Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 24, 2017 | Jun. 30, 2016 | |
Document And Entity Information | |||
Entity Registrant Name | DOCUMENT SECURITY SYSTEMS INC | ||
Entity Central Index Key | 771,999 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 9,693,036 | ||
Entity Common Stock, Shares Outstanding | 13,652,653 | ||
Trading Symbol | DSS | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash | $ 5,871,738 | $ 1,440,256 |
Restricted cash | 177,609 | 293,043 |
Accounts receivable, net | 1,890,981 | 2,097,433 |
Inventory | 1,206,377 | 937,830 |
Prepaid expenses and other current assets | 350,289 | 313,528 |
Total current assets | 9,496,994 | 5,082,090 |
Property, plant and equipment, net | 4,573,841 | 5,003,818 |
Other assets | 45,821 | 44,050 |
Goodwill | 15,285,123 | 15,285,123 |
Other intangible assets, net | 1,896,018 | 3,017,544 |
Total assets | 18,466,023 | 15,600,851 |
Current liabilities: | ||
Accounts payable | 2,212,653 | 1,945,073 |
Accrued expenses and deferred revenue | 1,290,593 | 955,066 |
Other current liabilities | 2,996,310 | 1,009,660 |
Short-term debt | 3,984,316 | |
Current portion of long-term debt, net | 1,202,335 | 1,553,061 |
Total current liabilities | 7,701,891 | 9,447,176 |
Long-term debt, net | 5,249,569 | 2,240,596 |
Other long-term liabilities | 2,184,843 | 63,697 |
Deferred tax liability, net | 45,619 | 162,107 |
Commitments and contingencies (Note 11) | ||
Stockholders' equity | ||
Common stock, $.02 par value; 200,000,000 shares authorized, 13,502,653 shares issued and outstanding (12,970,487 on December 31, 2015) | 270,053 | 259,410 |
Additional paid-in capital | 104,338,002 | 103,820,170 |
Accumulated other comprehensive loss | (45,343) | (63,697) |
Accumulated deficit | (101,278,611) | (100,328,608) |
Total stockholders' equity | 3,284,101 | 3,687,275 |
Total liabilities and stockholders' equity | $ 18,466,023 | $ 15,600,851 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ .02 | $ .02 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 13,502,653 | 12,970,487 |
Common stock, shares outstanding | 13,502,653 | 12,970,487 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Revenue | ||
Printed products | $ 17,277,172 | $ 15,700,676 |
Technology sales, services and licensing | 1,900,427 | 1,804,433 |
Total revenue | 19,177,599 | |
Costs and expenses | ||
Cost of revenue, exclusive of depreciation and amortization | 11,119,780 | 10,665,122 |
Selling, general and administrative (including stock based compensation) | 7,326,063 | 9,271,533 |
Depreciation and amortization | 1,391,815 | 1,558,899 |
Impairment of goodwill | 9,592,848 | |
Impairment of assets | 500,000 | |
Total costs and expenses | 19,837,658 | 31,588,402 |
Operating loss | (660,059) | (14,083,293) |
Other expense: | ||
Interest expense | (279,214) | (334,738) |
Gains on sales of investment and equipment | 120,431 | |
Net loss on debt modification and extinguishment | (19,096) | |
Foreign currency translation gain | 29,400 | |
Loss before income taxes | (939,273) | (14,287,296) |
Income tax expense | 10,730 | 22,184 |
Net loss | (950,003) | (14,309,480) |
Other comprehensive loss: | ||
Interest rate swap gain (loss) | 18,354 | (2,517) |
Comprehensive loss: | $ (931,649) | $ (14,311,997) |
Loss per common share: | ||
Basic and diluted | $ (0.07) | $ (1.20) |
Shares used in computing loss per common share: | ||
Basic and diluted | 13,068,329 | 11,939,969 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (950,003) | $ (14,309,480) |
Adjustments to reconcile net loss to net cash from (used by) operating activities: | ||
Depreciation and amortization | 1,391,815 | 1,558,899 |
Stock based compensation | 328,567 | 974,137 |
Paid in-kind interest | 39,000 | 84,379 |
Gain on disposals of equipment, net | (20,431) | |
Impairment of goodwill | 9,592,848 | |
Impairment of investment | 500,000 | |
Net loss on debt modification and extinguishment | 19,096 | |
Change in deferred tax provision | (116,488) | 22,184 |
Foreign currency transaction gain | (29,400) | |
Amortization of deferred financing costs | 21,351 | |
Decrease (increase) in assets: | ||
Accounts receivable | 206,452 | 238 |
Inventory | (268,547) | (68,568) |
Prepaid expenses and other current assets | (38,532) | 198,423 |
Restricted cash | 115,434 | 62,750 |
Increase (decrease) in liabilities: | ||
Accounts payable | 267,581 | 907,714 |
Accrued expenses and other liabilities | 4,469,895 | (469,419) |
Net cash from (used by) operating activities | 5,466,525 | (976,630) |
Cash flows from investing activities: | ||
Purchase of property, plant and equipment | (269,870) | (157,098) |
Third-party funding received for acquisition of patent assets | 3,043,000 | |
Acquisition of patent assets with third-party funding | (3,043,000) | |
Proceeds from sale of equipment | 46,283 | |
Proceeds from sale of intangible assets | 495,000 | |
Purchase of intangible assets | (73,661) | (5,159) |
Net cash from (used by) investing activities | 151,469 | (115,974) |
Cash flows from financing activities: | ||
Payments of long-term debt | (1,386,420) | (939,151) |
Issuances of common stock, net of issuance costs | 199,908 | 1,128,336 |
Net cash from (used by) financing activities | (1,186,512) | 189,185 |
Net increase (decrease) in cash | 4,431,482 | (903,419) |
Cash at beginning of year | 1,440,256 | 2,343,675 |
Cash at end of year | $ 5,871,738 | $ 1,440,256 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Other Comprehensive Loss [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2014 | $ 230,862 | $ 101,705,245 | $ (61,180) | $ (86,019,128) | $ 15,855,799 |
Balance, shares at Dec. 31, 2014 | 11,543,101 | ||||
Issuance of common stock, net | $ 27,273 | 1,101,063 | 1,128,336 | ||
Issuance of common stock, net, shares | 1,363,636 | ||||
Stock based payments, net of tax effect | $ 775 | 973,362 | 974,137 | ||
Stock based payments, net of tax effect, shares | 38,750 | ||||
Shares issued in debt modification | $ 500 | 40,500 | 41,000 | ||
Shares issued in debt modification, shares | 25,000 | ||||
Other comprehensive loss | (2,517) | (2,517) | |||
Net Loss | (14,309,480) | (14,309,480) | |||
Balance at Dec. 31, 2015 | $ 259,410 | 103,820,170 | (63,697) | (100,328,608) | 3,687,275 |
Balance, shares at Dec. 31, 2015 | 12,970,487 | ||||
Issuance of common stock, net | $ 6,000 | 193,908 | 199,908 | ||
Issuance of common stock, net, shares | 300,000 | ||||
Stock based payments, net of tax effect | $ 4,620 | 323,947 | 328,567 | ||
Stock based payments, net of tax effect, shares | 231,000 | ||||
Shares issued upon reverse stock split as a result of rounding up of fractional shares | $ 23 | (23) | |||
Shares issued upon reverse stock split as a result of rounding up of fractional shares, Shares | 1,166 | 2,498,128 | |||
Other comprehensive loss | 18,354 | $ 18,354 | |||
Net Loss | (950,003) | (950,003) | |||
Balance at Dec. 31, 2016 | $ 270,053 | $ 104,338,002 | $ (45,343) | $ (101,278,611) | $ 3,284,101 |
Balance, shares at Dec. 31, 2016 | 13,502,653 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | NOTE 1 - DESCRIPTION OF BUSINESS Document Security Systems, Inc. (the “Company”), through two of its subsidiaries, Premier Packaging Corporation, which operates under the assumed name of DSS Packaging Group, and Plastic Printing Professionals, Inc., which operates under the name of DSS Plastics Group, operates in the security and commercial printing, packaging and plastic ID markets. The Company develops, markets, manufactures and sells paper and plastic products designed to protect valuable information from unauthorized scanning, copying, and digital imaging. The Company’s subsidiary, DSS Digital Inc., which also operates under the name of DSS Digital Group, develops, markets and sells digital information services, including data hosting, disaster recovery and data back-up and security services. The Company’s subsidiary, DSS Technology Management, Inc., manages, licenses and acquires intellectual property (“IP”) assets for the purpose of monetizing these assets through a variety of value-enhancing initiatives, including, but not limited to, investments in the development and commercialization of patented technologies, licensing, strategic partnerships and commercial litigation. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation Use of Estimates Reclassifications Restricted Cash Accounts Receivable Inventory Property, Plant and Equipment Investments Goodwill - Other Intangible Assets and Patent Application Costs Impairment of Long Lived Assets Fair Value of Financial Instruments ● Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; ● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and ● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The carrying amounts reported in the balance sheet of cash, accounts receivable, prepaids, accounts payable and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments. The fair value of revolving credit lines, notes payable and long-term debt approximates their carrying value as the stated or discounted rates of the debt reflect recent market conditions. Derivative instruments, as discussed below, are recorded as assets and liabilities at estimated fair value based on available market information. Derivative Instruments The Company has an interest rate swap with Citizens that changes the variable rate on a term loan to a fixed rate as follows: Notional Amount Variable Rate Fixed Cost Maturity Date $ 966,786 3.77 % 5.87 % August 30, 2021 Share-Based Payments Revenue Recognition For technology sales and services, revenue is recognized in accordance with FASB ASC 985-605. Accordingly, revenue is recognized when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service or product has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of our fees is reasonably assured. We recognize cloud computing revenue, including data backup, recovery and security services, on a monthly basis, beginning on the date the customer commences use of our services. Professional services are recognized in the period services are provided. For printing technology licenses, revenue is recognized once all the following criteria for revenue recognition have been met: (1) persuasive evidence of an agreement exists; (2) the right and ability to use the product or technology has been rendered; (3) the fee is fixed and determinable and not subject to refund or adjustment; and (4) collection of the amounts due is reasonably assured. For other technology licenses, revenue arrangements generally provide for the payment of contractually determined fees in consideration for the grant of certain intellectual property rights for patented technologies owned or controlled by the Company. These rights typically include some combination of the following: (i) the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products covered by patented technologies owned or controlled the Company, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. The intellectual property rights granted may be perpetual in nature, extending until the expiration of the related patents, or can be granted for a defined, relatively short period of time, with the licensee possessing the right to renew the agreement at the end of each contractual term for an additional payment. Pursuant to the terms of these agreements, the Company has no further obligation with respect to the grant of the non-exclusive retroactive and future licenses, covenants-not-to-sue, releases, and other deliverables, including no express or implied obligation on the Company’s part to maintain or upgrade the technology, or provide future support or services. Generally, the agreements provide for the grant of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution of the agreement, or upon receipt of the minimum upfront payment for term agreement renewals. As such, the earnings process is complete and revenue is recognized upon the execution of the agreement, when collectability is reasonably assured, or upon receipt of the minimum upfront fee for term agreement renewals, and when all other revenue recognition criteria have been met. Certain of the Company’s revenue arrangements provide for future royalties or additional required payments based on future licensee activities. Additional royalties are recognized in revenue upon resolution of the related contingency provided that all revenue recognition criteria, as described above, have been met. Amounts of additional royalties due under these license agreements, if any, cannot be reasonably estimated by management. Costs of revenue - Contingent Legal Expenses - Advertising Costs . Research and Development Income Taxes Earnings Per Common Share As of December 31, 2016 and 2015, there were 3,672,878 and 2,968,655, respectively, of common stock share equivalents potentially issuable under convertible debt agreements, employment agreements, options, warrants, and restricted stock agreements that could potentially dilute basic earnings per share in the future. Common stock equivalents were excluded from the calculation of diluted earnings per share for 2016 and 2015 in which the Company had a net loss, since their inclusion would have been anti-dilutive. Comprehensive Loss Concentration of Credit Risk During 2016, two customers accounted for 38% of our consolidated revenue. As of December 31, 2016, these two customers accounted for 31% of our trade accounts receivable balance. During 2015, these two customers accounted for 35% of our consolidated revenue. As of December 31, 2015, these two customers accounted for 27% of our trade accounts receivable balance. Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, “Leases”, which requires that lease arrangements longer than 12 months result in an entity recognizing an asset and liability. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. The Company has not yet evaluated nor has it determined the effect of the standard will have on its consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, “Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting.” The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for the Company on January 1, 2017 and the Company is currently evaluating the impact that ASU 2016-09 will have on its consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments”, which clarifies the treatment of several types of cash receipts and payments for which there was diversity in practice. This update is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted, including adoption in an interim period. We anticipate that the adoption of this guidance will not have a material impact on our consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows”, regarding the presentation of restricted cash on the statement of cash flows. The standards update requires that the reconciliation of the beginning and end of period cash amounts shown in the statement of cash flows include restricted cash. When restricted cash is presented separately from cash and cash equivalents on the balance sheet, a reconciliation is required between the amounts presented on the statement of cash flows and the balance sheet. Also, the new guidance requires the disclosure of information about the nature of the restrictions. The standards update is effective retrospectively for fiscal years and interim periods beginning after December 15, 2017, with early adoption permitted. Newly Adopted Accounting Pronouncements Substantial doubt exists when conditions and events indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date of financial statement issuance. Also during 2016, the Company adopted FASB ASU 2015-03 – “Interest – Imputation of Interest”. The adoption of this ASU resulted in debt issuance costs being presented as a reduction to the related debt instrument, as opposed to being presented as a separate asset on the Company’s balance sheet. Management reclassified approximately $57,000 from “Other assets” as December 31, 2015, as a reduction to the carrying value of the respective debt instrument. |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Inventory | NOTE 3 – INVENTORY Inventory consisted of the following at December 31: 2016 2015 Finished Goods $ 736,987 $ 718,601 Work in process 314,353 167,779 Raw Materials 155,037 51,450 $ 1,206,377 $ 937,830 |
Property Plant and Equipment
Property Plant and Equipment | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property Plant and Equipment | NOTE 4 - PROPERTY PLANT AND EQUIPMENT Property, plant and equipment consisted of the following at December 31: Estimated Useful Life 2016 2015 Machinery and equipment 5-10 years $ 5,879,958 $ 5,615,562 Building and improvements 39 years 1,923,027 1,923,027 Land 185,000 185,000 Leasehold improvements See (1) 722,984 722,984 Furniture and fixtures 7 years 68,272 68,272 Software and websites 3 years 412,113 402,225 Total cost 9,191,354 8,917,070 Less accumulated depreciation 4,617,513 3,913,252 Property, plant, and equipment, net $ 4,573,841 $ 5,003,818 (1) |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Goodwill | NOTE 5 - INTANGIBLE ASSETS AND GOODWILL During 2016 and 2015, the Company spent approximately $74,000 and $5,000, respectively, on patent prosecution costs. On November 10, 2016, the Company purchased a portfolio of 122 LED patents and a corresponding license from Intellectual Discovery Co. Ltd. for $3,000,000 with funds it had received from a third party, resulting in a net book value of $0 when purchased. In May, 2016, the Company received proceeds of $495,000 for the sale of certain patents that were included in a pool of acquired patents. The Company evaluates acquired patents as related pools of assets for purposes of amortization and impairment, as well as operational evaluation and use. Accordingly, the proceeds received from the sale of the patents will reduce the cost of the pool of assets until the carrying value of the pool is reduced to zero. Any excess proceeds from future sales will result in a gain. The Company also considers the impact that the sale of a portion of the pool has on expected future recoverability on the pool. No impairment was considered necessary as a result of this evaluation. Intangible assets are comprised of the following: December 31, 2016 December 31, 2015 Useful Life Gross Carrying Amount Accumulated Amortizaton Net Carrying Amount Gross Carrying Amount Accumulated Amortizaton Net Carrying Amount Acquired intangibles- customer lists and non-compete agreements 5 -10 years 1,997,300 1,721,357 275,943 1,997,300 1,635,257 362,043 Acquired intangibles-patents and patent rights Varied (1) 3,155,000 2,092,767 1,062,233 3,650,000 1,562,526 2,087,474 Patent application costs Varied (2) 1,136,465 578,623 557,842 1,062,958 494,931 568,027 $ 6,288,765 $ 4,392,747 $ 1,896,018 $ 6,710,258 $ 3,692,714 $ 3,017,544 (1) Acquired patents and patent rights are amortized over their expected useful life which is generally the remaining legal life of the patent. As of December 31, 2016, the weighted average remaining useful life of these assets in service was approximately 2.4 years. (2) Patent application costs are amortized over their expected useful life which is generally the remaining legal life of the patent. As of December 31, 2016, the weighted average remaining useful life of these assets in service was approximately 8.6 years. Amortization expense for the year ended December 31, 2016 amounted to approximately $700,000 ($896,000 –2015). Approximate expected amortization for each of the five succeeding fiscal years is as follows: Year Amount 2017 $ 681,000 2018 $ 537,000 2019 $ 272,000 2020 $ 182,000 2021 $ 77,000 Goodwill The Company performed its annual goodwill impairment test as of December 31, 2016. The Company has goodwill attributed to two of its reporting units which are its Packaging and Plastics reporting units respectively. The Company performed the first step of the goodwill impairment test by comparing the fair value of each of its reporting units with their carrying amounts including goodwill. In performing this step, the Company determined estimates of fair value using a discounted cash flow model for each of these reporting units. The Company determined that its Packaging and Plastic reporting units each had to fair values in excess of their carrying value and therefore, did not have an indication of goodwill impairment. During the Company’s annual assessment of goodwill in 2015, the Company considered the negative trends in patent litigation which have reduced the success of patent owners in protecting their patents in the federal court system, among other factors. In performing Step 2, the Company determined the carrying amount of the goodwill exceeded the implied fair value of the goodwill by $9,600,000 and accordingly recorded approximately $9,600,000 of a goodwill impairment charge to the goodwill assigned to its DSS Technology Management division. There are inherent assumptions and estimates used in developing future cash flows requiring management’s judgment in applying these assumptions and estimates to the analysis of identifiable intangibles and asset impairment including projecting revenues, timing and amount of claim or settlements related to patent infringement cases, royalty rates, interest rates, and the cost of capital. Many of the factors used in assessing fair value are outside the Company’s control and it is reasonably likely that assumptions and estimates will change in future periods. These changes can result in future impairments. The changes in the carrying amount of goodwill for the years ended December 31, 2016 and 2015 are as follows: Packaging Plastics Technolgy Management Total Balance as of January 1, 2015 Goodwill $ 1,768,400 $ 684,949 $ 12,831,774 $ 15,285,123 Accumulated impairment losses - - (3,238,926 ) (3,238,926 ) 1,768,400 684,949 9,592,848 12,046,197 Goodwill acquired during the year - - - - Impairment losses - - (9,592,848 ) (9,592,848 ) Balance as of December 31, 2015 Goodwill 1,768,400 684,949 12,831,774 15,285,123 Accumulated impairment losses - - (12,831,774 ) (12,831,774 ) 1,768,400 684,949 - 2,453,349 Goodwill acquired during the year - - - - Impairment losses - - - - Balance as of December 31, 2016 Goodwill 1,768,400 684,949 12,831,774 15,285,123 Accumulated impairment losses - - (12,831,774 ) (12,831,774 ) $ 1,768,400 $ 684,949 $ - $ 2,453,349 |
Short-Term and Long-Term Debt
Short-Term and Long-Term Debt | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Short-Term and Long-Term Debt | NOTE 6 – SHORT TERM AND LONG TERM DEBT Revolving Credit Lines Long-Term Debt On May 24, 2013, the Company entered into a promissory note in the principal sum of $850,000 to purchase three printing presses that were previously leased by the Company’s wholly-owned subsidiary, Secuprint Inc., and carries an interest rate of 9% per annum. The note is secured by the assets of Company’s wholly-owned subsidiary, Secuprint Inc. Interest is payable quarterly, in arrears. The Company also issued the lender as additional consideration a five-year warrant to purchase up to 60,000 shares of the Company’s common stock at an exercise price of $3.00 per share. The warrant was valued at approximately $69,000 using the Black-Scholes-Merton option pricing model with a volatility of 60.0%, a risk free rate of return of 0.89% and zero dividend and forfeiture estimates. In conjunction with the issuance of the warrants, the Company recorded a discount on debt of approximately $69,000 that was amortized over the original term of the note. The note was set to mature on May 24, 2014, but its maturity date was extended on May 2, 2014 to May 24, 2015 by the lender. In exchange for the extension, the Company also issued the lender as additional consideration a five-year warrant to purchase up to 40,000 shares of the Company’s common stock at an exercise price of $1.50 per share. The warrant was valued at approximately $29,000 using the Black-Scholes-Merton option pricing model with a volatility of 70.0%, a risk free rate of return of 1.53% and zero dividend and forfeiture estimates. In conjunction with the issuance of the warrants, the Company recorded expense for modification of debt of approximately $29,000. On February 23, 2015, the Company entered into Promissory Note Amendment No. 2 to extend the maturity date to May 31, 2016 and to institute principal payments in the amount of $15,000 per month plus interest through the extended maturity date, and a balloon payment of $610,000 due on the extended maturity date. On April 12, 2016, the Company entered into Promissory Note Amendment No. 3 to extend the maturity date to May 31, 2017 and change the balloon payment to $430,000 due on the extended maturity date. As of December 31, 2016, the balance of the term loan was $505,000 ($685,000 at December 31, 2015). Term Loan Debt On April 28, 2015, Premier Packaging entered into a term note with Citizens for $525,000, repayable over a 60-month period. The loan bears interest at 3.61% and is payable in equal monthly installments of $9,591 until April 28, 2020. Premier Packaging used the proceeds of the term note to acquire a HP Indigo 7800 Digital press. The loan is secured by the printing press. As of December 31, 2016, the loan had a balance of $360,611 ($460,448 at December 31, 2015). Promissory Notes On December 6, 2013, Premier Packaging entered into a Construction to Permanent Loan with Citizens Bank for up to $450,000 that was converted into a promissory note upon the completion and acceptance of building improvements to the Company’s packaging plant in Victor, New York. In May 2014, the Company converted the loan into a $450,000 note payable in monthly installments over a 5 year period of $2,500 plus interest calculated at a variable rate of 1 Month Libor plus 3.15% (3.77% at December 31, 2016), which payments commenced on July 1, 2014. The note matures in July 2019 at which time a balloon payment of the remaining principal balance of $300,000 is due. As of December 31, 2016, the note had a balance of $375,000 ($405,247 –December 31, 2015). Under the Citizens Bank credit facilities, the Company’s subsidiary, Premier Packaging, is subject to various covenants including fixed charge coverage ratio, tangible net worth and current ratio covenants. For the quarters ended March 31, 2016, June 30, 2016, September 30, 2016, and December 31, 2016, Premier Packaging was in compliance with the covenants. The Citizens Bank obligations are secured by all of the assets of Premier Packaging and are also secured through cross guarantees by the Company and its other wholly-owned subsidiaries, Plastic Printing Professionals and Secuprint. A summary of scheduled principal payments of long-term debt, not including revolving lines of credit and other debt which can be settled with non-monetary assets, subsequent to December 31, 2016 are as follows: Year Amount 2017 $ 1,202,335 2018 486,699 2019 206,200 2020 136,163 2021 740,610 Thereafter 225,000 Total $ 2,997,007 Other Debt On March 27, 2014, DSSTM received an additional $1,000,000 under the Agreement comprised of a promissory note for $900,000 and fixed and contingent equity interests of $100,000. On September 5, 2014, DSSTM received the remaining $1,500,000 under the Agreement comprised of a promissory note for $1,350,000 and fixed and contingent return interests of $150,000. On May 23, 2016, DSSTM remitted $495,000 in proceeds received from the sale of patent assets (Note 5) to Fortress under the terms of the Agreement. On September 20, 2016, DSSTM remitted $125,250 in proceeds received from a settlement to Fortress as repayment of the note principal balance under the terms of the Agreement. The Agreement defines certain events as Events of Default, one of which is the failure by DSSTM, on or before the second anniversary of the Effective Date, to make payments to the Investors equal to the outstanding Advances. On February 13, 2016, being the second anniversary date of the Effective Date, DSSTM had failed to make these payments and was therefore in default of the Agreement. On December 2, 2016, the parties entered into a First