Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 14, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | DOCUMENT SECURITY SYSTEMS INC | |
Entity Central Index Key | 0000771999 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 18,002,721 | |
Trading Symbol | DSS | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2019 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash | $ 1,336,754 | $ 2,317,659 |
Restricted cash | 109,892 | 130,326 |
Accounts receivable, net of $50,000 allowance for doubtful accounts | 2,495,828 | 2,217,877 |
Inventory | 1,345,667 | 1,563,593 |
Prepaid expenses and other current assets | 309,223 | 285,580 |
Total current assets | 5,597,364 | 6,515,035 |
Property, plant and equipment, net | 5,015,358 | 5,014,494 |
Investment | 324,930 | 324,930 |
Other assets | 90,319 | 90,319 |
Right-of-use assets | 1,396,278 | |
Goodwill | 2,453,597 | 2,453,597 |
Other intangible assets, net | 1,291,868 | 881,411 |
Total assets | 16,169,714 | 15,279,786 |
Current liabilities: | ||
Accounts payable | 1,246,798 | 1,347,491 |
Accrued expenses and deferred revenue | 965,652 | 1,106,346 |
Other current liabilities | 1,846,281 | 2,255,942 |
Current portion of long-term debt, net | 698,369 | 713,427 |
Current portion of lease liability | 360,839 | |
Total current liabilities | 5,117,939 | 5,423,206 |
Long-term debt, net | 1,680,285 | 1,721,936 |
Lease liability | 1,059,802 | |
Other long-term liabilities | 350,906 | 391,325 |
Deferred tax liability, net | 168,986 | 168,986 |
Commitments and contingencies (Note 9) | ||
Stockholders' equity | ||
Common stock, $.02 par value; 200,000,000 shares authorized, 18,002,721 shares issued and outstanding (17,425,858 on December 31, 2018) | 360,054 | 348,517 |
Additional paid-in capital | 108,281,820 | 107,624,666 |
Accumulated other comprehensive loss | (7,830) | (7,052) |
Accumulated deficit | (100,842,248) | (100,391,798) |
Total stockholders' equity | 7,791,796 | 7,574,333 |
Total liabilities and stockholders' equity | $ 16,169,714 | $ 15,279,786 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts, accounts receivable | $ 50,000 | $ 50,000 |
Common stock, par value | $ .02 | $ .02 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 18,002,721 | 17,425,858 |
Common stock, shares outstanding | 18,002,721 | 17,425,858 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue: | ||
Total revenue | $ 4,808,920 | $ 4,377,554 |
Costs and expenses: | ||
Cost of revenue, exclusive of depreciation and amortization | 3,159,551 | 2,581,615 |
Selling, general and administrative (including stock based compensation) | 1,776,815 | 1,782,568 |
Depreciation and amortization | 294,407 | 345,667 |
Total costs and expenses | 5,230,773 | 4,709,850 |
Operating loss | (421,853) | (332,296) |
Other income (expense): | ||
Interest income | 1,668 | 3,074 |
Interest expense | (29,665) | (49,138) |
Amortization of deferred financing costs and debt discount | (600) | (27,731) |
Loss before income taxes | (450,450) | (406,091) |
Income tax expense (benefit) | ||
Net loss | (450,450) | (406,091) |
Other comprehensive (loss) income: | ||
Interest rate swap (loss) gain | (778) | 14,889 |
Comprehensive loss: | $ (451,228) | $ (391,202) |
Loss per common share: Basic and diluted | $ (0.03) | $ (0.02) |
Shares used in computing loss per common share: Basic and diluted | 17,494,750 | 16,599,327 |
Printed Products [Member] | ||
Revenue: | ||
Total revenue | $ 4,366,054 | $ 3,923,279 |
Technology Sales, Services and Licensing [Member] | ||
Revenue: | ||
Total revenue | $ 442,866 | $ 454,275 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (450,450) | $ (406,091) |
Adjustments to reconcile net loss to net cash used by operating activities: | ||
Depreciation and amortization | 294,407 | 345,667 |
Stock based compensation | 30,701 | 1,251 |
Paid in-kind interest | 12,000 | |
Amortization of deferred financing costs and debt discount | 600 | 27,731 |
Decrease (increase) in assets: | ||
Accounts receivable | (277,951) | 25,689 |
Inventory | 217,926 | 51,699 |
Prepaid expenses and other current assets | 720 | 13,329 |
Increase (decrease) in liabilities: | ||
Accounts payable | (100,692) | 188,795 |
Accrued expenses | (213,370) | (103,928) |
Other liabilities | (378,183) | (249,594) |
Net cash used by operating activities | (876,292) | (93,452) |
Cash flows from investing activities: | ||
Purchase of property, plant and equipment | (210,945) | (132,937) |
Purchase of intangible assets | (350,000) | (15,780) |
Net cash used by investing activities | (560,945) | (148,717) |
Cash flows from financing activities: | ||
Payments of long-term debt | (57,309) | (206,542) |
Borrowings from convertible note | 500,000 | |
Issuances of common stock, net of issuance costs | (6,793) | |
Receipt of subscription receivable, net of issuance costs | 288,000 | |
Net cash provided by financing activities | 435,898 | 81,458 |
Net decrease in cash and cash equivalents | (1,001,339) | (160,711) |
Cash and restricted cash at beginning of period | 2,447,985 | 4,444,628 |
Cash and restricted cash at end of period | $ 1,446,646 | $ 4,283,917 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Subscription Receivable [Member] | Accumulated Other Comprehensive Loss [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2017 | $ 331,987 | $ 106,633,708 | $ (300,000) | $ (23,069) | $ (101,856,767) | $ 4,785,859 |
Balance, shares at Dec. 31, 2017 | 16,599,327 | |||||
Issuance of common stock, net | (12,000) | 300,000 | 288,000 | |||
Stock based payments, net of tax effect | 1,251 | 1,251 | ||||
Other comprehensive gain | 14,889 | 14,889 | ||||
Net loss | (406,091) | (406,091) | ||||
Balance at Mar. 31, 2018 | $ 331,987 | 106,622,959 | (8,180) | (102,262,858) | 4,683,907 | |
Balance, shares at Mar. 31, 2018 | 16,599,327 | |||||
Balance at Dec. 31, 2018 | $ 348,517 | 107,624,666 | (7,052) | (100,391,798) | 7,574,333 | |
Balance, shares at Dec. 31, 2018 | 17,425,858 | |||||
Issuance of common stock, net | $ 11,537 | 626,453 | 637,990 | |||
Issuance of common stock, net, shares | 576,863 | |||||
