement
lawsuit against Microsoft that resulted in a $62.3 million verdict, which later
settled for $60 million. Prior to LTG, Ronaldi served as CEO of Turtle Bay
Technologies, Ltd, a wholly owned subsidiary of Juridica Capital. There, he used
his financial expertise to determine the value of different patent technologies.
"In many ways, leading Lexington is a perfect opportunity to leverage the two
phases of my career: leading technology startups and monetizing IP," Ronaldi
stated about his appointment. "One of the things that attracted me to Lexington
is the quality of the portfolio. I've been monetizing patents for more than 10
years and I've had a lot of success. I expect this portfolio to be every bit as
successful as any of the others I've managed."
Also, DSS has promoted Robert Bzdick to acting CEO. Bzdick , DSS's current
President and Chief Operating Officer, brings an extensive background in managing
manufacturing operations. He will assume this role until the merger of the two
companies become finalized, projected for the in the first half of 2013.
While LTG owns intellectual property assets, DSS specializes in anticounterfeit,
authenticication, and mass-serialization technologies. Its technologies are
designed to determine the authenticity of different products in various forums.
This combination will help strengthen DSS's intellectual property portfolio and
potentially enhance its revenue through the monetization of the combined
company's intellectual property assets. If the merger closes, LTG will bringing
over $7 to $10 million in debt free cash to DSS.
Bascom Research LTG acquired patent assets from Thomas L. Bascom, president of
LinkSpace, LLC. LTG and Linksys are currently collaborating, through Bascom
Research, to pursue research and development of radio frequency identification
(RFID) software for use in the electronic health records space. Bascom Research
hopes to increase the safety of patents in hospitals through utilizing its assets
with LinkSpace's enterprise-level software framework and DSS's digital security.
Bascom Research also owns several patents regarding the means for companies to
utilize social media. For the most part, Bascom Research is enforcing these
patents by suing major social media platforms for patent infringement. Bascom
Research could bring hundreds of millions of dollars to the new combined LTG/DSS
entity if it can win any of its lawsuits filed against five companies, including
Facebook (FB), LinkedIn (LNKD), and Jive Software (JIVE), which are pending in
federal court for the Eastern District of Virgina. For its claims against
Facebook, Bascom is seeking past damages dating back to 2006. Since that time,
the social media giant has generated $7.38 billion, so a potential damages award
could be massive. A hearing is scheduled for December 7, 2012 to determine
whether the case will remain before the "rocket docket" in Virginia or be moved
elsewhere.
DSS 3rd Quarter Results DSS reported several improvements in its Q3 results
including a 15% revenue jump from Q3 of 2011. Year-to-date, total revenue is
$11.7 million, which is a 27% increase from 2011 and put ths company on pace for
its strongest year.
Increased sales in the packaging division led the way for DSS, rising 39% during
the quarter. Licensing and digital sales also increased by 13% from the prior
quarter. Overall, for the first nine months of 2012, packaging sales are up by
54% from the first nine month of 2011 and licensing and digital sales have
increased 27%.
DSS also made strides in its gross profit performance during Q3, which saw gross
profit increase by 20% from Q3 2011. This resulted in gross profits reaching
$1.52 million for the quarter. DSS has made efforts to streamline operating costs
and focus its attention on sales efforts with higher margin opportunities. These
decisions have paid off for DSS mainly in its printing division, where gross
profit for the year to date has increased by 149%.
When measuring performance using adjusted EBITDA, the third quarter reflected a
7% improvement over adjusted EBITDA of Q3 of 2011.
These results seem to be promising for DSS, as it has an opportunity to build on
its 3rd quarter momentum in the fourth quarter, which has historically been the
company's strongest.
DSS's former CEO Patrick White stated, "We are very pleased with our third
quarter results, where we saw strength in all of our business divisions. As we
enter the final quarter of 2012, we expect to continue to build upon our revenue
and gross profit growth that allowed us to reach the important financial
milestone of positive adjusted EBITDA in the month of September."
DSS stock last traded at $2.70 with a market capitalization of $58.6 million.
Over the last year, the company has traded between $2.26 and $5.12 per share. |