Amendment to Investment Agreement and Certain Other Documents (the “Amendment”). The purpose of the Amendment was to vacate DSSTM’s ongoing non-payment default under the Agreement, and to amend certain provisions of the Agreement. The Agreement was amended to add expenses in the amount of $150,000 to DSSTM’s payment obligation, payable on the Maturity Date. This amount was recorded as debt issuance costs and is being amortized on a straight line basis through the amended maturity date of February 13, 2018. The Amendment added a provision whereby DSSTM is required to deposit $300,000 on or before March 2, 2017 and (ii) a further sum of $300,000 on or before March 2, 2018, into a deposit account (collectively, the “Deposit”). The March 2, 2017 deposit was made in a timely manner. The Deposit funds will be restricted to pay certain expenses, consisting of out-of-pocket expenses incurred in connection with certain existing patent litigation matters and other patent litigation matters which may occur after the Amendment Effective Date (the “Qualified Expenses”). In the Event of Default, the Investors may apply the then remaining Deposit to the then outstanding Obligations, if any. Additionally per the Amendment, DSSTM agrees to pay to the Investors an amount equal to 25% of any amounts received by DSSTM for any and all types of monetization activities related to certain of its patents covering systems and methods of using low power wireless peripheral devices (collectively, “BlueTooth Patents”), but only until the Investors have received payments under the Agreement totaling the sum of (i) the Capitalized Expenses plus (ii) payments of principal and interest on the Notes totaling the sum of (x) $4,500,000 (consisting of the previously made Advances) plus (y) additional amounts, if any, advanced by the Investors pursuant to the Agreement. In addition to the monetization interest granted the Investors in the BlueTooth Patents, DSSTM also granted the Collateral Agent and the Investors a security interest in certain of DSSTM’s unencumbered semiconductor patents to further collateralize the amounts owed under the Agreement. As of December 31, 2016, DSSTM has made aggregate principal payments of $770,250 on the notes. As of December 31, 2016, total net advances equaled $3,729,750, which consisted of $4,041,000 in notes and an aggregate of $459,000 of fixed and contingent equity interests, less aggregate principal payments of $770,250. Aggregate accrued interest totaled $209,500 as of December 31, 2016 ($132,000 as of December 31, 2015). Unamortized debt issuance costs totaled $175,231 as of December 31, 2016 ($56,582 as of December 31, 2015). As a result of the event of default, the Company had classified the remainder of the amounts due on the notes of approximately $4,023,000 as short-term debt as of December 31, 2015. As a result of the Amendment on December 2, 2016, the Company has classified the remainder of the amount due as long-term debt. The $495,000 of fixed and contingent equity interests are recorded in other liabilities. The Company will reduce the liability upon payment to the Investor from available proceeds from litigation, or if none by the maturity date of February 13, 2018, then such amounts will be reversed from other liabilities and recorded as other income as of the maturity date. |
Other Liabilities
Other Liabilities | 12 Months Ended |
Dec. 31, 2016 | |
Other Liabilities Disclosure [Abstract] | |
Other Liabilities | NOTE 7 – OTHER LIABILITIES On November 14, 2016, the Company entered into a Proceeds Investment Agreement (the “Agreement”) with Brickell Key Investments LP (“BKI”). Pursuant to the Agreement, BKI financed an aggregate of $13,500,000 in a patent purchase and monetization program to be implemented and managed by the Company (the “Financing”). Pursuant to Agreement. $3,000,000 of the Financing was used to cover the Company’s purchase of a portfolio of U.S. and foreign LED patents and a license from Intellectual Discovery Co., Ltd., a Korean company (collectively, the “LED Patent Portfolio”), resulting in a basis in these assets of $0. $6,000,000 of the Financing was directed by BKI to attorneys to cover those attorneys’ fees and out-of-pocket expenses for legal proceedings that may transpire relating to enforcement of the LED Patent Portfolio. This amount is not included in the Company’s financial statements as the Company has no control over these funds. In addition, the Company received $4,500,000 of the Financing which is required to be used by the Company to pay for the defense of Inter Partes Review Inter Partes Review In consideration for its portion of the Financing, the Company assigned to BKI its rights to the Patent Asset Proceeds, defined as any and all monetary recoveries (whether through damages, recoveries, royalties, monies, lump-sum payments, up-front payments, settlement amounts, distribution of property, cash value of equities, license fees or other revenues or other assets or amounts) paid by a defendant or defendants or a third-party to the Company as a result of or in connection with the LED Patent Portfolio, in an amount equal to the Minimum Return and the Additional Return as hereinafter defined (the “Assigned Rights”). Under the Assigned Rights, in addition to repayment in full of the Financing, the Company will pay BKI, solely from realized Patent Asset Proceeds, a return equal to the sum of (A) a certain multiple of the Financing or a designated annualized IRR Return on the Financing, whichever is greater (the “Minimum Return”), plus (B) an additional designated percentage of the Patent Asset Proceeds net of the Minimum Return (the “Additional Return”). Once the Minimum Return and Additional Return to BKI are satisfied, Intellectual Discovery Co., Ltd. will be entitled to a payment of a certain percentage of the Patent Asset Proceeds with the remaining balance of Patent Asset Proceeds to be retained by the Company. In consideration of the Financing, the Company also issued to BKI a five-year warrant to purchase up to 750,000 shares of the Company’s common stock at an exercise price of $1.00 per share (the “Warrant”). On July 8, 2013, the Company’s subsidiary, DSS Technology Management, purchased two patents for $500,000 covering certain methods and processes related to Bluetooth devices. In conjunction with the patent purchases, DSS Technology Management entered into a Proceed Right Agreement with certain investors pursuant to which DSS Technology Management initially received $250,000 of a total of $750,000 which it will ultimately receive thereunder, subject to certain payment milestones, in exchange for 40% of the proceeds which it receives, if any, from the use, sale or licensing of the two patents. As of December 31, 2016, the Company had received an aggregate of $650,000 ($650,000 in 2015) from the investors pursuant to the agreement of which approximately $467,000 was in other liabilities in the consolidated balance sheets ($551,000 as December 31, 2015). The Company will reduce the liability as it pays legal and other expenses related to its litigation involving the Bluetooth patents, for which the amount is available to be used for 50% of all such expenses. As described in Note 6, On February 13, 2014, the Company’s subsidiary, DSSTM entered into an Investment Agreement with Fortress pursuant to which DSSTM contracted to receive a series of advances up to $4,500,000. Under the terms of the Agreement, on the Effective Date, DSSTM issued and sold a promissory note in the amount of $1,791,000, fixed return equity interests in the amount of $199,000, and contingent equity interests in the amount of $10,000. On March 27, 2014, DSSTM received an additional $1,000,000 under the Agreement comprised of a promissory note for $900,000 and fixed and contingent equity interests of $100,000. On September 5, 2014, DSSTM received the remaining $1,500,000 under the Agreement comprised of a promissory note for $1,350,000 and fixed and contingent return interests of $150,000. The $495,000 of aggregate fixed and contingent equity interests received are recorded in other liabilities. The Company will reduce the liability upon payment to the Investor from available proceeds from litigation, or if none by the maturity date of February 13, 2018, then such amounts will be reversed from other liabilities and recorded as other income as of the maturity date. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 8 - STOCKHOLDERS’ EQUITY On August 26, 2016, the Company affected a one-for-four reverse stock split of the Company’s common stock. No fractional shares of the Company’s common stock were issued as a result of the reverse stock split. Instead, stockholders of record who otherwise would have been entitled to receive fractional shares were entitled to a rounding up of their fractional share to the nearest whole share, except in the case of any stockholder that owned less than four shares of the Company’s common stock immediately preceding the reverse stock split. In such case, such stockholder received cash for such fractional share in an amount equal to the product obtained by multiplying: (x) the closing sale price of the common stock on August 25, 2016 as reported on the NYSE MKT, by (y) the amount of the fractional share. As a result, the Company issued 1,166 common shares for shares due as a result of the rounding up feature and paid an aggregate of $92 to buy-out the fractional shares of holders with less than four shares immediately preceding the reverse stock split. All references in these financial statements to the number of shares of our common stock and to related per-share prices (including references to periods prior to the effective date of the reverse stock split) reflect this reverse stock split. Sales of Equity Between September 15, 2015 and September 24, 2015, the Company entered into securities purchase agreements with certain accredited investors for the sale of an aggregate of 1,079,545 shares of common stock at a purchase price of $0.88 per share, for a total purchase price of $950,000. In addition to the common stock, the purchasers received four-year warrants to purchase up to an aggregate of 215,910 additional shares of common stock at an exercise price of $1.60 per share and for a term of four years after the first six months from the warrant’s issuance date. The warrants had an estimated aggregate fair value of approximately $105,000 which was determined by utilizing the Black-Scholes-Merton option pricing model with a volatility of 81.4%, a risk free rate of return between of 1.45% and 1.60%, and zero dividend and forfeiture estimates. Between October 5, 2015 and October 21, 2015, the Company entered into securities purchase agreements with certain accredited investors for the sale of an aggregate of 284,091 shares of common stock at a purchase price of $0.88 per share, for a total purchase price of $250,000. In addition to the common stock, the purchasers received four-year warrants to purchase up to an aggregate of 56,818 additional shares of common stock at an exercise price of $1.60 per share and for a term of four years after the first six months from the warrant’s issuance date. The warrants had an estimated aggregate fair value of approximately $28,000 which was determined by utilizing the Black-Scholes-Merton option pricing model with a volatility of 81.4%, a risk free rate of return between of 1.35% and 1.36%, and zero dividend and forfeiture estimates. On February 23, 2015, the Company amended two of its debt obligations that, among other things, extended the maturity dates of the notes, instituted principal payments for the notes, and eliminated a conversion feature on one of the notes. In conjunction with these agreements, the Company issued an aggregate of 25,000 shares of its common stock with a grant date fair value of $41,000. Stock Warrants The Company issued five-year warrants to purchase up to 200,000 shares of the Company’s common stock as part of the December 29, 2016 equity sale at an exercise price of $1.00 per share. The Company issued warrants to purchase 272,728 shares of the Company’s common stock as part of its offering to accredited investors from September 15, 2015 through October 21, 2015, at an exercise price of $1.60 per share. The following is a summary with respect to warrants outstanding and exercisable at December 31, 2016 and 2015 and activity during the years then ended: 2016 2015 Weighted Weighted Average Average Exercise Exercise Warrants Price Warrants Price Outstanding at January 1: 1,862,515 $ 16.40 1,641,596 $ 18.80 Granted during the year 950,000 1.00 272,728 1.60 Lapsed/terminated - - (51,809 ) 14.08 Outstanding at December 31: 2,812,515 $ 11.20 1,862,515 $ 16.40 Exercisable at December 31: 2,812,515 $ 11.20 1,589,788 $ 16.40 Weighted average months remaining 34.6 34.3 Stock Options The following is a summary with respect to options outstanding at December 31, 2016 and 2015 and activity during the years then ended: 2016 2015 Number of Options Weighted Average Exercise Price Weighted Average Life Remaining Number of Options Weighted Average Exercise Price Weighted Average Life Remaining (in years) (in years) Outstanding at January 1: 1,106,140 11.56 1,232,073 11.68 Granted 37,500 1.00 13,388 2.40 Lapsed/terminated (508,043 ) 13.56 (139,321 ) 11.80 Outstanding at December 31: 635,597 9.33 3.7 1,106,140 11.56 4.0 Exercisable at December 31: 610,611 10.85 3.7 907,124 11.08 4.6 Expected to vest at December 31: 25,000 1.00 4.3 86,516 8.00 3.2 Aggregate intrinsic value of outstanding options at December 31: $ - $ - Aggregate intrinsic value of exercisable options at December 31: $ - $ - Aggregate intrinsic value of options expected to vest at December 31: $ - $ - The weighted-average grant date fair value of options granted during the year ended December 31, 2016 was $0.10 ($0.12 -2015). The aggregate grant date fair value of options that vested during the year was approximately $71,000 ($988,000 -2015). There were no options exercised during 2016 or 