Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 14, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | DOCUMENT SECURITY SYSTEMS INC | |
Entity Central Index Key | 771,999 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 13,688,903 | |
Trading Symbol | DSS | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash | $ 4,068,745 | $ 5,871,738 |
Restricted cash | 402,827 | 177,609 |
Accounts receivable, net of $50,000 allowance for uncollectible accounts | 1,874,366 | 1,890,981 |
Inventory | 1,523,879 | 1,206,377 |
Prepaid expenses and other current assets | 297,793 | 350,289 |
Total current assets | 8,167,610 | 9,496,994 |
Property, plant and equipment, net | 4,593,990 | 4,573,841 |
Other assets | 45,821 | 45,821 |
Goodwill | 2,453,597 | 2,453,349 |
Other intangible assets, net | 1,556,682 | 1,896,018 |
Total assets | 16,817,700 | 18,466,023 |
Current liabilities: | ||
Accounts payable | 1,767,768 | 2,212,653 |
Accrued expenses and deferred revenue | 940,736 | 1,290,593 |
Other current liabilities | 2,982,175 | 2,996,310 |
Short-term debt | 3,552,705 | |
Current portion of long-term debt, net | 834,416 | 1,202,335 |
Total current liabilities | 10,077,800 | 7,701,891 |
Long-term debt, net | 1,730,287 | 5,249,569 |
Other long-term liabilities | 893,995 | 2,184,843 |
Deferred tax liability, net | 55,094 | 45,619 |
Commitments and contingencies (Note 6) | ||
Stockholders' equity | ||
Common stock, $.02 par value; 200,000,000 shares authorized, 13,688,903 shares issued and outstanding (13,502,653 on December 31, 2016) | 273,778 | 270,053 |
Additional paid-in capital | 104,553,417 | 104,338,002 |
Accumulated other comprehensive loss | (39,494) | (45,343) |
Accumulated deficit | (101,727,177) | (101,278,611) |
Total stockholders' equity | 3,060,524 | 3,284,101 |
Total liabilities and stockholders' equity | $ 16,817,700 | $ 18,466,023 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for uncollectible accounts | $ 50,000 | $ 50,000 |
Common stock, par value | $ .02 | $ .02 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 13,688,903 | 13,502,653 |
Common stock, shares outstanding | 13,688,903 | 13,502,653 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenue | ||||
Printed products | $ 3,382,563 | $ 3,724,269 | $ 7,785,621 | $ 7,699,287 |
Technology sales, services and licensing | 477,600 | 348,211 | 845,133 | 712,179 |
Total revenue | 3,860,163 | 4,072,480 | 8,630,754 | 8,411,466 |
Costs and expenses | ||||
Cost of revenue, exclusive of depreciation and amortization | 2,190,901 | 2,330,202 | 4,979,251 | 4,941,150 |
Selling, general and administrative (including stock based compensation) | 1,490,132 | 1,637,537 | 3,216,013 | 3,541,944 |
Depreciation and amortization | 346,975 | 339,743 | 689,749 | 700,244 |
Total costs and expenses | 4,028,008 | 4,307,482 | 8,885,013 | 9,183,338 |
Operating loss | (167,845) | (235,002) | (254,259) | (771,872) |
Other expense: | ||||
Interest expense | (54,801) | (72,799) | (112,401) | (149,926) |
Amortized debt discount | (37,144) | (5,287) | (72,432) | (10,575) |
Loss before income taxes | (259,790) | (313,088) | (439,092) | (932,373) |
Income tax expense | 4,737 | 4,737 | 9,474 | 9,474 |
Net loss | (264,527) | (317,825) | (448,566) | (941,847) |
Other comprehensive loss: | ||||
Interest rate swap gain (loss) | (1,050) | (7,976) | 5,849 | (34,294) |
Comprehensive loss: | $ (265,577) | $ (325,801) | $ (442,717) | $ (976,141) |
Loss per common share: | ||||
Basic and diluted | $ (0.02) | $ (0.02) | $ (0.03) | $ (0.07) |
Shares used in computing loss per common share: | ||||
Basic and diluted | 13,664,503 | 12,976,737 | 13,644,559 | 12,973,612 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (448,566) | $ (941,847) |
Adjustments to reconcile net loss to net cash from (used by) operating activities: | ||
Depreciation and amortization | 689,749 | 700,244 |
Stock based compensation | 191,360 | 86,486 |
Paid in-kind interest | 36,000 | 39,000 |
Change in deferred tax provision | 9,474 | 9,474 |
Amortization of deferred financing costs | 72,432 | 10,576 |
Decrease (increase) in assets: | ||
Accounts receivable | 16,615 | (21,380) |
Inventory | (317,502) | (225,290) |
Prepaid expenses and other current assets | 52,496 | (11,686) |
Restricted cash | (225,218) | 75,274 |
Increase (decrease) in liabilities: | ||
Accounts payable | (445,590) | 316,587 |
Accrued expenses and other liabilities | (656,033) | (104,071) |
Net cash used by operating activities | (1,024,783) | (66,633) |
Cash flows from investing activities: | ||
Purchase of property, plant and equipment | (365,659) | (128,632) |
Proceeds from sale of intangibles | 495,000 | |
Purchase of intangible assets | (4,903) | (67,944) |
Net cash (used) provided by investing activities | (370,562) | 298,424 |
Cash flows from financing activities: | ||
Payments of long-term debt | (407,648) | (900,808) |
Issuances of common stock, net of issuance costs | ||
Net cash used by financing activities | (407,648) | (900,808) |
Net decrease in cash | (1,802,993) | (669,017) |
Cash at beginning of period | 5,871,738 | 1,440,256 |
