Patent Properties, Inc. (OTCBB:GLOI), an intellectual property company
that develops and commercializes its unique portfolio of assets and is
creating a disruptive licensing solution for the mass market of patent
owners and users, today announced third quarter and nine-month results
for the period ended September 30, 2013.
Third Quarter 2013 Highlights and Subsequent Events
-
In September 2013, completed the merger of GlobalOptions Group, Inc.
and Walker Digital Holdings, LLC, a wholly-owned subsidiary of Walker
Digital, LLC (the “Merger”). Subsequent to the Merger, Walker Digital
Holdings, LLC changed its name to Inventor Holdings, LLC.
-
In September 2013, completed an $11.7 million primary private
placement from the sale of 3,860,615 shares of common stock at $3.00
per share. Investors also received 50% warrant coverage exercisable
for a period of three years at $3.00 per share. The warrants are
subject to a call if the stock trades above $6.00 per share for 20 of
30 business days once the underlying shares are registered.
-
As of September 30, 2013, Patent Properties has $26.6 million in cash
and no outstanding debt on its balance sheet.
-
Effective November 12, 2013, the Company officially changed its name
from GlobalOptions Group, Inc. to Patent Properties, Inc. Patent
Properties will be changing its ticker symbol imminently.
“The third quarter of 2013 saw us achieve a milestone as we completed
the merger with GlobalOptions and became a public company,” said
Jonathan Ellenthal, Chief Executive Officer of Patent Properties. “The
merger allows us to bring to the public market a broad and still-growing
portfolio of wholly-owned inventions, as well as our ongoing efforts to
protect and enforce our property rights. In addition, we remain on
schedule to launch an entirely new patent licensing solution for the
mass market in the second half of 2014. We believe our new licensing
platform, once built, will address significant inefficiencies in the
multi-billion dollar patent licensing market. Further, we are well
capitalized and have the flexibility to execute our business plan and
monetize our vast portfolio of intellectual property.”
Third Quarter 2013 Results
For the third quarter ended September 30, 2013, Patent Properties
reported total revenue of $1.0 million versus $6.2 million in the
prior-year period, primarily due to recording revenue from one licensing
agreement in the third quarter 2013 compared to ten licensing agreements
in the prior-year period.
The timing and results of patent filings and the Company’s enforcement
proceedings relating to its intellectual property rights will fluctuate
from period to period. Although revenues from one or more of the
Company’s patents or patent families may be significant in a specific
reporting period, Patent Properties believes that none of its patents or
patent families are individually significant to its licensing and
enforcement business as a whole.
Legal and consulting contingent fees for the third quarter 2013 were
$0.4 million versus $2.9 million in the prior-year period. As a
percentage of revenue, legal and consulting contingent fees were 44% for
the third quarter 2013 and 47% for the prior-year period. Legal and
consulting contingent fees are dependent upon the realization of revenue.
Other legal and consulting expenses for the third quarter 2013 were $0.3
million versus $0.8 million in the prior-year period, mainly
attributable to the number of active patent infringement and licensing
cases. As of September 30, 2013 and September 30, 2012, the Company had
19 and 27 active patent infringement and licensing cases, respectively.
Other legal and consulting expenses fluctuate from period to period
based on patent enforcement and prosecution activity associated with
ongoing licensing and enforcement programs and the timing of the
commencement of new licensing and enforcement programs in each period.
The Company expects other legal and consulting expenses to continue to
fluctuate period to period in connection with upcoming scheduled trial
dates and its current and future patent development, licensing and
enforcement activities.
Total operating expenses for the third quarter 2013 were $7.3 million
versus $1.5 million in the prior-year period, primarily due to $5.6
million in professional fees related to the Merger and stock-based
compensation on awards earned concurrent with the Merger. Of the $5.6
million, $0.8 million was professional fees and $4.8 million was
stock-based compensation. Excluding professional fees and stock-based
compensation, total operating expenses for the third quarter 2013 would
have been $1.7 million.
Net loss for the third quarter of 2013 was $7.1 million compared to net
income of $1.0 million in the prior-year period. Loss per share for the
third quarter of 2013 was $0.76 compared to diluted earnings per share
of $0.05 in the prior-year period. On a pro-forma basis, excluding the
professional fees related to the Merger, net loss for the third quarter
of 2013 would have been $1.5 million and loss per share would have been
$0.16.
Liquidity and Capital Resources
As of September 30, 2013, Patent Properties has $26.6 million in cash
and no outstanding debt on its balance sheet.