2015. The fair value of each option award is estimated on the date of grant utilizing the Black-Scholes-Merton Option Pricing Model. The Company estimated the expected volatility of the Company’s common stock at the grant date using the historical volatility of the Company’s common stock over the most recent period equal to the expected stock option term. In March 2016, three of the Company’s senior management voluntarily cancelled an aggregate of 75,000 options to purchase shares of the Company’s common stock with exercise prices of $12.00 per share, of which 41,667 of the options were unvested on the date of cancellation resulting in a reversal of previously recognized stock based compensation expense of approximately $36,000. The following table shows our weighted average assumptions used to compute the share-based compensation expense for stock options and warrants granted during the years ended December 31, 2016 and 2015: Years Ended December 31, 2016 2015 Volatility 85.6 % 72.6 % Expected option term 3.5 years 2.9 years Risk-free interest rate 1.3 % 1.7 % Expected forfeiture rate 0.0 % 0.0 % Expected dividend yield 0.0 % 0.0 % Restricted Stock During 2016, the Company issued 6,250 shares of restricted common stock to a consultant providing marketing services to the Company. The restricted shares vested on May 2, 2016 and had an aggregate grant date fair value of approximately $6,250. In addition, during 2016 the Company issued an aggregate of 224,750 shares of restricted stock to members of the Company’s management which will vest on May 17, 2017 and had an aggregated grant date fair value of approximately $124,000. In January 2015, the Company issued an aggregate of 7,500 shares of restricted common stock to certain members of the Company’s board in exchange for agreements by the board members to reduce their cash compensation for the fiscal year of 2015. The restricted shares vested on August 15, 2015 and had an aggregate grant date fair value of approximately $11,000. In November 2015, the Company issued 31,250 restricted shares to a consultant in exchange for media advertising services agreement. The restricted shares vested over a 90-day period and had a grant date fair value of $27,500. On January 12, 2017, the Company issued an aggregate of 150,000 shares of restricted stock to members of the Company’s management which will vest on May 17, 2017 and had an aggregated grant date fair value of approximately $126,000. The following is a summary of activity of restricted stock during the years ended at December 31, 2016 and 2015: Shares Weighted- average Grant Date Fair Value Restricted shares outstanding, December 31, 2014 66,085 $ 2.80 Restricted shares granted 38,750 1.00 Restricted shares vested (89,835 ) 2.36 Restricted shares outstanding, December 31, 2015 15,000 $ 0.88 Restricted shares granted 231,000 0.56 Restricted shares vested (15,000 ) 0.88 Restricted shares outstanding, December 31, 2016 231,000 $ 0.56 Stock-Based Compensation |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 9 - INCOME TAXES Following is a summary of the components giving rise to the income tax provision (benefit) for the years ended December 31: The provision (benefit) for income taxes consists of the following: 2016 2015 Currently payable: Federal $ 132,835 $ - State (5,617 ) 5,836 Total currently payable 127,218 5,836 Deferred: Federal (379,710 ) (990,745 ) State (111,642 ) (147,674 ) Total deferred (491,352 ) (1,138,419 ) Less: increase in allowance 374,864 1,154,767 Net deferred (116,488 ) 16,348 Total income tax provision $ 10,730 $ 22,184 Individual components of deferred taxes are as follows: 2016 2015 Deferred tax assets: Net operating loss carry forwards $ 15,302,177 $ 17,383,770 Equity issued for services 280,975 855,139 Goodwill and other intangibles 1,684,346 692,470 Investment in pass-through entity 17,898 268,476 Deferred revenue 1,522,258 - Other 849,325 681,889 Gross deferred tax assets 19,656,979 19,881,744 Deferred tax liabilities: Goodwill and other intangibles 277,231 291,706 Depreciation and amortization 272,406 289,534 Gross deferred tax liabilities 549,637 581,240 Less: valuation allowance (19,152,961 ) (19,462,611 ) Net deferred tax liabilities $ (45,619 ) $ (162,107 ) The Company has approximately $46,038,000 in federal net operating loss carryforwards (“NOLs”) available to reduce future taxable income, which will expire at various dates from 2022 through 2036. Due to the uncertainty as to the Company’s ability to generate sufficient taxable income in the future and utilize the NOLs before they expire, the Company has recorded a valuation allowance accordingly. The Company’s NOLs are subject to annual limitations as a result of a change in its equity ownership as defined under the Internal Revenue Code Section 382. These limitations, as applicable, could further limit the use of the NOLs. The excess tax benefits associated with stock option exercises are recorded directly to stockholders’ equity only when realized. As a result, the excess pre-tax benefits available in net operating loss carryforwards but not reflected in deferred tax assets was approximately $1,019,000. These carryforwards expire at various dates from 2022 through 2030. Stock options granted by the Company in prior years as compensation for services were forfeited. This resulted in the reversal of approximately $678,000 of deferred tax assets and a corresponding reduction of the valuation allowance. The differences between the United States statutory federal income tax rate and the effective income tax rate in the accompanying consolidated statements of operations are as follows: 2016 2015 Statutory United States federal rate 34.0 % 34.0 % State income taxes net of federal benefit 5.0 0.7 Permanent differences (3.9 ) (23.3 ) Other (0.4 ) (3.5 ) Change in valuation reserves (35.8 ) (8.1 ) Effective tax rate (1.1 )% (0.2 )% At December 31, 2016 and 2015, the total unrecognized tax benefits of $446,000 have been netted against the related deferred tax assets. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, 2016 and 2015, the Company recognized no interest and penalties. The Company files income tax returns in the U.S. federal jurisdiction and various states. The tax years 2013-2016 generally remain open to examination by major taxing jurisdictions to which the Company is subject. |
Defined Contribution Pension Pl
Defined Contribution Pension Plan | 12 Months Ended |
Dec. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Defined Contribution Pension Plan | NOTE 10 - DEFINED CONTRIBUTION PENSION PLAN The Company maintains qualified employee savings plans (the “401(k) Plans”) which qualify as deferred salary arrangements under Section 401(k) of the Internal Revenue Code which covers all employees. Employees generally become eligible to participate in the 401(k) Plan immediately following the employee’s hire date. Employees may contribute a percentage of their earnings, subject to the limitations of the Internal Revenue Code. The Company matches up to 50% of the employee’s contribution up to a maximum match of 3%. The total matching contributions for 2016 were approximately $101,000 ($109,000 -2015). |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 11 – COMMITMENTS AND CONTINGENCIES Facilities - Equipment Leases The following table summarizes the Company’s lease commitments. Operating Leases Equipment Facilities Total Payments made in 2016 $ 48,499 $ 247,937 $ 296,436 Future minimum lease commitments: 2017 $ 44,131 $ 259,385 $ 303,516 2018 43,258 243,002 286,260 2019 14,419 68,820 83,239 2020 14,419 68,820 83,239 2021 - - - Total future minimum lease commitments $ 116,227 $ 640,027 $ 756,254 Employment Agreements Related Party Payments - Contingent Litigation Payments - Legal Proceedings On March 10, 2014, DSS Technology Management filed suit in the United States District Court for the Eastern District of Texas against Taiwan Semiconductor Manufacturing Company, TSMC North America, TSMC Development, Inc. (referred to collectively as TSMC), Samsung Electronics Co., Ltd, Samsung Electronics America, Inc., Samsung Telecommunications America L.L.C., Samsung Semiconductor, Inc., Samsung Austin Semiconductor LLC (referred to collectively as Samsung), and NEC Corporation of America (referred to as NEC), for patent infringement involving certain of its semiconductor patents. DSS Technology Management sought a judgment for infringement, injunctive relief, and money damages from each of the named defendants. On March 3, 2015, a Markman hearing was held in the Eastern District of Texas. Based on the District Court’s claim construction order issued on April 9, 2015, DSS Technology Management and TSMC entered in to a Joint Stipulation and Proposed Final Judgment of Non-Infringement dated May 4, 2015, subject to DSS Technology Management’s right to appeal the court’s claim construction order to the Federal Circuit. On March 22, 2016, the Federal Circuit ruled in favor of TSMC in the appeal, effectively ending the litigation with TSMC and Samsung. On April 28, 2015, DSS Technology Management reached a confidential settlement with NEC, ending the litigation with NEC. On February 16, 2015, DSS Technology Management filed suit in the United States District Court, Eastern District of Texas, against defendants Intel Corporation, Dell, Inc., GameStop Corp., Conn’s Inc., Conn Appliances, Inc., NEC Corporation of America, Wal-Mart Stores, Inc., Wal-Mart Stores Texas, LLC, and AT&T, Inc. The complaint alleges patent infringement and seeks judgment for infringement of two of DSSTM’s patents, injunctive relief and money damages. On December 9, 2015, Intel filed IPR petitions with PTAB for review of the patents at issue in the case. Intel’s IPRs were instituted by PTAB on June 8, 2016. The Intel litigation has been stayed by the District Court pending final determination of the IPR proceedings. On July 16, 2015, DSS Technology Management filed three separate lawsuits in the United States District Court for the Eastern District of Texas alleging infringement of certain of its semiconductor patents. The defendants are SK Hynix et al., et al., In addition to the foregoing, the Company may be subject to other legal proceedings that arise in the ordinary course of business and have not been finally adjudicated. Adverse decisions in the foregoing may have a material adverse effect on its results of operations, cash flows or our financial condition. The Company accrues for potential litigation losses when a loss is probable and reasonably estimable. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 12 Months Ended |
Dec. 31, 2016 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flow Information | NOTE 12 - SUPPLEMENTAL CASH FLOW INFORMATION Supplemental cash flow information for the years ended December 31: 2016 2015 Cash paid for interest $ 210,000 $ 251,000 Non-cash investing and financing activities: Financing of equipment purchases $ - $ 525,000 Gain (Loss) from change in fair value of interest rate swap derivative $ 18,000 $ (2,500 ) Capitalized debt modifcation costs that increase debt balance $ 150,000 $ - |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Segment Information | NOTE 13 - SEGMENT INFORMATION The Company’s businesses are organized, managed and internally reported as four operating segments. Two of these operating segments, Packaging and Printing and Plastics, are engaged in the printing and production of paper, cardboard and plastic documents with a wide range of features, including the Company’s patented technologies and trade secrets designed for the protection of documents against unauthorized duplication and altering. The two other operating segments, DSS Digital Group, and DSS Technology Management, Inc., are engaged in various aspects of developing, acquiring, selling and licensing technology assets and are grouped into one reportable segment called Technology. Approximate information concerning the Company’s operations by reportable segment for the years ended December 31, 2016 and 2015 is as follows. The Company relies on intersegment cooperation and management does not represent that these segments, if operated independently, would report the results contained herein: Year Ended December 31, 2016 Packaging and Printing Plastics Technology Corporate Total Revenues from external customers $ 12,934,000 4,344,000 1,900,000 - $ 19,178,000 Depreciation and amortization 617,000 122,000 649,000 4,000 1,392,000 Interest expense 123,000 - 70,000 86,000 279,000 Stock based compensation 17,000 10,000 26,000 276,000 329,000 Income tax expense - - - 11,000 11,000 Net income (loss) to common shareholders 1,533,000 447,000 (1,271,000 ) (1,659,000 ) (950,000 ) Capital expenditures 251,000 18,000 3,117,000 - 3,386,000 Identifiable assets 9,484,000 2,335,000 1,942,000 4,705,000 18,466,000 Year Ended December 31, 2015 Packaging and Printing Plastics Technology Corporate Total Revenues from external customers $ 11,797,000 3,904,000 1,804,000 - $ 17,505,000 Depreciation and amortization 584,000 120,000 847,000 8,000 1,559,000 Interest expense 137,000 - 84,000 114,000 335,000 Stock based compensation 69,000 39,000 112,000 754,000 974,000 Impairment of goodwill - - 9,593,000 - 9,593,000 Impairment of intangible assets and investments - - 500,000 - 500,000 Income tax expense - - - 22,000 22,000 Net income (loss) to common shareholders 1,070,000 166,000 (12,944,000 ) (2,601,000 ) (14,309,000 ) Capital expenditures 621,000 52,000 9,000 - 682,000 Identifiable assets 9,571,000 2,131,000 3,299,000 600,000 15,601,000 International revenue, which consists of sales to customers with operations in Canada, Western Europe, Latin America, Africa, the Middle East and Asia comprised 2% of total revenue for 2016 (2%- 2015). Revenue is allocated to individual countries by customer based on where the product is shipped to, location of services performed or the location of equipment that is under an annual maintenance agreement. The Company had no long-lived assets in any country other than the United States for any period presented. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation |
Use of Estimates | Use of Estimates |
Reclassifications | Reclassifications |
Restricted Cash | Restricted Cash |
Accounts Receivable | Accounts Receivable |
Inventory | Inventory |
Property, Plant and Equipment | Property, Plant and Equipment |
Investments | Investments |
Goodwill | Goodwill - |
Other Intangible Assets and Patent Application Costs | Other Intangible Assets and Patent Application Costs |
Impairment of Long Lived Assets | Impairment of Long Lived Assets |
Fair Value of Financial Instruments | Fair Value of Financial Instruments ● Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; ● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and ● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The carrying amounts reported in the balance sheet of cash, accounts receivable, prepaids, accounts payable and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments. The fair value of revolving credit lines, notes payable and long-term debt approximates their carrying value as the stated or discounted rates of the debt reflect recent market conditions. Derivative instruments, as discussed below, are recorded as assets and liabilities at estimated fair value based on available market information. |
Derivative Instruments | Derivative Instruments The Company has an interest rate swap with Citizens that changes the variable rate on a term loan to a fixed rate as follows: Notional Amount Variable Rate Fixed Cost Maturity Date $ 966,786 3.77 % 5.87 % August 30, 2021 |
Share-based Payments | Share-Based Payments |
Revenue Recognition | Revenue Recognition For technology sales and services, revenue is recognized in accordance with FASB ASC 985-605. Accordingly, revenue is recognized when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service or product has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of our fees is reasonably assured. We recognize cloud computing revenue, including data backup, recovery and security services, on a monthly basis, beginning on the date the customer commences use of our services. Professional services are recognized in the period services are provided. For printing technology licenses, revenue is recognized once all the following criteria for revenue recognition have been met: (1) persuasive evidence of an agreement exists; (2) the right and ability to use the product or technology has been rendered; (3) the fee is fixed and determinable and not subject to refund or adjustment; and (4) collection of the amounts due is reasonably assured. For other technology licenses, revenue arrangements generally provide for the payment of contractually determined fees in consideration for the grant of certain intellectual property rights for patented technologies owned or controlled by the Company. These rights typically include some combination of the following: (i) the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products covered by patented technologies owned or controlled the Company, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. The intellectual property rights granted may be perpetual in nature, extending until the expiration of the related patents, or can be granted for a defined, relatively short period of time, with the licensee possessing the right to renew the agreement at the end of each contractual term for an additional payment. Pursuant to the terms of these agreements, the Company has no further obligation with respect to the grant of the non-exclusive retroactive and future licenses, covenants-not-to-sue, releases, and other deliverables, including no express or implied obligation on the Company’s part to maintain or upgrade the technology, or provide future support or services. Generally, the agreements provide for the grant of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution of the agreement, or upon receipt of the minimum upfront payment for term agreement renewals. As such, the earnings process is complete and revenue is recognized upon the execution of the agreement, when collectability is reasonably assured, or upon receipt of the minimum upfront fee for term agreement renewals, and when all other revenue recognition criteria have been met. Certain of the Company’s revenue arrangements provide for future royalties or additional required payments based on future licensee activities. Additional royalties are recognized in revenue upon resolution of the related contingency provided that all revenue recognition criteria, as described above, have been met. Amounts of additional royalties due under these license agreements, if any, cannot be reasonably estimated by management. |
Costs of Revenue | Costs of revenue - |
Contingent Legal Expenses | Contingent Legal Expenses - |
Advertising Costs | Advertising Costs . |
Research and Development | Research and Development |
Income Taxes | Income Taxes |
Earnings Per Common Share | Earnings Per Common Share As of December 31, 2016 and 2015, there were 3,672,878 and 2,968,655, respectively, of common stock share equivalents potentially issuable under convertible debt agreements, employment agreements, options, warrants, and restricted stock agreements that could potentially dilute basic earnings per share in the future. Common stock equivalents were excluded from the calculation of diluted earnings per share for 2016 and 2015 in which the Company had a net loss, since their inclusion would have been anti-dilutive. |
Comprehensive Loss | Comprehensive Loss |
Concentration of Credit Risk | Concentration of Credit Risk During 2016, two customers accounted for 38% of our consolidated revenue. As of December 31, 2016, these two customers accounted for 31% of our trade accounts receivable balance. During 2015, these two customers accounted for 35% of our consolidated revenue. As of December 31, 2015, these two customers accounted for 27% of our trade accounts receivable balance. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, “Leases”, which requires that lease arrangements longer than 12 months result in an entity recognizing an asset and liability. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. The Company has not yet evaluated nor has it determined the effect of the standard will have on its consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, “Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting.” The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for the Company on January 1, 2017 and the Company is currently evaluating the impact that ASU 2016-09 will have on its consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments”, which clarifies the treatment of several types of cash receipts and payments for which there was diversity in practice. This update is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted, including adoption in an interim period. We anticipate that the adoption of this guidance will not have a material impact on our consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows”, regarding the presentation of restricted cash on the statement of cash flows. The standards update requires that the reconciliation of the beginning and end of period cash amounts shown in the statement of cash flows include restricted cash. When restricted cash is presented separately from cash and cash equivalents on the balance sheet, a reconciliation is required between the amounts presented on the statement of cash flows and the balance sheet. Also, the new guidance requires the disclosure of information about the nature of the restrictions. The standards update is effective retrospectively for fiscal years and interim periods beginning after December 15, 2017, with early adoption permitted. |
Newly Adopted Accounting Pronouncements | Newly Adopted Accounting Pronouncements Substantial doubt exists when conditions and events indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date of financial statement issuance. Also during 2016, the Company adopted FASB ASU 2015-03 – “Interest – Imputation of Interest”. The adoption of this ASU resulted in debt issuance costs being presented as a reduction to the related debt instrument, as opposed to being presented as a separate asset on the Company’s balance sheet. Management reclassified approximately $57,000 from “Other assets” as December 31, 2015, as a reduction to the carrying value of the respective debt instrument. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Schedule of Derivative Instruments | The Company has an interest rate swap with Citizens that changes the variable rate on a term loan to a fixed rate as follows: Notional Amount Variable Rate Fixed Cost Maturity Date $ 966,786 3.77 % 5.87 % August 30, 2021 |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory consisted of the following at December 31: 2016 2015 Finished Goods $ 736,987 $ 718,601 Work in process 314,353 167,779 Raw Materials 155,037 51,450 $ 1,206,377 $ 937,830 |
Property Plant and Equipment (T
Property Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Property, plant and equipment consisted of the following at December 31: Estimated Useful Life 2016 2015 Machinery and equipment 5-10 years $ 5,879,958 $ 5,615,562 Building and improvements 39 years 1,923,027 1,923,027 Land 185,000 185,000 Leasehold improvements See (1) 722,984 722,984 Furniture and fixtures 7 years 68,272 68,272 Software and websites 3 years 412,113 402,225 Total cost 9,191,354 8,917,070 Less accumulated depreciation 4,617,513 3,913,252 Property, plant, and equipment, net $ 4,573,841 $ 5,003,818 (1) |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets are comprised of the following: December 31, 2016 December 31, 2015 Useful Life Gross Carrying Amount Accumulated Amortizaton Net Carrying Amount Gross Carrying Amount Accumulated Amortizaton Net Carrying Amount Acquired intangibles- customer lists and non-compete agreements 5 -10 years 1,997,300 1,721,357 275,943 1,997,300 1,635,257 362,043 Acquired intangibles-patents and patent rights Varied (1) 3,155,000 2,092,767 1,062,233 3,650,000 1,562,526 2,087,474 Patent application costs Varied (2) 1,136,465 578,623 557,842 1,062,958 494,931 568,027 $ 6,288,765 $ 4,392,747 $ 1,896,018 $ 6,710,258 $ 3,692,714 $ 3,017,544 (1) Acquired patents and patent rights are amortized over their expected useful life which is generally the remaining legal life of the patent. As of December 31, 2016, the weighted average remaining useful life of these assets in service was approximately 2.4 years. (2) Patent application costs are amortized over their expected useful life which is generally the remaining legal life of the patent. As of December 31, 2016, the weighted average remaining useful life of these assets in service was approximately 8.6 years. |
Schedule of Estimated Future Amortization of Intangible Assets | Approximate expected amortization for each of the five succeeding fiscal years is as follows: Year Amount 2017 $ 681,000 2018 $ 537,000 2019 $ 272,000 2020 $ 182,000 2021 $ 77,000 |
Schedule of Changes On Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the years ended December 31, 2016 and 2015 are as follows: Packaging Plastics Technolgy Management Total Balance as of January 1, 2015 Goodwill $ 1,768,400 $ 684,949 $ 12,831,774 $ 15,285,123 Accumulated impairment losses - - (3,238,926 ) (3,238,926 ) 1,768,400 684,949 9,592,848 12,046,197 Goodwill acquired during the year - - - - Impairment losses - - (9,592,848 ) (9,592,848 ) Balance as of December 31, 2015 Goodwill 1,768,400 684,949 12,831,774 15,285,123 Accumulated impairment losses - - (12,831,774 ) (12,831,774 ) 1,768,400 684,949 - 2,453,349 Goodwill acquired during the year - - - - Impairment losses - - - - Balance as of December 31, 2016 Goodwill 1,768,400 684,949 12,831,774 15,285,123 Accumulated impairment losses - - (12,831,774 ) (12,831,774 ) $ 1,768,400 $ 684,949 $ - $ 2,453,349 |
Short Term and Long Term Debt (
Short Term and Long Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable and Long-Term Debt | A summary of scheduled principal payments of long-term debt, not including revolving lines of credit and other debt which can be settled with non-monetary assets, subsequent to December 31, 2016 are as follows: Year Amount 2017 $ 1,202,335 2018 486,699 2019 206,200 2020 136,163 2021 740,610 Thereafter 225,000 Total $ 2,997,007 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Schedule of Warrant Activity | The following is a summary with respect to warrants outstanding and exercisable at December 31, 2016 and 2015 and activity during the years then ended: 2016 2015 Weighted Weighted Average Average Exercise Exercise Warrants Price Warrants Price Outstanding at January 1: 1,862,515 $ 16.40 1,641,596 $ 18.80 Granted during the year 950,000 1.00 272,728 1.60 Lapsed/terminated - - (51,809 ) 14.08 Outstanding at December 31: 2,812,515 $ 11.20 1,862,515 $ 16.40 Exercisable at December 31: 2,812,515 $ 11.20 1,589,788 $ 16.40 Weighted average months remaining 34.6 34.3 |
Summary of Stock Option Activity Under Stock Option and Incentive Plans | The following is a summary with respect to options outstanding at December 31, 2016 and 2015 and activity during the years then ended: 2016 2015 Number of Options Weighted Average Exercise Price Weighted Average Life Remaining Number of Options Weighted Average Exercise Price Weighted Average Life Remaining (in years) (in years) Outstanding at January 1: 1,106,140 11.56 1,232,073 11.68 Granted 37,500 1.00 13,388 2.40 Lapsed/terminated (508,043 ) 13.56 (139,321 ) 11.80 Outstanding at December 31: 635,597 9.33 3.7 1,106,140 11.56 4.0 Exercisable at December 31: 610,611 10.85 3.7 907,124 11.08 4.6 Expected to vest at December 31: 25,000 1.00 4.3 86,516 8.00 3.2 Aggregate intrinsic value of outstanding options at December 31: $ - $ - Aggregate intrinsic value of exercisable options at December 31: $ - $ - Aggregate intrinsic value of options expected to vest at December 31: $ - $ - |