Stock based payments, net of tax effect | 30,701 | 30,701 | ||||
Stock based payments, net of tax effect, shares | ||||||
Other comprehensive gain | (778) | (778) | ||||
Net loss | (450,450) | (450,450) | ||||
Balance at Mar. 31, 2019 | $ 360,054 | $ 108,281,820 | $ (7,830) | $ (100,842,248) | $ 7,791,796 | |
Balance, shares at Mar. 31, 2019 | 18,002,721 |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
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, 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 (“DSSTM”), 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. In 2018, the Company commenced operations in the Asia Pacific market through its subsidiary DSS Asia Limited, which was formed in 2017. 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 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, 2018. Principles of Consolidation - Use of Estimates - Restricted Cash March 31, 2019 December 31, 2018 March 31, 2018 December 31, 2017 Cash $ 1,336,754 $ 2,317,659 $ 3,728,086 $ 4,188,623 Restricted Cash 109,892 130,326 555,831 256,005 Total $ 1,446,646 $ 2,447,985 $ 4,283,917 $ 4,444,628 Investment 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. The fair value of investments carried at cost, less impairment however, the fair value is not considered readily determinable based on the lack of liquidity for the shares owned. Derivative Instruments - . As of March 31, 2019, the Company has an interest rate swap agreement for its debt with RBS Citizens, N.A. (“Citizens Bank”) (see Note 6) which changes a variable rate into a fixed rate on a term loan as follows: Amount Variable Fixed Date $ 858,865 5.64 % 5.87 % August 30, 2021 Impairment of Long-Lived Assets and Goodwill Contingent Legal Expenses - Earnings Per Common Share For the three months ended March 31, 2019, common stock equivalents were excluded from the calculation of diluted earnings per share as the Company had a net loss, since their inclusion would have been anti-dilutive. Common stock equivalents were also excluded from the calculation of diluted earnings per share for 2018 periods presented in which the Company had a net loss, since their inclusion would have been anti-dilutive. Concentration of Credit Risk - During the three months ended March 31, 2019, two customers accounted for approximately 35% and 10%, respectively, of the Company’s consolidated revenue and accounted for 43% and 3%, respectively, of the Company’s accounts receivable balance as of March 31, 2019. During the three months ended March 31, 2018, these two customers accounted for 24% and 15%, respectively, of the Company’s consolidated revenue and accounted for 27% and 3%, respectively, of the Company’s accounts receivable balance as of March 31, 2018. 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 most of its customer contracts and by the diversification of its customer base. Income Taxes Recently Adopted Accounting Pronouncements At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, the Company calculates the associated lease liability and corresponding ROU assets upon lease commencement using a discount rate based on a credit-adjusted secured borrowing rate commensurate with the term of the lease. The Company records lease liabilities within current or noncurrent liabilities based upon the length of time associated with the lease payments. The operating lease ROU assets includes any lease payments made and excludes lease incentives and initial direct costs incurred, if any, and are recorded as noncurrent assets. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Leases with an initial term of 12 months or less are not recorded on the accompanying consolidated balance sheet. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The impact of the adoption of ASC 842 on the accompanying consolidated balance sheet as of January 1, 2019 was a right-of-use asset and a lease liability of $1,489,156. Continuing Operations and Going Concern – The expected use of cash for operations in 2019 will be primarily for funding operating losses, working capital, legal expenses associated with its intellectual property related litigation, and the costs associated with the global roll-out of the Company’s AuthentiGuard product line. Historically, the Company has been able to obtain equity and/or debt-based financing, including most recently when the Company raised gross proceeds of $951,000 in 2017 and $1,176,000 in 2018 from the sale of its equity. The Company’s management intends to take actions necessary to continue as a going concern. Management’s plans concerning these matters includes, among other things, continued growth among our operating segments including international expansion of our AuthentiGuard product, evaluating capital raising alternatives that will increase the Company’s cash resources by at least $2 million by the end of the third quarter of 2019, and tightly controlling operating costs and reducing spending growth rates wherever possible. Based upon our current amount of cash on hand, management’s historical ability to raise capital, and our ability to manage our cost structure and adjust operating plans if and as required, we have concluded that substantial doubt of our ability to continue as a going concern has been alleviated. Recent Accounting Pronouncements |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | 2. Revenue Effective January 1, 2018, the Company adopted Topic 606 using the modified retrospective approach and applied the guidance to those contracts which were not completed as of January 1, 2018. Adoption of Topic 606 did not impact the timing of revenue recognition in the Company’s Consolidated Financial Statements for the current or prior interim or annual periods. Accordingly, no adjustments have been made to opening retained earnings or prior period amounts. Revenue Recognition The Company sells printed products including packaging printing and fabrication, commercial and security printing and plastic cards and badges, including cards and badges integrated with technology