Cash at end of period | $ 4,068,745 | $ 771,239 |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | 1. Basis of Presentation and Significant Accounting Policies Document Security Systems, Inc. (the “Company”), through two of its subsidiaries, Premier Packaging Corporation and Plastic Printing Professionals, Inc., which operates under the assumed 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 operates under the assumed 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., acquires intellectual property (“IP”) assets and interests in companies owning intellectual property assets, or assists others in managing their intellectual property monetization efforts, 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. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8.03 of Regulation S-X for smaller reporting companies. Accordingly, these statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying balance sheets and related interim statements of operations and comprehensive loss and cash flows include all adjustments considered necessary for their fair presentation in accordance with U.S. GAAP. All significant intercompany transactions have been eliminated in consolidation. Interim results are not necessarily indicative of results expected for the full year. For further information regarding the Company’s accounting policies, refer to the audited consolidated financial statements and footnotes thereto included in the Company’s Form 10-K for the fiscal year ended December 31, 2016. Use of Estimates - Restricted Cash 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 - As of June 30, 2017 the Company has an interest rate swap agreement for its debt with RBS Citizens, N.A. (“Citizens Bank”) (see Note 4) which changes a variable rate into a fixed rate on a term loan as follows: Notional Variable Amount Rate Fixed Cost Maturity Date $ 940,358 4.21 % 5.87 % August 30, 2021 Impairment of Long Lived Assets and Goodwill Contingent Legal Expenses - Earnings Per Common Share 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 $92 to buy-out the fractional shares of holders with less than four shares immediately preceding the reverse stock split. As of June 30, 2017 and 2016, there were 3,278,127 and 2,498,114 (as adjusted to reflect the one-for-four reverse stock split that took effect on August 26, 2016) respectively, of common stock share equivalents potentially issuable options, warrants, and restricted stock agreements, that could potentially dilute basic earnings per share in the future. These shares are excluded from the calculation of diluted earnings per share in periods in which the Company had a net loss because their inclusion would be anti-dilutive to the Company’s losses in the respective periods. Concentration of Credit Risk - During the six months ended June 30, 2017, two customers accounted for 23% and 14%, respectively, of the Company’s consolidated revenue and accounted for 0% and 16%, respectively, of the Company’s accounts receivable balance as of June 30, 2017. During the six months ended June 30, 2016, one customer accounted for 25% of the Company’s consolidated revenue and accounted for 25% of the Company’s accounts receivable balance as of June 30, 2016. The risk with respect to accounts receivables is mitigated by credit evaluations the Company performs on its customers, the short duration of its payment terms for the significant majority of its customer contracts and by the diversification of its customer base. Reclassifications 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 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 was effective for the Company on January 1, 2017. The adoption of this standard did not have a material impact on our consolidated financial statements. 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. We anticipate that the adoption of this guidance will not have a material impact on our consolidated financial statements. |
Inventory
Inventory | 6 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory | 2. Inventory Inventory consisted of the following: June 30, 2017 December 31, 2016 Finished Goods $ 1,197,680 $ 736,987 WIP 210,585 314,353 Raw Materials 115,614 155,037 $ 1,523,879 $ 1,206,377 |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | 3. Intangible Assets Intangible assets are comprised of the following: June 30, 2017 December 31, 2016 Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Acquired intangibles - customer lists and non-compete agreements 5-10 years $ 1,997,300 $ 1,764,407 $ 232,893 $ 1,997,300 $ 1,721,357 $ 275,943 Acquired intangibles - patents and patent rights Varied (1) 3,155,000 2,348,355 806,645 3,155,000 2,092,767 1,062,233 Patent application costs Varied (2) 1,141,368 624,224 517,144 1,136,465 578,623 557,842 $ 6,293,668 $ 4,736,986 $ 1,556,682 $ 6,288,765 $ 4,392,747 $ 1,896,018 (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 June 30, 2017, the weighted average remaining useful life of these assets in service was approximately 2.02 years. (2) Patent application costs are amortized over their expected useful life which is generally the remaining legal life of the patent. As of June 30, 2017, the weighted average remaining useful life of these assets in service was approximately 6.5 years. Intangible asset amortization expense for the six months ended June 30, 2017 amounted to $344,238 ($359,996 - June 30, 2016). |
