US-listed PIPCO Document Security Systems has hired a Singapore businessman to head its international and Asia-focused efforts, according to recent SEC filings. The move comes alongside a stock swap that will ensure the company is not de-listed by regulators for not maintaining enough equity. DSS also says it will open two Asia offices in the near future, as the company’s monetisation project with Korea’s Intellectual Discovery rolls on.
A Form 8-K dated September 11th announced that DSS had recently established two subsidiaries – DSS International and DSS Asia (the latter falling under the former) – and that Ambrose Chan would take over as CEO of these overseas arms effective October 1st. The New York-listed parent will seed DSS International with $1 million to open offices in Singapore and Hong Kong.
Chan, aged 72, will be a part-time CEO earning a nominal salary of $1, the release says. He has led a number of listed companies in Hong Kong and Singapore, and appears best known for property development and hospitality management. In appointing him a board member last January, DSS CEO Jeffrey Ronaldi cited his “operational experience and knowledge of Asian markets”.
While Chan does not appear to have much of a background in technology or intellectual property, his comments when appointed as a board member suggest that his focus is on the operating part of DSS’s business, which is focused on anti-counterfeiting technology: “I know there is a massive counterfeiting problem in Asia and I think DSS has a true growth opportunity at hand,” he remarked.
Today’s incarnation of DSS is the product of the first known merger between an NPE (Lexington Technology Group) and an operating business. Ronaldi, who led the previous standalone patent licensing business, took over as chief of the merged entity in 2013. Chan’s job description suggests that buying more operating businesses may be central to DSS’s Asia expansion strategy – his primary objective is to “grow DSS International, including but not limited to through mergers and acquisitions”.
But perhaps the most important acquisition for DSS has been made already, in the form of much-needed investment from a private company run by Chan – Heng Fai Business Development. Another 8-K disclosure filed the day after Chan’s hiring announced the issuing of over 680,000 DSS shares to Heng Fai, which it paid for with shares of a Singapore company for which Chan serves as CEO – Singapore eDevelopment Limited (SEL).
The upshot, according to DSS, is that the transaction has increased its total stockholders’ equity by about $1.4 million. This brings it over $4 million in total – and thus back into line with the minimum requirements to remain listed on the small-cap NYSE American exchange. So it appears that thanks to Chan’s investment, DSS will make its October 2nd deadline to come back into compliance, and avoid a potentially costly de-listing.
That is good news for the patent side of the business, and a greater company focus on Asia might be too. The only active DSS enforcement campaign that we know about right now emerged from a deal with Korean patent fund Intellectual Discovery. It has since filed US litigation against five LED manufacturers, including, controversially, Seoul Semiconductor. DSS secured over $13.5 million in funding from Juridica to get the deal done, at a time when some other PIPCOs are retreating from litigation.
In what could be another Asia-centric deal, an entity called Solas OLED with Ronaldi as CEO acquired around 100 patents from Casio in 2016. It does not look like those assets have found their way to any US courtrooms to date.
Combine these patent-first deals with what should in theory be a promising market for the company’s core anti-counterfeiting technology, and it makes sense that DSS is looking to increase its footprint in this part of the world. VirnetX provides another example of a small-cap PIPCO looking East for investment. That transaction, with a Japanese consortium, also promised both short-term liquidity and long-term opportunity for a security-related products business. Time will tell whether these deals can deliver on both counts.