Schedule of Assumptions Used to Compute the Share-based Compensation Expense for Stock Options and Warrants | The following table shows our weighted average assumptions used to compute the share-based compensation expense for stock options and warrants granted during the years ended December 31, 2016 and 2015: Years Ended December 31, 2016 2015 Volatility 85.6 % 72.6 % Expected option term 3.5 years 2.9 years Risk-free interest rate 1.3 % 1.7 % Expected forfeiture rate 0.0 % 0.0 % Expected dividend yield 0.0 % 0.0 % |
Summary of Restricted Stock | The following is a summary of activity of restricted stock during the years ended at December 31, 2016 and 2015: Shares Weighted- average Grant Date Fair Value Restricted shares outstanding, December 31, 2014 66,085 $ 2.80 Restricted shares granted 38,750 1.00 Restricted shares vested (89,835 ) 2.36 Restricted shares outstanding, December 31, 2015 15,000 $ 0.88 Restricted shares granted 231,000 0.56 Restricted shares vested (15,000 ) 0.88 Restricted shares outstanding, December 31, 2016 231,000 $ 0.56 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Provision | Following is a summary of the components giving rise to the income tax provision (benefit) for the years ended December 31: The provision (benefit) for income taxes consists of the following: 2016 2015 Currently payable: Federal $ 132,835 $ - State (5,617 ) 5,836 Total currently payable 127,218 5,836 Deferred: Federal (379,710 ) (990,745 ) State (111,642 ) (147,674 ) Total deferred (491,352 ) (1,138,419 ) Less: increase in allowance 374,864 1,154,767 Net deferred (116,488 ) 16,348 Total income tax provision $ 10,730 $ 22,184 |
Schedule of Deferred Tax Assets and Liabilities | Individual components of deferred taxes are as follows: 2016 2015 Deferred tax assets: Net operating loss carry forwards $ 15,302,177 $ 17,383,770 Equity issued for services 280,975 855,139 Goodwill and other intangibles 1,684,346 692,470 Investment in pass-through entity 17,898 268,476 Deferred revenue 1,522,258 - Other 849,325 681,889 Gross deferred tax assets 19,656,979 19,881,744 Deferred tax liabilities: Goodwill and other intangibles 277,231 291,706 Depreciation and amortization 272,406 289,534 Gross deferred tax liabilities 549,637 581,240 Less: valuation allowance (19,152,961 ) (19,462,611 ) Net deferred tax liabilities $ (45,619 ) $ (162,107 ) |
Schedule of Effective Income Tax Rate Reconciliation | The differences between the United States statutory federal income tax rate and the effective income tax rate in the accompanying consolidated statements of operations are as follows: 2016 2015 Statutory United States federal rate 34.0 % 34.0 % State income taxes net of federal benefit 5.0 0.7 Permanent differences (3.9 ) (23.3 ) Other (0.4 ) (3.5 ) Change in valuation reserves (35.8 ) (8.1 ) Effective tax rate (1.1 )% (0.2 )% |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Payments Under Operating Leases | The following table summarizes the Company’s lease commitments. Operating Leases Equipment Facilities Total Payments made in 2016 $ 48,499 $ 247,937 $ 296,436 Future minimum lease commitments: 2017 $ 44,131 $ 259,385 $ 303,516 2018 43,258 243,002 286,260 2019 14,419 68,820 83,239 2020 14,419 68,820 83,239 2021 - - - Total future minimum lease commitments $ 116,227 $ 640,027 $ 756,254 |
Supplemental Cash Flow Inform29
Supplemental Cash Flow Information (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Supplemental Cash Flow Information [Abstract] | |
Schedule of Supplemental Cash Flow Information | Supplemental cash flow information for the years ended December 31: 2016 2015 Cash paid for interest $ 210,000 $ 251,000 Non-cash investing and financing activities: Financing of equipment purchases $ - $ 525,000 Gain (Loss) from change in fair value of interest rate swap derivative $ 18,000 $ (2,500 ) Capitalized debt modifcation costs that increase debt balance $ 150,000 $ - |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Operations by Reportable Segment | The Company relies on intersegment cooperation and management does not represent that these segments, if operated independently, would report the results contained herein: Year Ended December 31, 2016 Packaging and Printing Plastics Technology Corporate Total Revenues from external customers $ 12,934,000 4,344,000 1,900,000 - $ 19,178,000 Depreciation and amortization 617,000 122,000 649,000 4,000 1,392,000 Interest expense 123,000 - 70,000 86,000 279,000 Stock based compensation 17,000 10,000 26,000 276,000 329,000 Income tax expense - - - 11,000 11,000 Net income (loss) to common shareholders 1,533,000 447,000 (1,271,000 ) (1,659,000 ) (950,000 ) Capital expenditures 251,000 18,000 3,117,000 - 3,386,000 Identifiable assets 9,484,000 2,335,000 1,942,000 4,705,000 18,466,000 Year Ended December 31, 2015 Packaging and Printing Plastics Technology Corporate Total Revenues from external customers $ 11,797,000 3,904,000 1,804,000 - $ 17,505,000 Depreciation and amortization 584,000 120,000 847,000 8,000 1,559,000 Interest expense 137,000 - 84,000 114,000 335,000 Stock based compensation 69,000 39,000 112,000 754,000 974,000 Impairment of goodwill - - 9,593,000 - 9,593,000 Impairment of intangible assets and investments - - 500,000 - 500,000 Income tax expense - - - 22,000 22,000 Net income (loss) to common shareholders 1,070,000 166,000 (12,944,000 ) (2,601,000 ) (14,309,000 ) Capital expenditures 621,000 52,000 9,000 - 682,000 Identifiable assets 9,571,000 2,131,000 3,299,000 600,000 15,601,000 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Feb. 28, 2014 | Jan. 31, 2014 | |
Significant Accounting Policies [Line Items] | ||||
Restricted cash | $ 177,609 | $ 293,043 | ||
Accounts receivable, allowance | 50,000 | 59,000 | ||
Depreciation expense | 635,000 | 663,000 | ||
Net gain (loss) attributable to cash flow hedge | 45,000 | 64,000 | ||
Advertising costs | 27,000 | 25,000 | ||
Research and development | $ 435,000 | $ 470,000 | ||
Antidilutive securities | 3,672,878 | 2,968,655 | ||
Other assets | $ 57,000 | |||
Two Customer [Member] | Sales Revenue, Goods, Net [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Concentration of credit risk, percentage | 38.00% | 35.00% | ||
Two Customer [Member] | Accounts Receivable [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Concentration of credit risk, percentage | 31.00% | 27.00% | ||
DSS Technology Management [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Investments | $ 400,000 | $ 100,000 | ||
DSS Technology Management [Member] | Express Mobile Inc [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Investment owned shares | 594,530 | |||
Percent of outstanding common stock | 6.00% | |||
Cost of investment | $ 500,000 |
Summary of Significant Accoun32
Summary of Significant Accounting Policies - Schedule of Derivative Instruments (Details) | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Accounting Policies [Abstract] | |
Notional Amount | $ 966,786 |
Variable Rate | 3.77% |
Fixed Cost | 5.87% |
Maturity Date | Aug. 30, 2021 |
Inventory - Schedule of Invento
Inventory - Schedule of Inventory (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Finished Goods | $ 736,987 | $ 718,601 |
Work in process | 314,353 | 167,779 |
Raw Materials | 155,037 | 51,450 |
Inventory | $ 1,206,377 | $ 937,830 |
Property Plant and Equipment -
Property Plant and Equipment - Schedule of Property, Plant and Equipment (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | ||
Property, Plant and Equipment [Line Items] | |||
Total cost | $ 9,191,354 | $ 8,917,070 | |
Less accumulated depreciation | 4,617,513 | 3,913,252 | |
Property, plant, and equipment, net | 4,573,841 | 5,003,818 | |
Machinery and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total cost | $ 5,879,958 | 5,615,562 | |
Machinery and Equipment [Member] | Minimum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, estimated useful life | 5 years | ||
Machinery and Equipment [Member] | Maximum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, estimated useful life | 10 years | ||
Facilities [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total cost | $ 1,923,027 | 1,923,027 | |
Property and equipment, estimated useful life | 39 years | ||
Leasehold Improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total cost | [1] | $ 722,984 | 722,984 |
Leasehold Improvements [Member] | Minimum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, estimated useful life | 3 years | ||
Leasehold Improvements [Member] | Maximum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, estimated useful life | 10 years | ||
Furniture and Fixtures [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total cost | $ 68,272 | 68,272 | |
Property and equipment, estimated useful life | 7 years | ||
Software and Websites [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total cost | $ 412,113 | 402,225 | |
Property and equipment, estimated useful life | 3 years | ||
Land [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total cost | $ 185,000 | $ 185,000 | |
[1] | Expected lease term between 3 and 10 years. |
Property Plant and Equipment 35
Property Plant and Equipment - Schedule of Property, Plant and Equipment (Details) (Parenthetical) - Leasehold Improvements [Member] | 12 Months Ended |
Dec. 31, 2016 | |
Minimum [Member] | |
Property and equipment, estimated useful life | 3 years |
Maximum [Member] | |
Property and equipment, estimated useful life | 10 years |
Intangible Assets and Goodwil36
Intangible Assets and Goodwill (Details Narrative) - USD ($) | Nov. 10, 2016 | Dec. 31, 2016 | Dec. 31, 2015 |
Goodwill [Line Items] | |||
Patent prosecution costs | $ 74,000 | $ 5,000 | |
Payments to acquire intangible assets | 73,661 | 5,159 | |
Proceeds from sale of intangible assets | 495,000 | ||
Amortization of intangibles | 700,000 | 896,000 | |
Impairment of goodwill | $ 9,592,848 | ||
Impairment charge | $ 9,600,000 | ||
Intellectual Discovery Co. Ltd [Member] | |||
Goodwill [Line Items] | |||
Payments to acquire intangible assets | $ 3,000,000 | ||
Proceeds from sale of intangible assets | $ 0 |
Intangible Assets and Goodwil37
Intangible Assets and Goodwill - Schedule of Intangible Assets (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | ||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 6,288,765 | $ 6,710,258 | |
Accumulated Amortization | 4,392,747 | 3,692,714 | |
Net Carrying Amount | 1,896,018 | 3,017,544 | |
Customer Lists and Non-compete Agreements [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 1,997,300 | 1,997,300 | |
Accumulated Amortization | 1,721,357 | 1,635,257 | |
Net Carrying Amount | $ 275,943 | 362,043 | |
Customer Lists and Non-compete Agreements [Member] | Minimum [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful Life | 5 years | ||
Customer Lists and Non-compete Agreements [Member] | Maximum [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful Life | 10 years | ||
Patents and Patent Rights [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life, description | [1] | Varied | |
Gross Carrying Amount | $ 3,155,000 | 3,650,000 | |
Accumulated Amortization | 2,092,767 | 1,562,526 | |
Net Carrying Amount | $ 1,062,233 | 2,087,474 | |
Patent Application Costs [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life, description | [2] | Varied | |
Gross Carrying Amount | $ 1,136,465 | 1,062,958 | |
Accumulated Amortization | 578,623 | 494,931 | |
Net Carrying Amount | $ 557,842 | $ 568,027 | |
[1] | Acquired patents and patent rights are amortized over their expected useful life which is generally the remaining legal life of the patent. As of December 31, 2016, the weighted average remaining useful life of these assets in service was approximately 2.4 years. | ||
[2] | Patent application costs are amortized over their expected useful life which is generally the remaining legal life of the patent. As of December 31, 2016, the weighted average remaining useful life of these assets in service was approximately 8.6 years. |
Intangible Assets and Goodwil38
Intangible Assets and Goodwill - Schedule of Intangible Assets (Details) (Parenthetical) | 12 Months Ended |
Dec. 31, 2016 | |
Patents and Patent Rights [Member] | |
Weighted average remaining useful life | 2 years 4 months 24 days |
Patent Application Costs [Member] | |
Weighted average remaining useful life | 8 years 7 months 6 days |
Intangible Assets and Goodwil39
Intangible Assets and Goodwill - Schedule of Estimated Future Amortization of Intangible Assets (Details) | Dec. 31, 2016USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2,017 | $ 681,000 |
2,018 | 537,000 |
2,019 | 272,000 |
2,020 | 182,000 |
2,021 | $ 77,000 |
Intangible Assets and Goodwil40
Intangible Assets and Goodwill - Schedule of Changes on Carrying Amount of Goodwill (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Goodwill [Line Items] | ||
Goodwill, net, Beginning balance | $ 15,285,123 | $ 15,285,123 |
Accumulated impairment losses, Beginning balance | (12,831,774) | (3,238,926) |
Goodwill, Beginning balance | 2,453,349 | 12,046,197 |
Goodwill acquired during the year | ||
Impairment losses | (9,592,848) | |
Goodwill, net, Ending balance | 15,285,123 | 15,285,123 |
Accumulated impairment losses, Ending balance | (12,831,774) | (12,831,774) |
Goodwill, Ending balance | 2,453,349 | 2,453,349 |
Packaging and Printing Group [Member] | ||
Goodwill [Line Items] | ||
Goodwill, net, Beginning balance | 1,768,400 | 1,768,400 |
Accumulated impairment losses, Beginning balance | ||
Goodwill, Beginning balance | 1,768,400 | 1,768,400 |
Goodwill acquired during the year | ||
Impairment losses | ||
Goodwill, net, Ending balance | 1,768,400 | 1,768,400 |
Accumulated impairment losses, Ending balance | ||
Goodwill, Ending balance | 1,768,400 | 1,768,400 |
Document Security Systems Plastics Groups [Member] | ||
Goodwill [Line Items] | ||
Goodwill, net, Beginning balance | 684,949 | 684,949 |
Accumulated impairment losses, Beginning balance | ||
Goodwill, Beginning balance | 684,949 | 684,949 |
Goodwill acquired during the year | ||
Impairment losses | ||
Goodwill, net, Ending balance | 684,949 | |