Short-Term and Long-Term Debt
Short-Term and Long-Term Debt | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Short-Term and Long-Term Debt | 4. Short-Term and Long-Term Debt Revolving Credit Lines On July 26, 2017, Premier Packaging entered into a Loan Agreement and accompanying Term Note Non-Revolving Line of Credit Agreement with Citizens Bank pursuant to which Citizens agrees to lend up to $1,200,000 for the purpose of enabling Premier Packaging to purchase equipment from time to time that it may need for use in its business. As of the date of this report, the revolving line had a balance of $0. 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. On May 31, 2017, the Company entered into Convertible Promissory Note Amendment No. 4 to extend the maturity date to December 31, 2018 at which point the note is scheduled to be paid in full. In exchange for the extension, the Company also issued the lender as additional consideration 18,000 shares of the Company’s common stock which had a fair value of $17,640. As of June 30, 2017, the balance of the term loan was $415,000 ($505,000 at December 31, 2016). 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 June 30, 2017, the loan had a balance of $309,267 ($360,611 at December 31, 2016). 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% (4.21% at June 30, 2017), 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 June 30, 2017, the note had a balance of $360,000 ($375,000 – December 31, 2016). 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 and June 30, 2017, 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. 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 June 30, 2017, DSSTM has made aggregate principal payments of $770,250 on the notes. As of June 30, 2017, $3,552,705 is recorded as a short-term debt under the arrangement, which includes $245,500 of accrued interest, less unamortized debt issuance costs of $113,424. In addition, as of June 30, 2017, $459,000 of fixed and contingent equity interests is recorded in other short-term 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 settled by the Company by the transfer and assignment of certain of the Company’s patent assets. |
Other Liabilities
Other Liabilities | 6 Months Ended |
Jun. 30, 2017 | |
Other Liabilities Disclosure [Abstract] | |
Other Liabilities | 5. 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. A total of $6,000,000 of the Financing was directed by BKI to attorneys to cover anticipated 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, which are segregated and escrowed in the attorneys’ trust account. 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 Inter Partes Review Inter Partes Review 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 June 30, 2017, the Company had received an aggregate of $650,000 from the investors pursuant to the agreement of which approximately $453,000 was in current liabilities in the consolidated balance sheets ($467,000 as December 31, 2016). 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 4, 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 $459,000 of aggregate fixed and contingent equity interests received are recorded in current 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 current liabilities and recorded as other income as of the maturity date. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 6. Commitments and Contingencies On November 26, 2013, DSS Technology Management filed suit against Apple, Inc. (“Apple”) in the United States District Court for the Eastern District of Texas, for patent infringement (the “Apple Litigation”). The complaint alleges infringement by Apple of DSS Technology Management’s patents that relate to systems and methods of using low power wireless peripheral devices. DSS Technology Management is seeking a judgment for infringement, injunctive relief, and compensatory damages from Apple. On October 28, 2014, the case was stayed by the District Court pending a determination of Apple’s motion to transfer the case to the Northern District of California. On November 7, 2014, Apple’s motion to transfer the case to the Northern District of California was granted. On December 30, 2014, Apple filed two Inter Partes Review 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. On June 1, 2017, the PTAB ruled in favor of Intel for all the challenged claims. On July 28, 2017, DSS Technology Management filed a notice of appeal of the PTAB’s decision relating to U.S. Patent 6,784,552 with the Federal Circuit. 