Conference Call Information
Patent Properties will host a conference call and live webcast to
discuss third quarter 2013 results on Friday, November 15, 2013 at 9:00
AM Eastern time.
The conference call can be accessed over the phone by dialing
1-877-407-3982 or for international callers by dialing 1-201-493-6780;
please dial-in 10 minutes before the start of the call. A replay will be
available two hours after the call and can be accessed by dialing
1-877-870-5176 or for international callers by dialing 1-858-384-5517;
the passcode is 13572872. The replay will be available until Friday,
November 22, 2013.
In order to access the live webcast, please go to the Investor Relations
section of Patent Properties’ website at http://www.patentproperties.com
and click on the available webcast link. A replay will be available
shortly after the original webcast.
Forward-Looking Statements
This press release may contain certain “forward-looking statements” that
reflect the Company’s current expectations and projections about its
future results, performance, prospects and opportunities. When used, the
words “anticipate,” “believe,” “estimate,” “expect” and “intend” and
words or phrases of similar import, as they relate to Patent Properties,
are intended to identify forward-looking statements. Such
forward-looking statements include, in particular, projections about the
Company’s future results, statements about its plans, strategies,
business prospects, changes and trends in its business and the markets
in which it operates.
Additionally, statements concerning future matters such as revenue
levels, expense levels, and other statements regarding matters that are
not historical are forward-looking statements. Management cautions that
these forward-looking statements relate to future events or the
Company’s future financial performance and are subject to business,
economic, and other risks and uncertainties, both known and unknown,
that may cause actual results, levels of activity, performance, or
achievements of its business or its industry to be materially different
from those expressed or implied by any forward-looking statements.
Factors that could cause or contribute to such differences in results
and outcomes include, but are not limited to, those discussed under the
section entitled “Risk Factors” in the Company’s Current Report on Form
8-K dated September 18, 2013 (as amended by Form 8-K/A filed on
September 30, 2013) and in any Risk Factors or cautionary statements
contained in its quarterly reports on Form 10-Q. Readers should
carefully review this information as well as other risks and
uncertainties described in other filings the Company makes with the
Securities and Exchange Commission, or the SEC. The Company does not
undertake any obligation to publicly update these forward-looking
statements. As a result, investors should not place undue reliance on
these forward-looking statements.
About Patent Properties, Inc.
Patent Properties, Inc. (OTC BB: GLOI) intends to develop, enforce and
commercialize its unique portfolio of intellectual property assets,
which were created by Walker Digital, LLC, the research and development
lab led by internationally recognized inventor and entrepreneur Jay
Walker, and also to introduce a disruptive licensing solution for the
mass market of patent owners and users. Mr. Walker is best known as the
founder of priceline.com and has twice been named by TIME magazine as
“one of the top 50 business leaders of the digital age.” All of the
patents owned by the company were developed internally by Walker
Digital, LLC, with Jay Walker as a named inventor on all issued patents
and the lead inventor on the vast majority. Additional information
regarding the company can be found at www.patentproperties.com.
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PATENT PROPERTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands)
(Unaudited)
|
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|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
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|
Nine Months Ended September 30,
|
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|
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2013
|
|
|
|
|
2012
|
|
|
|
|
2013
|
|
|
|
|
2012
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Licensing fees
