Diversinet: AllOne offers $3M break up fee

By Brian Dolan
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allonephoneDiversinet, a developer of secure mobile application platforms, announced that its mobile health partner, AllOne Mobile, recently filed a legal proceeding that would end the two company's 2008 licensing agreement. AllOne has requested to pay Diversinet $3 million to officially terminate their agreement, but Diversinet believes that it is owed a substantially greater amount than AllOne's proposed $3 million. Diversinet is currently discussing its options with its legal team, the company said. (More)

As we have previously reported, Diversinet provides security and encryption for AllOne mobile users’s health information and also enables the software to run across a number of mobile platforms. While no time table has been established for the conclusion of negotiations, the companies have assured existing and potential customers that they will continue to work together while they attempt to rejigger their agreement.

Following an investment in 2007, AllOne’s parent company owns a 15 percent stake in Diversinet. Last September, the two companies inked a five-year agreement that entitled AllOne to exclusive use of certain Diversinet technology in the personal health market. Here’s more on the specifics of that agreement, including the key financial metrics involved:

“Under the terms of the License Agreement, Diversinet has provided an exclusive worldwide right to AllOne to sub-license certain Diversinet software in combination with AllOne’s software, in the mobile personal health record market. The License Agreement may be cancelled after the third year (i.e. after August 30, 2011) by providing 180 days notice by AllOne in certain circumstances. Under the terms of the License Agreement, Diversinet has received the minimum commitment fee of $5.5 million in the first year (i.e. 12 months ended August 31, 2009) and two quarterly payments of $1.75 million each on September 1 and December 1, 2009. In addition, $3.5 million is payable for the six months ended August 31, 2010, $7 million is payable for the 12 months ended August 31, 2011 and $10 million is payable in each of years four and five to Diversinet quarterly in advance as a minimum commitment. For healthcare sales, initial amounts received are allocated to AllOne until the minimum commitment fee under the Agreement is met, after which Diversinet and AllOne share revenues according to the Agreement. To date, the amounts received by AllOne on deployments have not exceeded the minimum commitment fees.”

AllOne has mobile health deals in place with the U.S. Army, Significa Insurance Group (Significa), Erin Group Administrators (EGA) and others. The company also has partnerships with Microsoft HealthVault, MedFlash, and Clickatell.

AllOne’s mobile health offering, AllOne Mobile, enables users to securely view, manage and exchange their health care information with physicians, hospitals, pharmacies and other health care providers anytime and anywhere. Specifically users can view and send insurance coverage information; track prescription drugs; catalog allergies, or fax a child’s allergy records to the school nurse; send health information, like health history, to a physician; and access health tips to better manage chronic conditions.

Read Diversinet's most recent press release here

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