Accumulated impairment losses, Ending balance | ||
Goodwill, Ending balance | 684,949 | |
Technology Management [Member] | ||
Goodwill [Line Items] | ||
Goodwill, net, Beginning balance | 12,831,774 | 12,831,774 |
Accumulated impairment losses, Beginning balance | (12,831,774) | (3,238,926) |
Goodwill, Beginning balance | 9,592,848 | |
Goodwill acquired during the year | ||
Impairment losses | (9,592,848) | |
Goodwill, net, Ending balance | 12,831,774 | 12,831,774 |
Accumulated impairment losses, Ending balance | (12,831,774) | (12,831,774) |
Goodwill, Ending balance | ||
Document Security Systems Plastics Group [Member] | ||
Goodwill [Line Items] | ||
Goodwill, net, Beginning balance | 684,949 | |
Accumulated impairment losses, Beginning balance | ||
Goodwill, Beginning balance | 684,949 | |
Goodwill acquired during the year | ||
Impairment losses | ||
Goodwill, net, Ending balance | 684,949 | 684,949 |
Accumulated impairment losses, Ending balance | ||
Goodwill, Ending balance | $ 684,949 | $ 684,949 |
Short Term and Long Term Debt41
Short Term and Long Term Debt (Details Narrative) - USD ($) | Sep. 20, 2016 | May 23, 2016 | Apr. 12, 2016 | Sep. 24, 2015 | Apr. 28, 2015 | Sep. 05, 2014 | Feb. 13, 2014 | Jul. 19, 2013 | Mar. 31, 2016 | Oct. 21, 2015 | May 02, 2015 | Feb. 23, 2015 | May 31, 2014 | May 24, 2013 | Dec. 30, 2011 | Aug. 31, 2011 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 29, 2016 | Mar. 27, 2014 | Dec. 06, 2013 |
Debt Instrument [Line Items] | |||||||||||||||||||||
Stock options issued, exercise price per share | $ 0.88 | $ 12 | $ 0.88 | $ 1 | $ 2.40 | ||||||||||||||||
Sale of investment units, shares issuable per warrant | 215,910 | 56,818 | |||||||||||||||||||
Sale of investment units, warrant exercise price per share | $ 1.60 | $ 1.60 | $ 1 | ||||||||||||||||||
Long-term debt, net | $ 5,249,569 | $ 2,240,596 | |||||||||||||||||||
Proceeds from sale of intangible assets | 495,000 | ||||||||||||||||||||
Short-term debt | 3,984,316 | ||||||||||||||||||||
Fixed and contingent equity interests | 495,000 | ||||||||||||||||||||
Accrued interest | 209,500 | 132,000 | |||||||||||||||||||
Unamortized debt issuance costs | $ 175,231 | 56,582 | |||||||||||||||||||
Convertible Notes Payable [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Debt instrument, maturity date | Dec. 30, 2016 | ||||||||||||||||||||
Debt instrument, face amount | $ 575,000 | ||||||||||||||||||||
Debt interest rate | 10.00% | ||||||||||||||||||||
Beneficial conversion feature recorded as a debt discount | $ 88,000 | ||||||||||||||||||||
Debt instrument, carrying amount | $ 650,000 | $ 230,000 | 410,000 | ||||||||||||||||||
Debt instrument, final balloon payment | $ 230,000 | ||||||||||||||||||||
Promissory Notes [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Debt instrument, maturity date | May 31, 2017 | May 31, 2016 | |||||||||||||||||||
Debt instrument, face amount | $ 850,000 | ||||||||||||||||||||
Debt interest rate | 9.00% | ||||||||||||||||||||
Debt instrument, carrying amount | $ 505,000 | 685,000 | |||||||||||||||||||
Periodic installments amount | $ 15,000 | ||||||||||||||||||||
Debt instrument, final balloon payment | $ 155,000 | $ 610,000 | |||||||||||||||||||
Shares to be issued upon conversion of convertible note, shares | 60,000 | ||||||||||||||||||||
Stock options issued, exercise price per share | $ 3 | ||||||||||||||||||||
Fair value of notes payable | $ 29,000 | $ 69,000 | |||||||||||||||||||
Expected volatility | 70.00% | 60.00% | |||||||||||||||||||
Risk-free interest rate per annum | 1.53% | 0.89% | |||||||||||||||||||
Expected dividend yield | 0.00% | 0.00% | |||||||||||||||||||
Long-term debt, unamortized discount | $ 29,000 | $ 69,000 | |||||||||||||||||||
Sale of investment units, shares issuable per warrant | 40,000 | ||||||||||||||||||||
Sale of investment units, warrant exercise price per share | $ 1.50 | ||||||||||||||||||||
Interest accrued in the period | 15,000 | ||||||||||||||||||||
Promissory Notes One [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Debt instrument, maturity date | May 31, 2017 | ||||||||||||||||||||
Debt instrument, final balloon payment | $ 430,000 | ||||||||||||||||||||
Term Loan [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Debt instrument, carrying amount | $ 1,303,900 | ||||||||||||||||||||
Debt instrument, term | 60 months | ||||||||||||||||||||
Interest rate on outstanding term loan | 4.84% | ||||||||||||||||||||
Credit facility agreement, monthly principal payment | $ 24,511 | ||||||||||||||||||||
RBS Citizens [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Line of credit, maximum borrowing amount | $ 800,000 | ||||||||||||||||||||
Interest rate additional rate above LIBOR | 4.37% | ||||||||||||||||||||
Debt instrument, maturity date | May 31, 2017 | ||||||||||||||||||||
Credit facility, amount outstanding | $ 0 | 0 | |||||||||||||||||||
RBS Citizens [Member] | Promissory Notes [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Interest rate additional rate above LIBOR | 3.15% | 3.77% | |||||||||||||||||||
Debt interest rate | 5.87% | ||||||||||||||||||||
Debt instrument, carrying amount | $ 966,786 | 1,021,926 | |||||||||||||||||||
Periodic installments amount | $ 7,658 | ||||||||||||||||||||
RBS Citizens [Member] | Permanent Loan [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Interest rate additional rate above LIBOR | 3.15% | 3.77% | |||||||||||||||||||
Debt instrument, maturity date | Jul. 31, 2019 | ||||||||||||||||||||
Debt instrument, carrying amount | $ 375,000 | 405,247 | $ 450,000 | ||||||||||||||||||
Periodic installments amount | $ 450,000 | ||||||||||||||||||||
Interest accrued in the period | $ 2,500 | ||||||||||||||||||||
Debt instrument, term | 5 years | ||||||||||||||||||||
Debt instrument, final balloon payment | $ 300,000 | ||||||||||||||||||||
RBS Citizens [Member] | LIBOR [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Interest rate additional rate above LIBOR | 3.75% | ||||||||||||||||||||
Peoples Capital [Member] | Term Loan [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Debt instrument, carrying amount | $ 559,609 | 819,681 | |||||||||||||||||||
Citizens [Member] | Term Loan [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Debt instrument, carrying amount | $ 525,000 | 360,611 | $ 460,448 | ||||||||||||||||||
Debt instrument, term | 60 months | ||||||||||||||||||||
Interest rate on outstanding term loan | 3.61% | ||||||||||||||||||||
Credit facility agreement, monthly principal payment | $ 9,591 | ||||||||||||||||||||
Bzdick Properties Limited Liability Company [Member] | Promissory Notes [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Debt instrument, maturity date | Aug. 31, 2021 | ||||||||||||||||||||
Purchase price for Real Estate acquired | $ 1,500,000 | ||||||||||||||||||||
Purchase price for Real Estate acquired, loan obtained | $ 1,200,000 | ||||||||||||||||||||
DSS Technology Management [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Short-term debt | 770,250 | ||||||||||||||||||||
Annual principal payment | 3,729,750 | ||||||||||||||||||||
Notes payable | 4,041,000 | ||||||||||||||||||||
Fixed and contingent equity interests | $ 459,000 | ||||||||||||||||||||
DSS Technology Management [Member] | Investment Agreement [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Debt instrument, carrying amount | $ 1,000,000 | ||||||||||||||||||||
Advances | $ 4,500,000 | ||||||||||||||||||||
Long-term debt, net | $ 1,350,000 | 1,791,000 | 900,000 | ||||||||||||||||||
Fixed return equity interests | 150,000 | 199,000 | $ 100,000 | ||||||||||||||||||
Fair value of contingent consideration | 10,000 | ||||||||||||||||||||
Proceeds from return received | $ 1,500,000 | 2,000,000 | |||||||||||||||||||
Proceeds from sale of intangible assets | $ 125,250 | $ 495,000 | |||||||||||||||||||
Payment of obligation | $ 150,000 | ||||||||||||||||||||
Straight line basis maturity date | Feb. 13, 2018 | ||||||||||||||||||||
Received percentage | 25.00% | ||||||||||||||||||||
Short-term debt | $ 4,500,000 | ||||||||||||||||||||
DSS Technology Management [Member] | Investment Agreement [Member] | March 2, 2017 [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Deposits | 300,000 | ||||||||||||||||||||
DSS Technology Management [Member] | Investment Agreement [Member] | March 2, 2018 [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Deposits | $ 300,000 |
Short Term and Long Term Debt -
Short Term and Long Term Debt - Schedule of Notes Payable and Long-Term Debt (Details) | Dec. 31, 2016USD ($) |
Debt Disclosure [Abstract] | |
2,017 | $ 1,202,335 |
2,018 | 486,699 |
2,019 | 206,200 |
2,020 | 136,163 |
2,021 | 740,610 |
Thereafter | 225,000 |
Total | $ 2,997,007 |
Other Liabilities (Details Narr
Other Liabilities (Details Narrative) - USD ($) | Nov. 14, 2016 | Sep. 05, 2014 | Mar. 27, 2014 | Feb. 13, 2014 | Jul. 08, 2013 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 29, 2016 | Oct. 21, 2015 | Sep. 24, 2015 |
Payment to acquire intangible assets | $ 73,661 | $ 5,159 | ||||||||
Intangible assets book value | 6,288,765 | 6,710,258 | ||||||||
Proceeds from financing amount | 495,000 | |||||||||
Other liabilities short term | 2,996,310 | 1,009,660 | ||||||||
Warrants to purchase of common stock shares | 56,818 | 215,910 | ||||||||
Warrants exercise price per share | $ 1 | $ 1.60 | $ 1.60 | |||||||
Fixed and contingent equity interests | 495,000 | |||||||||
DSS Technology Management [Member] | ||||||||||
Payment to acquire intangible assets | $ 500,000 | |||||||||
Proceeds from financing amount | 250,000 | |||||||||
Payment milestones amount | $ 750,000 | |||||||||
Milestones description | Subject to certain payment milestones, in exchange for 40% of the proceeds which it receives, if any, from the use, sale or licensing of the two patents. | |||||||||
Reduction the liability pays legal and other expense percentage | 50.00% | |||||||||
Proceeds Investment Agreement [Member] | Brickell Key Investments LP [Member] | ||||||||||
Finance amount | $ 13,500,000 | |||||||||
Other liabilities | 4,209,000 | |||||||||
Other liabilities short term | 2,070,000 | |||||||||
Payment of estimated future inter parts review costs | 2,500,000 | |||||||||
Allocation to working capital | $ 1,709,000 | |||||||||
Warrants term | 5 years | |||||||||
Warrants to purchase of common stock shares | 750,000 | |||||||||
Warrants exercise price per share | $ 1 | |||||||||
Proceeds Investment Agreement [Member] | Intellectual Discovery Co. Ltd [Member] | LED Patent Portfolio [Member] | ||||||||||
Payment to acquire intangible assets | 3,000,000 | |||||||||
Intangible assets book value | 0 | |||||||||
Attorneys' fees and out-of-pocket expenses | 6,000,000 | |||||||||
Proceeds from financing amount | $ 4,500,000 | |||||||||
Proceed Right Agreement [Member] | Investors [Member] | ||||||||||
Other liabilities | $ 467,000 | 551,000 | ||||||||
Proceeds from related party debt | 650,000 | $ 650,000 | ||||||||
Investment Agreement [Member] | DSS Technology Management [Member] | ||||||||||
Proceeds from related party debt | $ 1,500,000 | $ 1,000,000 | $ 4,500,000 | |||||||
Proceeds from issued and sold promissory note | 1,350,000 | 900,000 | 1,791,000 | |||||||
Fixed return equity interests | 199,000 | |||||||||
Contingent equity interests | $ 10,000 | |||||||||
Fixed and contingent equity interests | $ 150,000 | $ 100,000 | $ 495,000 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Dec. 29, 2016 | Nov. 29, 2016 | Aug. 26, 2016 | Sep. 24, 2015 | Jun. 20, 2013 | Mar. 31, 2016 | Nov. 30, 2015 | Oct. 21, 2015 | Feb. 23, 2015 | Jan. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 |
Reverse stock split | one-for-four reverse stock split | ||||||||||||
Number of shares of common stock | 300,000 | 1,166 | 1,079,545 | 25,000 | |||||||||
Buy-out fees | $ 92 | ||||||||||||
Warrant to purchase of common stock | 200,000 | ||||||||||||
Warrant Exercise price | $ 1 | $ 1.60 | $ 1.60 | ||||||||||
Fair value of warrant | $ 87,000 | ||||||||||||
Volatility | 86.40% | 81.40% | 81.40% | 85.60% | 72.60% | ||||||||
Risk free return | 1.96% | 1.30% | 1.70% | ||||||||||
Dividend yield | 0.00% | 0.00% | 0.00% | 0.00% | |||||||||
Stock options issued, exercise price per share | $ 0.88 | $ 12 | $ 0.88 | $ 1 | $ 2.40 | ||||||||
Value of common stock sold | $ 950,000 | $ 250,000 | $ 41,000 | $ 199,908 | $ 1,128,336 | ||||||||
Term | 4 years | 4 years | 3 years 6 months | 2 years 10 months 24 days | |||||||||
Number of shares exchanged for warrants exercised | 215,910 | 56,818 | |||||||||||
Fair value of options issued | $ 105,000 | $ 28,000 | |||||||||||
Stock options issued | 284,091 | ||||||||||||
Stock based compensation | $ 36,000 | $ 328,567 | $ 974,137 | ||||||||||
Weighted-average grant date fair value of options granted | $ 0.10 | $ 0.12 | |||||||||||
Fair value of options vested during the year | $ 41,667 | $ 71,000 | $ 988,000 | ||||||||||
Number of option cancelled | 75,000 | ||||||||||||
Stock compensation expense, description | the Company had stock compensation expense of approximately $329,000 or $0.03 basic earnings per share ($974,000; $0.12 basic earnings per share - 2015). | ||||||||||||
Stock compensation expense | $ 329,000 | ||||||||||||
Unrecognized compensation costs | $ 89,000 | $ 89,000 | |||||||||||
Stock Options [Member] | |||||||||||||
Stock options issued | 6,000,000 | ||||||||||||
Restricted Stock [Member] | |||||||||||||
Number of restricted common stock issued | 7,500 | 224,750 | |||||||||||
Restricted shares vested date | May 17, 2017 | ||||||||||||
Restricted stock, value | $ 11,000 | $ 124,000 | |||||||||||
Restricted Stock [Member] | January 12, 2017 [Member] | |||||||||||||
Number of restricted common stock issued | 150,000 | ||||||||||||
Restricted shares vested date | May 17, 2017 | ||||||||||||
Restricted stock, value | $ 126,000 | ||||||||||||
Accredited Investors [Member] | |||||||||||||
Warrant Exercise price | $ 1.60 | ||||||||||||
Number of shares exchanged for warrants exercised | 272,728 | ||||||||||||
Consultant [Member] | |||||||||||||