|
|
|
$
|
956
|
|
|
|
$
|
6,187
|
|
|
|
$
|
2,080
|
|
|
|
$
|
15,657
|
|
Patent sales
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
1,600
|
|
Total revenues
|
|
|
|
956
|
|
|
|
|
6,187
|
|
|
|
|
2,080
|
|
|
|
|
17,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Legal and consulting contingency fees
|
|
|
|
416
|
|
|
|
|
2,899
|
|
|
|
|
803
|
|
|
|
|
6,762
|
|
Other legal and consulting fees
|
|
|
|
326
|
|
|
|
|
753
|
|
|
|
|
1,269
|
|
|
|
|
1,973
|
|
Electronic data set-up fees
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
1,600
|
|
Total cost of revenue
|
|
|
|
742
|
|
|
|
|
3,652
|
|
|
|
|
2,072
|
|
|
|
|
10,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
|
|
214
|
|
|
|
|
2,535
|
|
|
|
|
8
|
|
|
|
|
6,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits
|
|
|
|
1,456
|
|
|
|
|
1,296
|
|
|
|
|
2,052
|
|
|
|
|
2,659
|
|
Professional fees
|
|
|
|
5,582
|
|
|
|
|
-
|
|
|
|
|
5,874
|
|
|
|
|
-
|
|
Patent expenses
|
|
|
|
213
|
|
|
|
|
162
|
|
|
|
|
620
|
|
|
|
|
620
|
|
General and administrative
|
|
|
|
69
|
|
|
|
|
44
|
|
|
|
|
139
|
|
|
|
|
130
|
|
Total operating expenses
|
|
|
|
7,320
|
|
|
|
|
1,502
|
|
|
|
|
8,685
|
|
|
|
|
3,409
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$
|
(7,106
|
)
|
|
|
$
|
1,033
|
|
|
|
$
|
(8,677
|
)
|
|
|
$
|
3,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
(0.76
|
)
|
|
|
$
|
0.13
|
|
|
|
$
|
(1.06
|
)
|
|
|
$
|
0.46
|
|
Diluted
|
|
|
$
|
(0.76
|
)
|
|
|
$
|
0.05
|
|
|
|
$
|
(1.06
|
)
|
|
|
$
|
0.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
9,310,882
|
|
|
|
|
7,667,667
|
|
|
|
|
8,221,424
|
|
|
|
|
7,667,667
|
|
Diluted
|
|
|
|
9,310,882
|
|
|
|
|
22,666,667
|
|
|
|
|
8,221,424
|
|
|
|
|
22,666,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRO FORMA COMPUTATION RELATED TO CONVERSION TO
|
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|
|
|
|
|
|
C CORPORATION FOR INCOME TAX PURPOSES
|
|
|
|
|
|
|
|
|
|
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical income (loss)
|
|
|
|
(7,106
|
)
|
|
|
|
1,033
|
|
|
|
|
(8,677
|
)
|
|
|
|
3,513
|
|
Pro forma benefit (provision) for income taxes
|
|
|
|
2,842
|
|
|
|
|
(413
|
)
|
|
|
|
3,471
|
|
|
|
|
(1,405
|
)
|
Pro forma income (loss)
|
|
|
|
(4,264
|
)
|
|
|
|
620
|
|
|
|
|
(5,206
|
)
|
|
|
|
2,108
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma weighted average basic shares outstanding
|
|
|
|
9,310,882
|
|
|
|
|
7,667,667
|
|
|
|
|
8,221,424
|
|
|
|
|
7,667,667
|
|
Pro forma weighted average diluted shares outstanding
|
|
|
|
9,310,882
|
|
|
|
|
22,666,667
|
|
|
|
|
8,221,424
|
|
|
|
|
22,666,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma basic earnings (loss) per share
|
|
|
$
|
(0.46
|
)
|
|
|
$
|
0.08
|
|
|
|
$
|
(0.63
|
)
|
|
|
$
|
0.27
|
|
Pro forma diluted earnings (loss) per share
|
|
|
$
|
(0.46
|
)
|
|
|
$
|
0.03
|
|
|
|
$
|
(0.63
|
)
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PATENT PROPERTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
Cash
|
|
|
$
|
26,580
|
|
|
$
|
-
|
|
Accounts receivable, net
|
|
|
|
19
|
|
|
|
3,663
|
|
Prepaid and other current assets
|
|
|
|
460
|
|
|
|
164
|
|
Total current assets
|
|
|
|
27,059
|
|
|
|
3,827
|
|
Other Assets:
|
|
|
|
|
|
Investments, at cost
|
|
|
|
250
|
|
|
|
250
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
|
$
|
27,309
|
|
|
$
|
4,077
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
176
|
|
|
$
|
465
|
|
Accrued expenses
|
|
|
|
1,284
|
|
|
|
1,684
|
|
TOTAL LIABILITIES
|
|
|
|
1,460
|
|
|
|
2,149
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
Preferred stock, $0.001 par value, 15,000,000 shares authorized
|
|
|
|
|
|
Series B Convertible Preferred stock, $0.001 par value, 14,999,000
shares designated, issued and outstanding
|
|
|
|
15
|
|
|
|
15
|
|
Common stock, $0.001 par value, 100,000,000 shares authorized;
21,134,744 and 7,667,667 shares issued as of September 30, 2013 and
December 31, 2012, respectively
|
|
|
|
21
|
|
|
|
8
|
|
Treasury stock, at cost
|
|
|
|
(840
|
)
|
|
|
-
|
|
Additional paid-in capital
|
|
|
|
33,402
|
|
|
|
(23
|
)
|
Accumulated deficit
|
|
|
|
(6,749
|
)
|
|
|
1,928
|
|
TOTAL STOCKHOLDERS’ EQUITY
|
|
|
|
25,849
|
|
|
|
1,928
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
$
|
27,309
|
|
|
$
|
4,077
|
|
Copyright Business Wire 2013