such as RFID and smart chips. The Company also provides information technology services and digital authentication products and services to its customers. The Company recognizes its products and services revenue based on when the title passes to the customer or when the service is completed and accepted by the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for shipped product or service provided. Sales and other taxes billed and collected from customers are excluded from revenue. Customers, including distributors, do not have a general right of return. The Company also derives revenue from royalties from third parties which are typically based on licensees’ net sales of products that utilize the Company’s technology, or on a per item usage of the technology on the customers’ printed products. The Company recognizes license revenue at the time it is reported by the licensee. From time to time, the Company generates license revenues through litigation settlements. For these, the Company recognizes revenue 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. As of March 31, 2019, the Company had no unsatisfied performance obligations for contracts with an original expected duration of greater than one year. Pursuant to Topic 606, the Company has applied the practical expedient with respect to disclosure of the deferral and future expected timing of revenue recognition for transaction price allocated to remaining performance obligations. The Company elected the practical expedient allowing it to not recognize as a contract asset the commission paid to its salesforce on the sale of its products as an incremental cost of obtaining a contract with a customer but rather recognize such commission as expense when incurred as the amortization period of the asset that the Company would have otherwise recognized is one year or less. Accounts Receivable The Company extends credit to its customers in the normal course of business. The Company performs ongoing credit evaluations and generally do not require collateral. Payment terms are generally 30 days but up to net 60 for certain customers. The Company carries its trade accounts receivable at invoice amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts based upon management’s estimates that include a review of the history of past write-offs and collections and an analysis of current credit conditions. At March 31, 2019, the Company established a reserve for doubtful accounts of approximately $50,000 ($50,000 – December 31, 2018). The Company does not accrue interest on past due accounts receivable. Sales Commissions Sales commissions are expensed as incurred for contracts with an expected duration of one year or less. There were no sales commissions capitalized as of March 31, 2019. Shipping and Handling Costs Costs incurred by the Company related to shipping and handling are included in cost of products sold. Amounts charged to customers pertaining to these costs are reflected as revenue. See Note 12 for disaggregated revenue information. |
Inventory
Inventory | 3 Months Ended |
Mar. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventory | 3. Inventory Inventory consisted of the following: Inventory March 31, 2019 December 31, 2018 Finished Goods $ 996,365 $ 1,144,695 WIP 207,028 339,091 Raw Materials 142,274 79,807 $ 1,345,667 $ 1,563,593 |
Investment
Investment | 3 Months Ended |
Mar. 31, 2019 | |
Investments Schedule [Abstract] | |
Investment | 4. Investment The Company owns 21,196,552 ordinary shares and an existing three-year warrant to purchase up to 105,982,759 ordinary shares at an exercise price of SGD$0.040 (US$0.0298) per share of Singapore eDevelopment Limited (“SED”), a company incorporated in Singapore and publicly-listed on the Singapore Exchange Limited. The shares and warrants are restricted for resale until September 17, 2019. At the time of the investment, the cost of the investment was determined to be the fair value of the Company’s common stock issued in the transaction, which was determined to have the most readily determinable fair value. In 2018, the Company adopted ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities.” has and carries its investment in SED at costs. During the 4th quarter of 2018, the Company determined that its investment in Singapore eDevelopment (“SED”) was impaired due to the decline in the share price of SED, especially since November of 2018, which the Company believes was influenced by a general decline in equity markets in Asia caused by the tariff dispute between the United States and China. As such, in response to the decline in the trading value of the SED shares in the fourth quarter of 2018, the Company performed an impairment test and determined an impairment of approximately $160,000 was warranted. The carrying value of the investment as of March 31, 2019 was $324,930. |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | 5. Intangible Assets Intangible assets are comprised of the following: March 31, 2019 December 31, 2018 Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Acquired intangibles - customer lists, licenses and non-compete agreements 3-10 years 1,778,848 887,698 891,150 1,284,065 823,884 460,181 Acquired intangibles - patents and patent rights 500,000 500,000 - 500,000 500,000 - Patent application costs Varied (1) 1,168,155 767,437 400,718 1,168,155 746,925 421,230 $ 3,447,003 $ 2,155,135 $ 1,291,868 $ 2,952,220 $ 2,070,809 $ 881,411 (1) Patent application costs are amortized over their expected useful life which is generally the remaining legal life of the patent. As of March 31, 2019, the weighted average remaining useful life of these assets in service was approximately 7 years. Amortization expense for the three months ended March 31, 2019 amounted to $84,326 ($169,644 - March 31, 2018). On October 24, 2018, the Company’s subsidiary, DSS Asia Limited acquired Guangzhou Hotapps Technology Ltd., (“Guangzhou Hotapps”) a Chinese company, in exchange for a 2-year, $100,000 unsecured promissory note. In connection with this acquisition, the Company acquired the license to do business in China to which the Company allocated a value of $85,734 as well as a related deferred tax liability of $33,333 due to outside basis differences and recorded as an intangible asset that it will amortize over a five-year period. On March 5, 2019, the Company paid $350,000 and issued 130,435 shares of the Company’s common stock valued at $144,783 in conjunction with the signing of a Master Distributor Agreement with Advanced Cyber Security Corp. (“ACS”) to for the Company to distribute ACS’s EndpointLockV™ cyber security software exclusively in thirteen countries in Asia and Australia, and non-exclusively, in the U.S. and Middle East. The aggregate cost of $494,783 of the agreement was recorded as an intangible asset to be amortized over the expected useful life of 36 months. |