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., On April 13, 2017, Document Security Systems, Inc. (“DSS”) filed a patent infringement lawsuit against Seoul Semiconductor Co., Ltd. and Seoul Semiconductor, Inc. (collectively, “Seoul Semiconductor”) in the United States District Court for the Eastern District of Texas, Marshall Division, alleging infringement of certain of DSS’s Light-Emitting Diode (“LED”) patents. DSS is seeking a judgement for infringement of the patents along with other relief including, but not limited to, money damages, costs and disbursements. On June 7, 2017, DSS refiled its patent infringement complaint against Seoul Semiconductor in the United States District Court for the Central District of California, Southern Division. The case is currently pending. On April 13, 2017, DSS filed a patent infringement lawsuit against Everlight Electronics Co., Ltd. and Everlight Americas, Inc. (collectively, “Everlight”) in the United States District Court for the Eastern District of Texas, Marshall Division, alleging infringement of certain of DSS’s LED patents. DSS is seeking a judgement for infringement of the patents along with other relief including, but not limited to, money damages, costs and disbursements. On June 8, 2017, DSS refiled its patent infringement complaint against Everlight in the United States District Court for the Central District of California. The case is currently pending. On April 13, 2017, DSS filed a patent infringement lawsuit against Cree, Inc. (“Cree”) in the United States District Court for the Eastern District of Texas, Marshall Division, alleging infringement of certain of DSS’s LED patents. DSS is seeking a judgement for infringement of the patents along with other relief including, but not limited to, money damages, costs and disbursements. On June 8, 2017, DSS refiled its patent infringement complaint against Cree in the United States District Court for the Central District of California, and thereafter filed a first amended complaint for patent infringement against Cree in that same court on July 14, 2017. The case is currently pending. On July 13, 2017, DSS filed a patent infringement lawsuit against Osram GMBH, Osram OPTO Semiconductors GMBH & Co., and Osram Sylvania Inc. (collectively, “Osram”) in the United States District Court for the Central District of California, alleging infringement of certain of DSS’s LED patents. DSS is seeking a judgment for infringement of the patents along with other relief including, but not limited to, money damages, costs and disbursements. The case is currently pending. In addition to the foregoing, we may become subject to other legal proceedings that arise in the ordinary course of business and have not been finally adjudicated. Adverse decisions in any of the foregoing may have a material adverse effect on our results of operations, cash flows or our financial condition. The Company accrues for potential litigation losses when a loss is probable and estimable. Contingent Litigation Payments Contingent Payments |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | 7. Stockholder’s Equity On August 26, 2016, the Company affected a one-for-four reverse stock split of the Company’s common stock. All references in this report 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. Restricted Stock Stock-Based Payments and Compensation - |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 6 Months Ended |
Jun. 30, 2017 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flow Information | 8. Supplemental Cash Flow Information Supplemental cash flow information for the six months ended June 30, 2017 and 2016 is approximately as follows: 2017 2016 Cash paid for interest $ 85,000 $ 110,000 Non-cash investing and financing activities: Gain (loss) from change in fair value of interest rate swap derivatives $ 5,000 $ (34,000 ) |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | 9. 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, 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 three and six months ended June 30, 2017 and 2016 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. Three Months Ended June 30, 2017 Packaging and Printing Plastics Technology Corporate Total Revenues from external customers $ 2,157,000 $ 1,226,000 $ 477,000 $ - $ 3,860,000 Depreciation and amortization 159,000 30,000 157,000 1,000 347,000 Stock based compensation - - 14,000 44,000 58,000 Net Income (loss) to common shareholders 116,000 155,000 (260,000 ) (276,000 ) (265,000 ) Three Months Ended June 30, 2016 Packaging and Printing Plastics Technology Corporate Total Revenues from external customers $ 2,657,000 $ 1,067,000 $ 348,000 $ - 4,072,000 Depreciation and amortization 153,000 29,000 157,000 1,000 340,000 Stock based compensation - - 6,000 6,000 12,000 Net Income (loss) to common shareholders 275,000 142,000 (488,000 ) (247,000 ) (318,000 ) Six Months Ended June 30, 2017 Packaging and Printing Plastics Technology Corporate Total Revenues from external customers $ 5,403,000 $ 2,383,000 $ 845,000 $ - $ 8,631,000 Depreciation and amortization 319,000 60,000 310,000 1,000 690,000 Stock based compensation - - 37,000 154,000 191,000 Net Income (loss) to common shareholders 508,000 318,000 (571,000 ) (704,000 ) (449,000 ) Identifiable assets 9,185,000 2,395,000 1,897,000 3,341,000 16,818,000 Six Months Ended June 30, 2016 Packaging and Printing Plastics Technology Corporate Total Revenues from external customers $ 5,584,000 $ 2,115,000 $ 712,000 $ - $ 8,411,000 Depreciation and amortization 306,000 57,000 335,000 2,000 700,000 Stock based compensation 17,000 10,000 19,000 40,000 86,000 Net Income (loss) to common shareholders 532,000 253,000 (1,053,000 ) (674,000 ) (942,000 ) Identifiable assets 9,121,000 2,295,000 2,063,000 637,000 14,116,000 |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates - |
Restricted Cash | Restricted Cash |
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 - As of June 30, 2017 the Company has an interest rate swap agreement for its debt with RBS Citizens, N.A. (“Citizens Bank”) (see Note 4) which changes a variable rate into a fixed rate on a term loan as follows: Notional Variable Amount Rate Fixed Cost Maturity Date $ 940,358 4.21 % 5.87 % August 30, 2021 |
Impairment of Long Lived Assets and Goodwill | Impairment of Long Lived Assets and Goodwill |
Contingent Legal Expenses | Contingent Legal Expenses - |
Earnings Per Common Share | Earnings Per Common Share 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 $92 to buy-out the fractional shares of holders with less than four shares immediately preceding the reverse stock split. As of June 30, 2017 and 2016, there were 3,278,127 and 2,498,114 (as adjusted to reflect the one-for-four reverse stock split that took effect on August 26, 2016) respectively, of common stock share equivalents potentially issuable options, warrants, and restricted stock agreements, that could potentially dilute basic earnings per share in the future. These shares are excluded from the calculation of diluted earnings per share in periods in which the Company had a net loss because their inclusion would be anti-dilutive to the Company’s losses in the respective periods. |
Concentration of Credit Risk | Concentration of Credit Risk - During the six months ended June 30, 2017, two customers accounted for 23% and 14%, respectively, of the Company’s consolidated revenue and accounted for 0% and 16%, respectively, of the Company’s accounts receivable balance as of June 30, 2017. During the six months ended June 30, 2016, one customer accounted for 25% of the Company’s consolidated revenue and accounted for 25% of the Company’s accounts receivable balance as of June 30, 2016. The risk with respect to accounts receivables is mitigated by credit evaluations the Company performs on its customers, the short duration of its payment terms for the significant majority of its customer contracts and by the diversification of its customer base. |
Reclassifications | Reclassifications |
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 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 was effective for the Company on January 1, 2017. The adoption of this standard did not have a material impact on our consolidated financial statements. 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. We anticipate that the adoption of this guidance will not have a material impact on our consolidated financial statements. |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Derivative Instruments | As of June 30, 2017 the Company has an interest rate swap agreement for its debt with RBS Citizens, N.A. (“Citizens Bank”) (see Note 4) which changes a variable rate into a fixed rate on a term loan as follows: Notional Variable Amount Rate Fixed Cost Maturity Date $ 940,358 4.21 % 5.87 % August 30, 2021 |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory consisted of the following: June 30, 2017 December 31, 2016 Finished Goods $ 1,197,680 $ 736,987 WIP 210,585 314,353 Raw Materials 115,614 155,037 $ 1,523,879 $ 1,206,377 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets are comprised of the following: June 30, 2017 December 31, 2016 Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Acquired intangibles - customer lists and non-compete agreements 5-10 years $ 1,997,300 $ 1,764,407 $ 232,893 $ 1,997,300 $ 1,721,357 $ 275,943 Acquired intangibles - patents and patent rights Varied (1) 3,155,000 2,348,355 806,645 3,155,000 2,092,767 1,062,233 Patent application costs Varied (2) 1,141,368 624,224 517,144 1,136,465 578,623 557,842 $ 6,293,668 $ 4,736,986 $ 1,556,682 $ 6,288,765 $ 4,392,747 $ 1,896,018 |
Supplemental Cash Flow Inform19
Supplemental Cash Flow Information (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Supplemental Cash Flow Information [Abstract] | |
Schedule of Supplemental Cash Flow Information | Supplemental cash flow information for the six months ended June 30, 2017 and 2016 is approximately as follows: 2017 2016 Cash paid for interest $ 85,000 $ 110,000 Non-cash investing and financing activities: Gain (loss) from change in fair value of interest rate swap derivatives $ 5,000 $ (34,000 ) |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
