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Document Security Systems Inc. announced Tuesday it has signed a definitive merger agreement with Lexington Technology Group Inc., a privately owned intellectual property asset management group.
DSS officials said the deal is awaiting shareholder approval from both companies. Once the deal is approved, the combined company will continue under the name Document Security Systems Inc.
Lexington Technology Group is to be the surviving corporation as a wholly owned subsidiary of DSS through an exchange of capital stock of Lexington Technology Group for capital stock and warrants of DSS.
Lexington Technology CEO Will Rosellini will lead the combined company, replacing Patrick White as CEO of DSS, officials said. DSS chairman Robert Fagenson said the merger in increase the combined company’s intellectual property portfolio.
“The combination of DSS and Lexington will yield a company with both a wealth of intellectual property and industrial assets that we believe can generate revenues from commercial application of these and other technologies,” Fagenson said, in a statement. “The broadened management team has depth and experience needed to capitalize on the patent portfolio and a balance sheet with significantly increased working capital to operate the company.”
Lexington Technology owns patent assets it acquired from Thomas Bascom, president of LinkSpace LLC, a company that develops software patents. The two companies have partnered through Lexington Technology’s Virginia-based subsidiary Bascom Research to invest capital and expertise in the development of radio frequency identification medical technology.
Lexington Technology officials said Bascom Research intends to integrate its technology with LinkSpace’s software framework and DSS’s digital security RFID technology for electronic health records to improve patient safety in hospitals.
Last month, Lexington Technology closed on $11 million in financing to develop software and integrated frameworks for medical RFID and patient data in electronic health records.
“We believe this merger will enhance the exiting efforts of both entities to broaden revenue generation through the pursuit of market opportunities, and the licensing and protection of our combined intellectual property portfolio,” said Rosellini, in a statement. “We expect to file an IDE with the FDA to begin clinical trials at Virginia-area hospitals…in 2013.”
Peter Hardigan, chief operating officer at Lexington Technology, will become chief investment officer at the company. The board will include Fagenson; Robert Bzdick, president and chief operating officer of DSS; and Ira Greenstein, an independent director of DSS since 2004.
DSS employs 105 local workers. The company has its headquarters in Rochester with three other locations in the area for printing, packaging and digital segments. The company also has a plastics group in Brisbane, Calif.
DSS stock (NYSE: DSS) was down 4 percent midday Tuesday at $4.15 a share after peaking at $4.59.
The stock had closed Monday at $4.32 a share, up from $4.21.
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