Short Term and Long-Term Debt
Short Term and Long-Term Debt | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Short Term and Long-Term Debt | 6. 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 pursuant to which Citizens agreed to lend up to $1,200,000 to permit Premier Packaging to purchase equipment from time to time that it may need for use in its business. The aggregate principal balance outstanding under the Equipment Acquisition Line of Credit shall bear interest thereon at a per annum rate of 2% above the LIBOR Advantage Rate until the Conversion Date (as defined in the Term Note Non-Revolving Line of Credit). Effective on the Conversion Date, the interest shall be adjusted to a fixed rate equal to 2% above the bank’s Cost of Funds, as determined by Citizens. Current maturities of long-term debt are based on an estimated 48 month amortization which will be adjusted upon conversion. As of March 31, 2019, the line had not yet converted and had a balance of $339,600 ($339,000 at December 31, 2018). On December 1, 2017, the Company’s subsidiary Plastic Printing Professionals entered into a Loan Agreement and accompanying Term Note Non-Revolving Line of Credit Agreement with Citizens pursuant to which Citizens agreed to lend up to $800,000 to enable Plastic Printing Professionals to purchase equipment from time to time that it may need for use in its business. Advances may be made under this Equipment Acquisition Line of Credit, from time to time, from December 1, 2017 until December 1, 2018. The aggregate principal balance outstanding under the Equipment Acquisition Line of Credit bears interest at 2% above the LIBOR Advantage Rate (as defined in the agreement) (4.49% at March 31, 2019) until converted. Effective on conversion, the interest rate payable on the aggregate principal balance outstanding shall be adjusted to a fixed rate equal to 2% above Citizens’ cost of funds as determined by Citizens. Prior to conversion, interest on the outstanding principal is payable in arrears monthly. After conversion, the aggregate principal balance may be repaid in (i) up to 84 installments comprised of principal and interest for new equipment or (ii) up to 60 installments comprised of principal and interest for used equipment. Commencing March 30, 2019, the line was converted into two term notes under which the Company will make monthly payments of $13,657 until November 30, 2023. Interest under the term notes is payable monthly at 5.37%. As of March 31, 2019, the combined balance of the term notes was $673,691 ($684,554 at December 31, 2018). Term Loan Debt 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% (5.64% at March 31, 2019), 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 March 31, 2019, the note had a balance of $305,000 ($315,000 – December 31, 2018). The Citizens credit facilities to each of the Company’s subsidiaries, Premier Packaging and Plastic Printing Professionals, contain various covenants including fixed charge coverage ratio, tangible net worth and current ratio covenants which are tested annually at December 31. For the year ended December 31, 2018, both Premier Packaging and Plastic Printing Professionals were in compliance with the annual covenants. On October 24, 2018, the Company’s subsidiary, DSS Asia Limited entered into a $100,000 unsecured promissory note with HotApps International Pte Ltd in conjunction with the acquisition of Guangzhou Hotapps Technology Ltd., a Chinese subsidiary of HotApps International Pte Ltd, by DSS Asia Limited. The promissory note does not accrue interest and is payable in full on October 24, 2020. Effective on February 18, 2019, Document Security Systems, Inc. (the “Company” or “Borrower”) entered into a Convertible Promissory Note (the “Note”) with LiquidValue Development Pte Ltd (the “Holder”) in the principal sum of $500,000 (the “Principal Amount”), of which up to $500,000 of the Principal Amount can be paid by the conversion of such amount into the Company’s common stock, par value $0.02 per share, up to a maximum of 446,428 shares of common stock (the “Common Stock”), at a conversion price of $1.12 per share. The Note carried a fixed interest rate of 8% per annum and had a term of 12-months. Accrued interest was payable in cash in arrears on the last day of each calendar quarter, with the first interest payment due on June 30, 2019, and remains payable until the Principal Amount is paid in full. The Holder is a related party, owned by one of the Company’s directors. Effective on March 25, 2019, the Holder exercised its conversion option and converted the Maximum Conversion Amount under the Note. As a result of Holder’s election to exercise its full conversion rights under the Note, the Note was cancelled effective on March 25, 2019. |
Other Liabilities
Other Liabilities | 3 Months Ended |
Mar. 31, 2019 | |
Other Liabilities Disclosure [Abstract] | |