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. Three Months Ended June 30, 2017 Packaging and Printing Plastics Technology Corporate Total Revenues from external customers $ 2,157,000 $ 1,226,000 $ 477,000 $ - $ 3,860,000 Depreciation and amortization 159,000 30,000 157,000 1,000 347,000 Stock based compensation - - 14,000 44,000 58,000 Net Income (loss) to common shareholders 116,000 155,000 (260,000 ) (276,000 ) (265,000 ) Three Months Ended June 30, 2016 Packaging and Printing Plastics Technology Corporate Total Revenues from external customers $ 2,657,000 $ 1,067,000 $ 348,000 $ - 4,072,000 Depreciation and amortization 153,000 29,000 157,000 1,000 340,000 Stock based compensation - - 6,000 6,000 12,000 Net Income (loss) to common shareholders 275,000 142,000 (488,000 ) (247,000 ) (318,000 ) Six Months Ended June 30, 2017 Packaging and Printing Plastics Technology Corporate Total Revenues from external customers $ 5,403,000 $ 2,383,000 $ 845,000 $ - $ 8,631,000 Depreciation and amortization 319,000 60,000 310,000 1,000 690,000 Stock based compensation - - 37,000 154,000 191,000 Net Income (loss) to common shareholders 508,000 318,000 (571,000 ) (704,000 ) (449,000 ) Identifiable assets 9,185,000 2,395,000 1,897,000 3,341,000 16,818,000 Six Months Ended June 30, 2016 Packaging and Printing Plastics Technology Corporate Total Revenues from external customers $ 5,584,000 $ 2,115,000 $ 712,000 $ - $ 8,411,000 Depreciation and amortization 306,000 57,000 335,000 2,000 700,000 Stock based compensation 17,000 10,000 19,000 40,000 86,000 Net Income (loss) to common shareholders 532,000 253,000 (1,053,000 ) (674,000 ) (942,000 ) Identifiable assets 9,121,000 2,295,000 2,063,000 637,000 14,116,000 |
Basis of Presentation and Sig21
Basis of Presentation and Significant Accounting Policies (Details Narrative) - USD ($) | Aug. 26, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 |
Significant Accounting Policies [Line Items] | ||||
Restricted cash | $ 402,827 | $ 177,609 | ||
Accumulated other comprehensive loss | $ 39,494 | $ 45,343 | ||
Antidilutive securities | 3,278,127 | 2,498,114 | ||
Reverse stock split | one for four | |||
Number of common stock shares issued | 1,166 | |||
Number of common stock shares issued value | $ 92 | |||
Customer One [Member] | Sales Revenue, Goods, Net [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Concentration of credit risk, percentage | 23.00% | 25.00% | ||
Customer One [Member] | Accounts Receivable [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Concentration of credit risk, percentage | 0.00% | 25.00% | ||
Customer Two [Member] | Sales Revenue, Goods, Net [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Concentration of credit risk, percentage | 14.00% | |||
Customer Two [Member] | Accounts Receivable [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Concentration of credit risk, percentage | 16.00% |
Summary of Significant Accoun22
Summary of Significant Accounting Policies - Schedule of Derivative Instruments (Details) | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Accounting Policies [Abstract] | |
Notional Amount | $ 94,358 |
Variable Rate | 4.21% |
Fixed Cost | 5.87% |
Maturity Date | Aug. 30, 2021 |
Inventory - Schedule of Invento
Inventory - Schedule of Inventory (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Finished Goods | $ 1,197,680 | $ 736,987 |
WIP | 210,585 | 314,353 |
Raw Materials | 115,614 | 155,037 |
Inventory | $ 1,523,879 | $ 1,206,377 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of intangibles | $ 344,238 | $ 359,996 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2017 | Dec. 31, 2016 | ||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 6,293,668 | $ 6,288,765 | |
Accumulated Amortization | 4,736,986 | 4,392,747 | |
Net Carrying Amount | 1,556,682 | 1,896,018 | |
Customer Lists and Non-compete Agreements [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 1,997,300 | 1,997,300 | |
Accumulated Amortization | 1,764,407 | 1,721,357 | |
Net Carrying Amount | $ 232,893 | 275,943 | |
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 | 3,155,000 | |
Accumulated Amortization | 2,348,355 | 2,092,767 | |
Net Carrying Amount | $ 806,645 | 1,062,233 | |
Patent Application Costs [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life, description | [2] | Varied | |
Gross Carrying Amount | $ 1,141,368 | 1,136,465 | |
Accumulated Amortization | 624,224 | 578,623 | |
Net Carrying Amount | $ 517,144 | $ 557,842 | |
[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 June 30, 2017, the weighted average remaining useful life of these assets in service was approximately 2.02 years. | ||
[2] | Patent application costs are amortized over their expected useful life which is generally the remaining legal life of the patent. As of June 30, 2017, the weighted average remaining useful life of these assets in service was approximately 6.5 years. |
Intangible Assets - Schedule 26
Intangible Assets - Schedule of Intangible Assets (Details) (Parenthetical) | 6 Months Ended |
Jun. 30, 2017 | |
Patents and Patent Rights [Member] | |
Weighted average remaining useful life | 2 years 7 days |
Patent Application Costs [Member] | |