Number of restricted common stock issued | 6,250 | ||||||||||||
Restricted stock, value | $ 6,250 | ||||||||||||
Minimum [Member] | |||||||||||||
Risk free return | 1.45% | 1.35% | |||||||||||
Maximum [Member] | |||||||||||||
Risk free return | 1.60% | 1.36% | |||||||||||
Sales of Equity [Member] | |||||||||||||
Listing fees | $ 25,000 | ||||||||||||
Stock Warrants [Member] | |||||||||||||
Warrant to purchase of common stock | 750,000 | ||||||||||||
Warrant Exercise price | $ 1 | ||||||||||||
Fair value of warrant | $ 199,000 | ||||||||||||
Volatility | 86.40% | ||||||||||||
Risk free return | 1.78% | ||||||||||||
Dividend yield | 0.00% | ||||||||||||
Term | 5 years | ||||||||||||
Stock based compensation | $ 198,000 | ||||||||||||
Purchase Agreement [Member] | |||||||||||||
Purchase price | $ 225,000 | ||||||||||||
Media Advertising Services Agreement [Member] | Consultant [Member] | |||||||||||||
Number of restricted common stock issued | 31,250 | ||||||||||||
Restricted stock, value | $ 27,500 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Warrant Activity (Details) - $ / shares | Sep. 24, 2015 | Mar. 31, 2016 | Oct. 21, 2015 | Dec. 02, 2016 | Dec. 02, 2015 | Dec. 31, 2016 | Dec. 31, 2015 |
Outstanding, Beginning balance | 1,106,140 | 1,232,073 | |||||
Granted during the year | 37,500 | 13,388 | |||||
Outstanding, Ending balance | 635,597 | 1,106,140 | |||||
Exercisable | 610,611 | 907,124 | |||||
Outstanding Beginning balance, Weighted Average Exercise Price | $ 11.56 | $ 11.68 | |||||
Granted, Weighted Average Exercise Price | $ 0.88 | $ 12 | $ 0.88 | 1 | 2.40 | ||
Outstanding, Ending balance, Weighted Average Exercise Price | 9.33 | 11.56 | |||||
Exercisable Weighted Average Exercise Price | $ 10.85 | $ 11.08 | |||||
Warrant [Member] | |||||||
Outstanding, Beginning balance | 1,862,515 | 1,641,596 | |||||
Granted during the year | 950,000 | 272,728 | |||||
Lapsed/terminated | (51,809) | ||||||
Outstanding, Ending balance | 2,812,515 | 1,862,515 | |||||
Exercisable | 2,812,515 | 1,589,788 | |||||
Outstanding Beginning balance, Weighted Average Exercise Price | $ 16.40 | $ 18.80 | |||||
Granted, Weighted Average Exercise Price | 1 | 1.60 | |||||
Lapsed, Weighted Average Exercise Price | 14.08 | ||||||
Outstanding, Ending balance, Weighted Average Exercise Price | 11.20 | 16.40 | |||||
Exercisable Weighted Average Exercise Price | 11.20 | 16.40 | |||||
Weighted average months remaining | $ 34.6 | $ 34.3 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Stock Option Activity Under Stock Option and Incentive Plans (Details) - USD ($) | Sep. 24, 2015 | Mar. 31, 2016 | Oct. 21, 2015 | Dec. 31, 2016 | Dec. 31, 2015 |
Equity [Abstract] | |||||
Outstanding, Beginning balance | 1,106,140 | 1,232,073 | |||
Granted | 37,500 | 13,388 | |||
Lapsed/terminated | (508,043) | (139,321) | |||
Outstanding, Ending balance | 635,597 | 1,106,140 | |||
Exercisable | 610,611 | 907,124 | |||
Expected to vest , Ending balance | 25,000 | 86,516 | |||
Outstanding Beginning balance, Weighted Average Exercise Price | $ 11.56 | $ 11.68 | |||
Granted, Weighted Average Exercise Price | $ 0.88 | $ 12 | $ 0.88 | 1 | 2.40 |
Lapsed/terminated, Weighted Average Exercise Price | 13.56 | 11.80 | |||
Outstanding, Ending balance, Weighted Average Exercise Price | 9.33 | 11.56 | |||
Exercisable Weighted Average Exercise Price | 10.85 | 11.08 | |||
Expected to Vest, Ending balance, Weighted Average Exercise Price | $ 1 | $ 8 | |||
Oustanding, Weighted Average Life Remaining | 3 years 8 months 12 days | 4 years | |||
Exercisable, Weighted Average Life Remaining | 3 years 8 months 12 days | 4 years 7 months 6 days | |||
Expected to vest, Weighted Average Life Remaining | 4 years 3 months 18 days | 3 years 2 months 12 days | |||
Aggregate intrinsic value of outstanding option, Ending balance | |||||
Aggregate intrinsic value of exercisable options, Ending balance | |||||
Aggregate intrinsic value of options expected to vest, Ending balance |
Stockholders' Equity - Schedu47
Stockholders' Equity - Schedule of Assumptions Used to Compute the Share-based Compensation Expense for Stock Options and Warrants (Details) | Dec. 29, 2016 | Sep. 24, 2015 | Oct. 21, 2015 | Dec. 31, 2016 | Dec. 31, 2015 |
Equity [Abstract] | |||||
Volatility | 86.40% | 81.40% | 81.40% | 85.60% | 72.60% |
Expected option term | 4 years | 4 years | 3 years 6 months | 2 years 10 months 24 days | |
Risk-free interest rate | 1.96% | 1.30% | 1.70% | ||
Expected forfeiture rate | 0.00% | 0.00% | |||
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Stockholders' Equity - Summar48
Stockholders' Equity - Summary of Restricted Stock (Details) - Restricted Stock [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Restricted shares outstanding, Beginning balance, Shares | 15,000 | 66,085 |
Restricted shares granted, Shares | 231,000 | 38,750 |
Restricted shares vested, Shares | (15,000) | (89,835) |
Restricted shares outstanding, Ending balance, Shares | 231,000 | 15,000 |
Restricted shares outstanding, Beginning balance, Weighted-average Grant Date Fair Value | $ 0.88 | $ 2.80 |
Restricted shares granted, Weighted-average Grant Date Fair Value | 0.56 | 1 |
Restricted shares vested, Weighted-average Grant Date Fair Value | 0.88 | 2.36 |
Restricted shares outstanding, Ending balance, Weighted-average Grant Date Fair Value | $ 0.56 | $ 0.88 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Net operating loss carryforwards | $ 46,038,000 | |
Excess tax benefits associated with stock option exercises included in net operating loss carryforwards but not reflected in deferred tax assets | 1,019,000 | |
Deferred tax assets | 678,000 | |
Unrecognized tax benefits | $ 446,000 | $ 446,000 |
Minimum [Member] | ||
Net operating loss carryforwards, expiration date | Dec. 31, 2022 | |
Minimum [Member] | Excess Tax Benefits [Member] | ||
Net operating loss carryforwards, expiration date | Dec. 31, 2022 | |
Maximum [Member] | ||
Net operating loss carryforwards, expiration date | Dec. 31, 2036 | |
Maximum [Member] | Excess Tax Benefits [Member] | ||
Net operating loss carryforwards, expiration date | Dec. 31, 2030 |
Income Taxes - Schedule of Inco
Income Taxes - Schedule of Income Tax Provision (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Federal, Current | $ 132,835 | |
State, Current | (5,617) | 5,836 |
Total currently payable | 127,218 | 5,836 |
Federal, Deferred | (379,710) | (990,745) |
State, Deferred | (111,642) | (147,674) |
Total deferred | (491,352) | (1,138,419) |
Less: increase in allowance | 374,864 | 1,154,767 |
Net deferred | (116,488) | 16,348 |
Total income tax provision | $ 10,730 | $ 22,184 |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Income Tax Disclosure [Abstract] | ||
Deferred tax assets: Net operating loss carryforwards | $ 15,302,177 | $ 17,383,770 |
Deferred tax assets: Equity issued for services | 280,975 | 855,139 |
Deferred tax assets: Goodwill and other intangibles | 1,684,346 | 692,470 |
Deferred tax assets: Investment in pass-through entity | 17,898 | 268,476 |
Deferred tax assets: Deferred revenue | 1,522,258 | |
Deferred tax assets: Other | 849,325 | 681,889 |
Deferred tax assets: Gross deferred tax assets | 19,656,979 | 19,881,744 |
Deferred tax liabilities: Goodwill and other intangibles | 277,231 | 291,706 |
Deferred tax liabilities: Depreciation and amortization | 272,406 | 289,534 |
Deferred tax liabilities: Gross deferred tax liabilities | 549,637 | 581,240 |
Deferred tax liabilities: Less: valuation allowance | (19,152,961) | (19,462,611) |
Deferred tax liabilities: Net deferred tax liabilities | $ (45,619) | $ (162,107) |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Statutory United States federal rate | 34.00% | 34.00% |
State income taxes net of federal benefit | 5.00% | 0.70% |
Permanent difference | (3.90%) | (23.30%) |
Other | (0.40%) | (3.50%) |
Change in valuation reserves | (35.80%) | (8.10%) |
Effective tax rate | (1.10%) | (0.20%) |
Defined Contribution Pension 53
Defined Contribution Pension Plan (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Compensation and Retirement Disclosure [Abstract] | ||
Employee's contribution maximum percentage | 50.00% | |
Employer match percentage | 3.00% | |
Contributions by company | $ 101,000 | $ 109,000 |
Commitments and Contingencies54
Commitments and Contingencies (Details Narrative) | 12 Months Ended |
Dec. 31, 2016USD ($)ft² | |
Severance payment amount | $ 840,000 |
Minimum [Member] | |
Lease equipment term | 36 months |
Maximum [Member] | |
Lease equipment term | 60 months |
Patrick White [Member] | |
Consulting fees paid to related party | $ 35,000 |
Document Security Systems Corporate Offices and Digital Division [Member] | |
Area of square feet | ft² | 5,700 |
Rent expense | $ 6,100 |
Document Security Systems Plastics Group [Member] | |
Area of square feet | ft² | 15,000 |
Rent expense | $ 13,000 |
Lease expiration date | Dec. 31, 2018 |
Packaging and Printing Group [Member] | |
Area of square feet | ft² | 40,000 |
DSS Technology Management [Member] | |
Rent expense | $ 600 |
Lease expiration date | Dec. 31, 2017 |
Paid of rent | $ 1,200 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Future Minimum Payments Under Operating Leases (Details) | Dec. 31, 2016USD ($) |
Payments made in 2016 | $ 296,436 |
2,017 | 303,516 |
2,018 | 286,260 |
2,019 | 83,239 |
2,020 | 83,239 |
2,021 | |
Total future minimum lease commitments | 756,254 |
Equipment [Member] | |
Payments made in 2016 | 48,499 |
2,017 | 44,131 |
2,018 | 43,258 |
2,019 | 14,419 |
2,020 | 14,419 |
2,021 | |
Total future minimum lease commitments | 116,227 |
Facilities [Member] | |
Payments made in 2016 | 247,937 |
2,017 | 259,385 |
2,018 | 243,002 |
2,019 | 68,820 |
2,020 | 68,820 |
2,021 | |
Total future minimum lease commitments | $ 640,027 |
Supplemental Cash Flow Inform56
Supplemental Cash Flow Information - Schedule of Supplemental Cash Flow Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Supplemental Cash Flow Information [Abstract] | ||
Cash paid for interest | $ 210,000 | $ 251,000 |
Financing of equipment purchases | 525,000 | |
Gain (Loss) from change in fair value of interest rate swap derivative | 18,000 | (2,500) |
Capitalized debt modification costs that increase debt balance | $ 150,000 |
Segment Information (Details Na
Segment Information (Details Narrative) - Segment | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | ||
Number of operating segment | 4 | |
International Revenue [Member] | ||
Segment Reporting Information [Line Items] | ||
Concentration of credit risk, percentage | 2.00% | 2.00% |
Segment Information - Schedule
Segment Information - Schedule of Operations by Reportable Segment (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | |||
Revenues from external customers | $ 19,177,599 | ||
Depreciation and amortization | 1,391,815 | $ 1,558,899 | |
Interest expense | 279,214 | 334,738 | |
Stock based compensation | $ 36,000 | 328,567 | 974,137 |
Impairment of goodwill | 9,592,848 | ||
Impairment of intangible assets and investments | 500,000 | ||
Income tax expense | 10,730 | 22,184 | |
Net income (loss) to common stockholders | (950,003) | (14,309,480) | |
Identifiable assets | 18,466,023 | 15,600,851 | |
Operating Segments [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues from external customers | 19,178,000 | 17,505,000 | |
Depreciation and amortization | 1,392,000 | 1,559,000 | |
Interest expense | 279,000 | 335,000 | |
Stock based compensation | 329,000 | 974,000 | |
Impairment of goodwill | 9,593,000 | ||
Impairment of intangible assets and investments | 500,000 | ||
Income tax expense | 11,000 | 22,000 | |
Net income (loss) to common stockholders | (950,000) | (14,309,000) | |
Capital expenditures | 3,386,000 | 682,000 | |
Identifiable assets | 18,466,000 | 15,601,000 | |
Operating Segments [Member] | Packaging and Printing Group [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues from external customers | 12,934,000 | 11,797,000 | |
Depreciation and amortization | 617,000 | 584,000 | |
Interest expense | 123,000 | 137,000 | |
Stock based compensation | 17,000 | 69,000 | |
Impairment of goodwill | |||
Impairment of intangible assets and investments | |||
Income tax expense | |||
Net income (loss) to common stockholders | 1,533,000 | 1,070,000 | |
Capital expenditures | 251,000 | 621,000 | |
Identifiable assets | 9,484,000 | 9,571,000 | |
Operating Segments [Member] | Document Security Systems Plastics Group [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues from external customers | 4,344,000 | 3,904,000 | |
Depreciation and amortization | 122,000 | 120,000 | |
Interest expense | |||
Stock based compensation | 10,000 | 39,000 | |
Impairment of goodwill | |||
Impairment of intangible assets and investments | |||
Income tax expense | |||
Net income (loss) to common stockholders | 447,000 | 166,000 | |
Capital expenditures | 18,000 | 52,000 | |
Identifiable assets | 2,335,000 | 2,131,000 | |
Operating Segments [Member] | Technology Management [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues from external customers | 1,900,000 | 1,804,000 | |
Depreciation and amortization | 649,000 | 847,000 | |
Interest expense | 70,000 | 84,000 | |
Stock based compensation | 26,000 | 112,000 | |
Impairment of goodwill | 9,593,000 | ||
Impairment of intangible assets and investments | 500,000 | ||
Income tax expense | |||
Net income (loss) to common stockholders | (1,271,000) | (12,944,000) | |
Capital expenditures | 3,117,000 | 9,000 | |
Identifiable assets | 1,942,000 | 3,299,000 | |
Operating Segments [Member] | Corporate [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues from external customers | |||
Depreciation and amortization | 4,000 | 8,000 | |
Interest expense | 86,000 | 114,000 | |
Stock based compensation | 276,000 | 754,000 | |
Impairment of goodwill | |||
Impairment of intangible assets and investments | |||
Income tax expense | 11,000 | 22,000 | |
Net income (loss) to common stockholders | (1,659,000) | (2,601,000) | |
Capital expenditures | |||
Identifiable assets | $ 4,705,000 | $ 600,000 |