Other Liabilities | 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 the 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, on November 14, 2016, the Company received $4,500,000 of the Financing, which was required to be used by the Company to pay for the defense of Inter Partes Review or other similar proceedings that may be filed from time to time by defendants with the U.S. Patent & Trademark Office relating to the LED Patent Portfolio, with excess amounts available for general working capital needs. As of March 31, 2019, an aggregate of approximately $1,632,000 is recorded as other liabilities by the Company, of which approximately $1,398,000 is classified as short-term. Of this amount, the Company allocated $2,500,000 which it subsequently adjusted to $1,500,000 for the payment of estimated future Inter Partes Review costs. The Company will reduce this liability as it pays legal and other expenses related to the Inter Partes Review matters involving the LED Patent Portfolio as incurred. The remaining $694,800 in other liabilities is allocated to working capital, which the Company is amortizing on a pro-rata basis over the expected remaining life of the monetization period of the LED Patent Portfolio through November 30, 2019. For this amount, the Company reduced the liability with an offset to selling, general and administrative costs by $47,500 per month from January 2017 through July 2017, $80,000 per month for the remainder of 2017 through March 2018, $86,500 per month for the remainder of 2018, and $86,850 per month through November 30, 2019. During the three months ended March 31, 2019, there was approximately $161,671 of Inter Partes Review costs and an aggregate of $260,550 was recorded as a reduction of the liability allocated to working capital. On July 8, 2013, the Company’s subsidiary, DSSTM, purchased two patents for $500,000 covering certain methods and processes related to Bluetooth devices. In conjunction with the patent purchases, DSSTM entered into a Proceed Right Agreement with certain investors pursuant to which DSSTM 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 March 31, 2019, the Company had received an aggregate of $750,000 ($750,000 in 2018) from the investors pursuant to the agreement of which approximately $448,000 was in current liabilities in the consolidated balance sheets ($476,000 as of December 31, 2018). The Company reduces 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. |
Lease Liability
Lease Liability | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Lease Liability | 8. Lease Liability The Company has operating leases predominantly for operating facilities. As of March 31, 2019, the remaining lease terms on our operating leases range from less than one year to approximately five years. Renewal options to extend our leases have not been exercised due to uncertainty. Termination options are not reasonably certain of exercise by the Company. There is no transfer of title or option to purchase the leased assets upon expiration. There are no residual value guarantees or material restrictive covenants. There are no significant finance leases as of March 31, 2019. Future minimum lease payments as of March 31, 2019 are as follows: Maturity of Lease Liability 2019 $ 297,105 2020 392,987 2021 303,956 2022 284,130 2023 290,499 Thereafter 24,208 Total lease payments 1,592,885 Less: Imputed Interest (172,244 ) Total lease liability $ 1,420,641 Current $ 360,839 Noncurrent $ 1,059,802 Weighted-average remaining lease term (years) 4.4 Weighted-average discount rate 5.4 % The Company has an additional operating lease for equipment of $118,219 which has not commenced as of March 31, 2019, and as such, has not been recognized on the Company’s consolidated balance sheets. This operating lease is expected to commence between 2019 and 2020 with a 4-year lease term. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 9. Commitments and Contingencies On November 26, 2013, DSSTM 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 DSSTM’s patents that relate to systems and methods of using low power wireless peripheral devices. DSSTM 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 (“IPR”) petitions with the Patent Trial and Appeal Board (“PTAB”) for review of the patents at issue in the case. The PTAB instituted the IPRs on June 25, 2015. The California District Court then stayed the case pending the outcome of those IPR proceedings. Oral arguments of the IPRs took place on March 15, 2016, and on June 17, 2016, PTAB ruled in favor of Apple on both IPR petitions. DSSTM then filed an appeal with the U.S. Court of Appeals for the Federal Circuit (the “Federal Circuit”) seeking reversal of the PTAB decisions. Oral arguments for the appeal were held on August 9, 2017. On March 23, 2018, the Federal Circuit reversed the PTAB, finding that the PTAB erred when it found the claims of U.S. Patent No. 6,128,290 to be unpatentable. The Federal Circuit affirmed its decision on July 12, 2018, when it denied Apple’s petition for panel rehearing of the Federal Circuit’s Opinion and Judgment issued on March 23, 2018. On July 27, 2018, the District Court judge lifted the Stay resuming the litigation, which has a trial date set for February 24, 2020. On February 16, 2015, DSSTM 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, DSSTM filed a notice of appeal of the PTAB’s decision relating to U.S. Patent 6,784,552 with the Federal Circuit. On January 8, 2019, DSSTM entered into a confidential settlement agreement with Intel Corporation, Dell Inc., GameStop Corp, Conn’s Inc., Conn Appliances, Inc., Wal-Mart Stores, Inc., Wal-Mart Stores Texas, LLC and AT&T Mobility LLC (collectively, the “Defendants”). The Federal Circuit Appeal involving DSSTM and Intel was dismissed on January 16, 2019, and the District Court case against the Defendants was dismissed, as to all the Defendants, on February 5, 2019. On July 16, 2015, DSSTM 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., Samsung Electronics et al., and Qualcomm Incorporated. Each respective complaint alleges patent infringement and seeks judgment for infringement, injunctive relief and money damages. On November 12, 2015, SK Hynix filed an IPR petition with PTAB for review of the patent at issue in their case. SK Hynix’s IPR was instituted by the PTAB on May 11, 2016. On August 16, 2016, DSSTM