Weighted average remaining useful life | 6 years 6 months |
Short Term and Long Term Debt (
Short Term and Long Term Debt (Details Narrative) - USD ($) | Feb. 23, 2017 | Sep. 20, 2016 | May 23, 2016 | Apr. 12, 2016 | Apr. 28, 2015 | Sep. 05, 2014 | Feb. 13, 2014 | Jul. 19, 2013 | May 31, 2017 | May 02, 2015 | Feb. 23, 2015 | May 31, 2014 | May 24, 2013 | Dec. 30, 2011 | Aug. 30, 2011 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Mar. 27, 2014 | Dec. 06, 2013 | Aug. 31, 2011 |
Debt Instrument [Line Items] | |||||||||||||||||||||
Long-term debt, net | $ 1,730,287 | $ 5,249,569 | |||||||||||||||||||
Proceeds from sale of intangible assets | $ 495,000 | ||||||||||||||||||||
Short-term debt | 3,552,705 | ||||||||||||||||||||
Accrued interest | 245,500 | ||||||||||||||||||||
Unamortized debt issuance costs | 113,424 | ||||||||||||||||||||
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 | 140,000 | 230,000 | ||||||||||||||||||
Debt instrument, final balloon payment | 230,000 | ||||||||||||||||||||
Promissory Notes [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Debt instrument, maturity date | May 31, 2016 | May 31, 2017 | Apr. 30, 2018 | ||||||||||||||||||
Debt instrument, face amount | $ 850,000 | ||||||||||||||||||||
Debt interest rate | 9.00% | ||||||||||||||||||||
Debt instrument, carrying amount | 415,000 | 505,000 | |||||||||||||||||||
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% | |||||||||||||||||||
Number of stock issued for exchange consideration | 18,000 | ||||||||||||||||||||
Number of stock issued for exchange consideration, value | $ 17,640 | ||||||||||||||||||||
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 | Dec. 31, 2018 | |||||||||||||||||||
Debt instrument, final balloon payment | $ 430,000 | ||||||||||||||||||||
Number of stock issued for exchange consideration | 18,000 | ||||||||||||||||||||
Number of stock issued for exchange consideration, value | $ 17,640 | ||||||||||||||||||||
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 | ||||||||||||||||||||
Non Revolving Line of Credit Agreement [Member] | Citizens Bank [Member] | July 26, 2017 [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Line of credit, maximum borrowing amount | 1,200,000 | ||||||||||||||||||||
Credit facility, amount outstanding | 0 | ||||||||||||||||||||
RBS Citizens [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Line of credit, maximum borrowing amount | $ 800,000 | ||||||||||||||||||||
Interest rate additional rate above LIBOR | 4.64% | ||||||||||||||||||||
Debt instrument, maturity date | Jul. 26, 2018 | ||||||||||||||||||||
Credit facility, amount outstanding | $ 0 | 0 | |||||||||||||||||||
RBS Citizens [Member] | Promissory Notes [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Interest rate additional rate above LIBOR | 3.94% | ||||||||||||||||||||
Debt interest rate | 5.87% | ||||||||||||||||||||
Debt instrument, carrying amount | $ 940,359 | 966,786 | |||||||||||||||||||
Periodic installments amount | $ 7,658 | ||||||||||||||||||||
RBS Citizens [Member] | Permanent Loan [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Interest rate additional rate above LIBOR | 4.21% | ||||||||||||||||||||
Debt instrument, maturity date | Jul. 31, 2019 | ||||||||||||||||||||
Debt instrument, carrying amount | $ 360,000 | 375,000 | $ 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% | ||||||||||||||||||||
RBS Citizens [Member] | LIBOR [Member] | Promissory Notes [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Interest rate additional rate above LIBOR | 3.15% | ||||||||||||||||||||
RBS Citizens [Member] | LIBOR [Member] | Permanent Loan [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Interest rate additional rate above LIBOR | 3.15% | ||||||||||||||||||||
Peoples Capital [Member] | Term Loan [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Debt instrument, carrying amount | $ 424,733 | 559,609 | |||||||||||||||||||
Citizens [Member] | Term Loan [Member] | |||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||
Debt instrument, carrying amount | $ 525,000 | $ 309,267 | $ 360,611 | ||||||||||||||||||
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] | |||||||||||||||||||||
Debt instrument, maturity date | Feb. 13, 2018 | ||||||||||||||||||||
Short-term debt | $ 770,250 | ||||||||||||||||||||
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 |
Other Liabilities (Details Narr
Other Liabilities (Details Narrative) - USD ($) | Nov. 14, 2016 | Sep. 05, 2014 | Mar. 27, 2014 | Feb. 13, 2014 | Jul. 08, 2013 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 |
Payment to acquire intangible assets | $ 4,903 | $ 67,944 | ||||||||
Intangible assets book value | $ 6,293,668 | 6,293,668 | $ 6,288,765 | |||||||
Proceeds from financing amount | 495,000 | |||||||||
Other liabilities short term | 2,982,175 | 2,982,175 | 2,996,310 | |||||||
Selling, general and administrative costs | 1,490,132 | $ 1,637,537 | 3,216,013 | $ 3,541,944 | ||||||
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 | 3,924,500 | 3,924,500 | ||||||||
