Earlier this month GlobalOptions Group, Inc. (“GlobalOptions”) (OTCBB:GLOI) and Walker Digital Holdings, LLC, a wholly-owned subsidiary of Walker Digital, LLC (“Walker Digital”), announced that they completed the previously announced merger of the two companies. The newly formed entity consists of the patent portfolio created by Walker Digital, the research and development lab led by renowned inventor, entrepreneur and Priceline (NASDAQ:PCLN) founder Jay Walker. Walker, who is named on more than 450 issued and pending U.S. and international patents, is one of the most prolific individual living inventors.
The merged company will seek a corporate name change to Patent Properties, Inc. as expeditiously as possible. All of the patents owned by Patent Properties, Inc. were developed internally by Walker Digital, with Jay Walker as a named inventor on all issued patents and the lead inventor on most of the patents in the portfolio. Currently the Company’s patent portfolio includes 377 granted patents and 94 pending patent applications.
Prior to the merger, GlobalOptions Group provided risk mitigation and management services, including forensic DNA analysis, proprietary DNA collection products, and related research services to law enforcement agencies, federal and state governments, crime laboratories and disaster management organizations. Thus, this merger seems in some ways to be a backdoor way for Walker Digital to obtain a ticker symbol for trading purposes.
“For the past 20 years, we have consistently created intellectual property to address some of the most complex customer behavioral issues in various industries, thus unlocking unrealized value for consumers and businesses alike,” said Mr. Walker, Executive Chairman of Patent Properties’ Board of Directors. “Today’s 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 are now able to accelerate the commercialization of an entirely new, big data business system for patent licensing currently under development. We believe our new licensing platform will address significant inefficiencies in the multi-billion dollar patent licensing market.”
Since 2011, Walker Digital has generated $65 million in revenues from licensing and litigating its patent portfolio as well as from patent sales. Presently the company has 19 ongoing litigation matters, and Patent Properties says that it expects to file additional patent infringement cases before the end of 2013.
Patent Properties also announced the completion of an $11.6 million primary private placement from the sale of 3,860,616 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. The company intends to use its approximate $25 million in cash, which comprises the net proceeds from the private placement plus the cash currently on GlobalOptions’ balance sheet, to fund operations.
Under the merger transaction, all of the outstanding membership interests of Walker Digital Holdings, LLC were exchanged for shares of GlobalOptions common stock and shares of a new Series B Preferred Stock of GlobalOptions. On a non-diluted basis, Walker Digital owns approximately 64% of the economic interest and 80% of the voting interest of the newly formed entity, respectively. Walker Digital may also receive an additional 2,166,667 shares subject to certain performance conditions. At the completion of the transaction and the primary private placement, the company has 41,976,130 outstanding shares on a fully diluted basis.