and SK Hynix entered into a confidential settlement agreement ending the litigation between them. The pending SK Hynix IPR was then terminated by mutual agreement of the parties on August 31, 2016. On March 18, 2016, Samsung also filed an IPR petition, which was instituted by the PTAB. On September 20, 2017, PTAB ruled in favor of Samsung for all the challenged claims relating to U.S. Patent 6,784,552. DSSTM then appealed this PTAB ruling to the Federal Circuit on November 17, 2017. The Federal Circuit joined this appeal with the Intel appeal effective on December 7, 2017. Qualcomm filed its IPR proceeding on July 1, 2016, which was then later joined with Intel’s IPRs in August 2016 by PTAB. On June 1, 2017, the PTAB ruled in favor of Intel/Qualcomm for all the challenged claims. On July 28, 2017, DSSTM filed a notice of appeal of the PTAB’s decision relating to U.S. Patent 6,784,552 with the Federal Circuit. A confidential patent license agreement was executed by DSSTM on November 14, 2018, covering Samsung and Qualcomm. On December 12, 2018, DSSTM and Samsung entered into a confidential release. On December 27, 2018, DSSTM and Qualcomm entered into a confidential settlement agreement. The DSSTM - Samsung District Court case was dismissed on December 17, 2018. The DSSTM - Samsung Federal Circuit Appeal was dismissed on January 2, 2019. The Federal Circuit Appeal involving DSSTM and Qualcomm was dismissed on January 16, 2019. The DSSTM - Qualcomm District Court case was dismissed on January 16, 2019. As a result, all of DSSTM’s litigation matters originally filed in the District Court for the Eastern District of Texas have been resolved and are now dismissed. On April 13, 2017, the Company 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, alleging infringement of certain of the Company’s Light-Emitting Diode (“LED”) patents. The Company is seeking a judgment for infringement of the patents along with other relief including, but not limited to, money damages, costs and disbursements. On June 7, 2017, the Company refiled its patent infringement complaint against Seoul Semiconductor in the United States District Court for the Central District of California, Southern Division. On December 3, 2017, Seoul Semiconductor filed an IPR challenging the validity of certain claims of U.S. Patent No. 6,949,771. This IPR was instituted by the PTAB on June 7, 2018. On April 18, 2019, the PTAB issued a written decision determining claims 1-9 of the ‘771 patent unpatentable. The Company is presently reviewing the decision to determine the next course of action with respect to this patent. On December 21, 2017, Seoul Semiconductor filed an IPR challenging the validity of certain claims of U.S. Patent No. 7,256,486. This IPR was instituted by the PTAB on June 21, 2018. On January 25, 2018, Seoul Semiconductor filed an IPR challenging the validity of certain claims of U.S. Patent No. 7,524,087. This IPR was instituted by the PTAB on July 27, 2018. These challenged patents are the patents that are the subject matter of the infringement lawsuit, which is pending but stayed pending the outcome of the IPR proceedings. On April 13, 2017, the Company 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, alleging infringement of certain of the Company’s LED patents. The Company is seeking a judgment for infringement of the patents along with other relief including, but not limited to, money damages, costs and disbursements. On June 8, 2017, the Company refiled its patent infringement complaint against Everlight in the United States District Court for the Central District of California. On June 8, 2018, Everlight filed IPR petitions challenging the validity of claims under U.S. Patent Nos. 7,256,486 and 7,524,087. On June 12, 2018, Everlight filed an IPR petition challenging the validity of claims under U.S. Patent No. 6,949,771, and on June 15, 2018, filed an IPR petition challenging the validity of claims under U.S. Patent No 7,919,787. These challenged patents are the patents that are the subject matter of the infringement lawsuit. On January 18, 2019, the Company and Everlight entered into a confidential settlement agreement resolving the litigation. On April 13, 2017, the Company filed a patent infringement lawsuit against Cree, Inc. (“Cree”) in the United States District Court for the Eastern District of Texas, alleging infringement of certain of the Company’s LED patents. The Company is seeking a judgment for infringement of the patents along with other relief including, but not limited to, money damages, costs and disbursements. On June 8, 2017, the Company 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 as of the date of this Report. On June 6, 2018, Cree filed an IPR petition challenging the validity of claims under U.S. Patent No. 7,256,486. This IPR was instituted and joined with the Seoul Semiconductor IPR. On June 7, 2018, Cree filed IPR petitions challenging the validity of certain claims U.S. Patent Nos. 7,524,087 and 6,949,771. Both IPRs were denied by the PTAB on November 14, 2018 as time-barred. The challenged patent is the patent that is the subject matter of the infringement lawsuit, which is pending but stayed pending the outcome of the IPR. On August 15, 2017, the Company filed a patent infringement lawsuit against Lite-On, Inc., and Lite-On Technology Corporation (collectively, “Lite-On”) in the United States District Court for the Central District of California, alleging infringement of certain of the Company’s LED patents. The Company 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 but is stayed pending the outcome of IPR proceedings filed by other parties. On December 7, 2017, DSS filed a patent infringement lawsuit against Nichia Corporation and Nichia America Corporation in the United States District Court for the Central District of California, alleging infringement of certain of DSS’s LED patents. The Company 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 as of the date of this Report. On May 10, 2018, Nichia filed an IPR petition challenging the validity of claims under U.S. Patent No. 7,919,787. On May 11, 2018, Nichia filed an IPR petition challenging the validity of claims under U.S. Patent No. 7,652,297. On May 25, 2018, Nichia filed an IPR petition challenging the validity of claims under U.S. Patent No. 7,524,087. On May 29, 2018, Nichia filed an IPR petition challenging the validity of claims under U.S. Patent No. 6,949,771. On May 30, 2018, Nichia filed an IPR petition challenging the validity of claims under U.S. Patent No. 7,256,486. The 6,949,771 IPR was denied institution, but the remaining IPRs were instituted by the PTAB. On December 10, 2018, Nichia refiled IPRs relating to 6,949,771, which was denied by the PTAB on April 15, 2019. These challenged patents are the patents that are the subject matter of the infringement lawsuit, which is pending but stayed pending the outcome of the IPR proceedings. 