Other liabilities short term | 2,070,000 | 2,070,000 | ||||||||
Payment of estimated future inter parts review costs | 2,500,000 | |||||||||
Allocation to working capital | $ 1,424,000 | 1,424,000 | ||||||||
Selling, general and administrative costs | 47,500 | |||||||||
Reduction of the liability | $ 285,000 | |||||||||
Warrants to purchase of common stock shares | 750,000 | 750,000 | ||||||||
Warrants exercise price per share | $ 1 | $ 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 | $ 453,000 | $ 453,000 | $ 467,000 | |||||||
Proceeds from related party debt | 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 | $ 495,000 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Jan. 12, 2017 | Aug. 26, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 |
Reverse stock split | one for four | ||||||
Number of restricted common stock issued | 200,000 | ||||||
Restricted stock, value | $ 50,000 | $ 86,000 | |||||
Stock compensation expense | $ 191,000 | ||||||
Stock compensation expense, description | Company had stock compensation expense of approximately $191,000 or less than $0.01 basic and diluted earnings per share ($86,000; less than $0.01 basic and diluted earnings per share for the corresponding six months ended June 30, 2016). | ||||||
Basic and diluted earnings per share | $ 0.02 | $ 0.02 | $ 0.03 | $ 0.07 | |||
Restricted Stock [Member] | |||||||
Number of restricted common stock issued | 150,000 | 224,750 | |||||
Restricted shares vested date | May 17, 2017 | ||||||
Restricted stock, value | $ 126,000 | $ 124,000 | |||||
EBITDA [Member] | Restricted Stock [Member] | |||||||
Restricted stock, value | $ 500,000 | ||||||
Sale of stock price per share | $ 1 |
Supplemental Cash Flow Inform30
Supplemental Cash Flow Information - Schedule of Supplemental Cash Flow Information (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Supplemental Cash Flow Information [Abstract] | ||
Cash paid for interest | $ 85,000 | $ 110,000 |
Gain (Loss) from change in fair value of interest rate swap derivative | $ 5,000 | $ (34,000) |
Segment Information (Details Na
Segment Information (Details Narrative) | 6 Months Ended |
Jun. 30, 2017Segment | |
Segment Reporting [Abstract] | |
Number of operating segment | 4 |
Segment Information - Schedule
Segment Information - Schedule of Operations by Reportable Segment (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | |||||
Revenues from external customers | $ 3,860,163 | $ 4,072,480 | $ 8,630,754 | $ 8,411,466 | |
Depreciation and amortization | 346,975 | 339,743 | 689,749 | 700,244 | |
Stock based compensation | 191,360 | 86,486 | |||
Net Income (loss) to common shareholders | (259,790) | (313,088) | (439,092) | (932,373) | |
Identifiable assets | 16,817,700 | 16,817,700 | $ 18,466,023 | ||
Operating Segments [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenues from external customers | 3,860,000 | 4,072,000 | 8,631,000 | 8,411,000 | |
Depreciation and amortization | 347,000 | 340,000 | 690,000 | 700,000 | |
Stock based compensation | 58,000 | 12,000 | 191,000 | 86,000 | |
Net Income (loss) to common shareholders | (265,000) | (318,000) | (449,000) | (942,000) | |
Identifiable assets | 16,818,000 | 14,116,000 | 16,818,000 | 14,116,000 | |
Operating Segments [Member] | Packaging and Printing Group [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenues from external customers | 2,157,000 | 2,657,000 | 5,403,000 | 5,584,000 | |
Depreciation and amortization | 159,000 | 153,000 | 319,000 | 306,000 | |
Stock based compensation | 17,000 | ||||
Net Income (loss) to common shareholders | 116,000 | 275,000 | 508,000 | 532,000 | |
Identifiable assets | 9,185,000 | 9,121,000 | 9,185,000 | 9,121,000 | |
Operating Segments [Member] | Document Security Systems Plastics Group [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenues from external customers | 1,226,000 | 1,067,000 | 2,383,000 | 2,115,000 | |
Depreciation and amortization | 30,000 | 29,000 | 60,000 | 57,000 | |
Stock based compensation | 10,000 | ||||
Net Income (loss) to common shareholders | 155,000 | 142,000 | 318,000 | 253,000 | |
Identifiable assets | 2,395,000 | 2,295,000 | 2,395,000 | 2,295,000 | |
Operating Segments [Member] | Technology Management [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenues from external customers | 477,000 | 348,000 | 845,000 | 712,000 | |
Depreciation and amortization | 157,000 | 157,000 | 310,000 | 335,000 | |
Stock based compensation | 14,000 | 6,000 | 37,000 | 19,000 | |
Net Income (loss) to common shareholders | (260,000) | (488,000) | (571,000) | (1,053,000) | |
Identifiable assets | 1,897,000 | 2,063,000 | 1,897,000 | 2,063,000 | |
Operating Segments [Member] | Corporate [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenues from external customers | |||||
Depreciation and amortization | 1,000 | 1,000 | 1,000 | 2,000 | |
Stock based compensation | 44,000 | 6,000 | 154,000 | 40,000 | |
Net Income (loss) to common shareholders | (276,000) | (247,000) | (704,000) | (674,000) | |
Identifiable assets | $ 3,341,000 | $ 637,000 | $ 3,341,000 | $ 637,000 |