Internet Patents Corp., Prism Technologies To Merge

(RTTNews) - Internet Patents Corp. (PTNT) and Prism Technologies, LLC said Tuesday that they have entered into a definitive agreement to merge.

Following the acquisition, Prism will be wholly owned by Internet Patents Corp. and will operate the patent licensing business for all Prism and Internet Patents Corp. patents.

Prism and its subsidiaries currently own or have rights to a patent portfolio consisting of nine patent families incorporating 61 issued and six pending patents in the computer and network security, semiconductors and medical technology spaces. To date, it has licensed its technology to over 30 companies, including Microsoft, Research-In-Motion, VeriSign, Adobe, National Instruments, Bank of America and Harris Bancorp. Prism generated $40 million in gross revenues in 2013 and $9.4 million in 2012 and estimates that proceeds from patent related activities in 2014 will exceed $28 million.

The combined company will have eleven employees. Gregory Duman, Prism's President, will join Internet Patents Corp.'s Board of Directors.

Under the deal, Internet Patents Corp. will pay $16.5 million in cash, less any debt that is not related to the acquisition of patents and issue 3.5 million shares of its common stock to Prism security holders at closing. Internet Patents Corp. has also agreed to share future revenue related to Prism's patents with Prism's former security holders. Internet Patents Corp. will retain the first $16.5 million in Prism Patent Proceeds received after closing, less any cash remaining in Prism at the time of closing. Prism's former security holders will receive 70% of subsequent Prism Patent Proceeds, up to $55 million. The maximum revenue share of $55 million to be paid to Prism's former security holders would be reduced by any distributions of Prism Patent Proceeds that are made by Prism prior to closing. After the maximum earnout is achieved, Internet Patents Corp. will retain all future Prism Patent Proceeds.

Immediately following the closing of the deal, Prism's former equity owners are expected to own about 31% of the outstanding common stock of the combined company, or about 34% of the outstanding common stock of the combined company calculated on a fully diluted basis.

The deal is expected to be completed in the first quarter of 2015.