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 | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | 10. Stockholders’ Equity Sales of Equity - On July 3, 2018, Heng Fai Holdings Limited (“HFHL”) purchased 214,286 shares of the Company’s common stock at a purchase price of $1.40 per share. On December 17, 2018, HFHL purchased 612,245 shares of the Company’s common stock at a purchase price of $0.98 per share. On March 5, 2019, the Company issued 130,435 shares of its common stock at $1.15 per share as partial consideration for a licensing and distribution agreement entered into with Advanced Cyber Security Corp. On February 18, 2019, the Company had entered into a Convertible Promissory Note with LiquidValue Development Pte Ltd in the principal sum of $500,000, of which up to $500,000 of the Principal Amount could be paid by the conversion of such amount into the Company’s common stock, par value $0.02 per share, up to a maximum of 446,428 shares of common stock (the “Maximum Conversion Amount”), at a conversion price of $1.12 per share. Effective on March 25, 2019, LiquidValue Development Pte Ltd exercised its conversion option and converted the Maximum Conversion Amount under the Note. Stock-Based Compensation - |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 3 Months Ended |
Mar. 31, 2019 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flow Information | 11. Supplemental Cash Flow Information The following table summarizes supplemental cash flows for the three-month periods ended March 31, 2019 and 2018: Supplemental Cash Information 2019 2018 Cash paid for interest $ 30,000 $ 37,000 Non-cash investing and financing activities: Impact of adoption of lease accounting standards $ 1,498,156 $ - (Loss) gain from change in fair value of interest rate swap derivatives $ (1,000 ) $ 15,000 Common stock issued upon conversion of convertible note $ 500,000 $ - Equity issued to purchase intangible assets $ 145,000 $ - |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | 12. Segment Information The Company’s businesses are organized, managed and internally reported as five 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 three other operating segments, DSS Digital Group, DSS Technology Management, and DSS International, which was added in 2017, 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 months ended March 31, 2019 and 2018 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 March 31, 2019 Packaging and Printing Plastics Technology Corporate Total Revenue $ 3,313,000 $ 1,053,000 $ 443,000 $ - $ 4,809,000 Depreciation and amortization 225,000 41,000 28,000 - 294,000 Interest expense 22,000 6,000 2,000 - 30,000 Amortized debt discount 1,000 - - - 1,000 Stock based compensation 4,000 - 23,000 4,000 31,000 Net Income (loss) 89,000 (17,000 ) (377,000 ) (145,000 ) (450,000 ) Identifiable assets 9,248,000 4,506,000 1,234,000 1,182,000 16,170,000 Three Months Ended March 31, 2018 Packaging and Printing Plastics Technology Corporate Total Revenue $ 2,918,000 $ 1,005,000 $ 454,000 $ - $ 4,377,000 Depreciation and amortization 167,000 30,000 149,000 - 346,000 Interest expense 23,000 6,000 12,000 8,000 49,000 Amortized debt discount 1,000 - 21,000 6,000 28,000 Stock based compensation - - 1,000 - 1,000 Net Income (loss) 247,000 79,000 (497,000 ) (235,000 ) (406,000 ) Identifiable assets 9,422,000 2,979,000 2,163,000 2,418,000 16,982,000 The following tables disaggregate our business segment revenues by major source. Printed Products Revenue Information: Three months ended March 31, 2019 Packaging Printing and Fabrication $ 2,961,000 Commercial and Security Printing 352,000 Technology Integrated Plastic Cards and Badges 503,000 Plastic Cards, Badges and Accessories 550,000 Total Printed Products $ 4,366,000 Three months ended March 31, 2018 Packaging Printing and Fabrication $ 2,610,000 Commercial and Security Printing 308,000 Technology Integrated Plastic Cards and Badges 252,000 Plastic Cards, Badges and Accessories 753,000 Total Printed Products $ 3,923,000 Technology Sales, Services and Licensing Revenue Information: Three months ended March 31, 2019 Information Technology Sales and Services $ 74,000 Digital Authentication Products and Services 230,000 Royalties from Licensees 139,000 Total Technology Sales, Services and Licensing $ 443,000 Three months ended March 31, 2018 Information Technology Sales and Services $ 130,000 Digital Authentication Products and Services 178,000 Royalties from Licensees 147,000 Total Technology Sales, Services and Licensing $ 455,000 |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation - |
Use of Estimates | Use of Estimates - |
Restricted Cash | Restricted Cash March 31, 2019 December 31, 2018 March 31, 2018 December 31, 2017 Cash $ 1,336,754 $ 2,317,659 $ 3,728,086 $ 4,188,623 Restricted Cash 109,892 130,326 555,831 256,005 Total $ 1,446,646 $ 2,447,985 $ 4,283,917 $ 4,444,628 |
Investment | Investment |
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. The fair value of investments carried at cost, less impairment however, the fair value is not considered readily determinable based on the lack of liquidity for the shares owned. |
