Spherix Inc. (SPEX), the patent licensing company run by CEO Anthony Hayes, said it is in talks to invest in DatChat Inc., a privately held provider of secure messaging services
Bethesda, Maryland-based Spherix said it has entered into a non-binding letter of intent to invest in DatChat, which is run by Chairman Darin Myman, who also is CEO of Wally World Media Inc. He previously was CEO of BigString Corp., a provider of self-destructing email instant messaging and texts.
Spherix didn’t provide any details on how much it plans to invest. The company just raised $2.5 million in a public offering and had cash and cash equivalents and marketable securities of just under $2 million as of March 31, 2016.
“This contemplated investment in DatChat continues our focus to diversify and build value for our holders by an investment in this exciting field,” Hayes said in a statement. “We believe the technology of DatChat is unique and our expertise in the technology patent space may allow us to help DatChat realize its value.”
The company has been trying to move away from its main patent enfacement business, which has struggled to produce revenue and profits in the current patent enforcement environment. Infringers increasingly have been unwilling to settle with Spherix and other licensing companies because changes to the legal system have made it easier to fight enforcement actions, invalidate patents and minimize awards.
Spherix is not the only patent enforcement company to invest outside its core business of monetizing patents.
Form Holdings Corp. (FH), the fromer Vringo Inc., yesterday announced a $20.15 million stock acquisition of XpresSpa Inc., a privately held provider of luxury spa services in airports. It was New York-based Form’s second acquisition of an operating company to boost its ability to generate revenue and profit. Last October, Form acquired Group Mobile, a provider of rugged computers, and Fli Charge, a remote power charging system producer, for $6.33 million in stock.
The company said DatChat's patent-pending encryption technology allows users to secure their messages sent between mobile devices.
“According to DatChat, its app is the first privacy messaging app that provides the option to dictate how long sent messages are accessible on the recipient's phone and is the first to offer an option that will erase both sides of a conversation on both the sender and recipient's devices, even after the information is transmitted to another user. Currently, the DatChat app is available in the iTunes store.
Spherix said there is no assurance that the proposal will result in a binding offer being made to DatChat or that the transaction contemplated by the letter of intent, or any other transaction between the parties, will be completed.
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