Derivative Instruments | Derivative Instruments - . As of March 31, 2019, the Company has an interest rate swap agreement for its debt with RBS Citizens, N.A. (“Citizens Bank”) (see Note 6) which changes a variable rate into a fixed rate on a term loan as follows: Amount Variable Fixed Date $ 858,865 5.64 % 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 For the three months ended March 31, 2019, common stock equivalents were excluded from the calculation of diluted earnings per share as the Company had a net loss, since their inclusion would have been anti-dilutive. Common stock equivalents were also excluded from the calculation of diluted earnings per share for 2018 periods presented in which the Company had a net loss, since their inclusion would have been anti-dilutive. |
Concentration of Credit Risk | Concentration of Credit Risk - During the three months ended March 31, 2019, two customers accounted for approximately 35% and 10%, respectively, of the Company’s consolidated revenue and accounted for 43% and 3%, respectively, of the Company’s accounts receivable balance as of March 31, 2019. During the three months ended March 31, 2018, these two customers accounted for 24% and 15%, respectively, of the Company’s consolidated revenue and accounted for 27% and 3%, respectively, of the Company’s accounts receivable balance as of March 31, 2018. 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 most of its customer contracts and by the diversification of its customer base. |
Income Taxes | Income Taxes |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, the Company calculates the associated lease liability and corresponding ROU assets upon lease commencement using a discount rate based on a credit-adjusted secured borrowing rate commensurate with the term of the lease. The Company records lease liabilities within current or noncurrent liabilities based upon the length of time associated with the lease payments. The operating lease ROU assets includes any lease payments made and excludes lease incentives and initial direct costs incurred, if any, and are recorded as noncurrent assets. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Leases with an initial term of 12 months or less are not recorded on the accompanying consolidated balance sheet. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The impact of the adoption of ASC 842 on the accompanying consolidated balance sheet as of January 1, 2019 was a right-of-use asset and a lease liability of $1,489,156. |
Continuing Operations and Going Concern | Continuing Operations and Going Concern – The expected use of cash for operations in 2019 will be primarily for funding operating losses, working capital, legal expenses associated with its intellectual property related litigation, and the costs associated with the global roll-out of the Company’s AuthentiGuard product line. Historically, the Company has been able to obtain equity and/or debt-based financing, including most recently when the Company raised gross proceeds of $951,000 in 2017 and $1,176,000 in 2018 from the sale of its equity. The Company’s management intends to take actions necessary to continue as a going concern. Management’s plans concerning these matters includes, among other things, continued growth among our operating segments including international expansion of our AuthentiGuard product, evaluating capital raising alternatives that will increase the Company’s cash resources by at least $2 million by the end of the third quarter of 2019, and tightly controlling operating costs and reducing spending growth rates wherever possible. Based upon our current amount of cash on hand, management’s historical ability to raise capital, and our ability to manage our cost structure and adjust operating plans if and as required, we have concluded that substantial doubt of our ability to continue as a going concern has been alleviated. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements |
Basis of Presentation and Sig_3
Basis of Presentation and Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Cash and Restricted Cash | March 31, 2019 December 31, 2018 March 31, 2018 December 31, 2017 Cash $ 1,336,754 $ 2,317,659 $ 3,728,086 $ 4,188,623 Restricted Cash 109,892 130,326 555,831 256,005 Total $ 1,446,646 $ 2,447,985 $ 4,283,917 $ 4,444,628 |
Schedule of Derivative Instruments | As of March 31, 2019, the Company has an interest rate swap agreement for its debt with RBS Citizens, N.A. (“Citizens Bank”) (see Note 6) which changes a variable rate into a fixed rate on a term loan as follows: Amount Variable Fixed Date $ 858,865 5.64 % 5.87 % August 30, 2021 |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory consisted of the following: Inventory March 31, 2019 December 31, 2018 Finished Goods $ 996,365 $ 1,144,695 WIP 207,028 339,091 Raw Materials 142,274 79,807 $ 1,345,667 $ 1,563,593 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets are comprised of the following: March 31, 2019 December 31, 2018 Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Acquired intangibles - customer lists, licenses and non-compete agreements 3-10 years 1,778,848 887,698 891,150 1,284,065 823,884 460,181 Acquired intangibles - patents and patent rights 500,000 500,000 - 500,000 500,000 - Patent application costs Varied (1) 1,168,155 767,437 400,718 1,168,155 746,925 421,230 $ 3,447,003 $ 2,155,135 $ 1,291,868 $ 2,952,220 $ 2,070,809 $ 881,411 (1) Patent application costs are amortized over their expected useful life which is generally the remaining legal life of the patent. As of March 31, 2019, the weighted average remaining useful life of these assets in service was approximately 7 years. |
Lease Liability (Tables)
Lease Liability (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Schedule of Future Minimum Lease Payments | Future minimum lease payments as of March 31, 2019 are as follows: Maturity of Lease Liability 2019 $ 297,105 2020 392,987 2021 303,956 2022 284,130 2023 290,499 Thereafter 24,208 Total lease payments 1,592,885 Less: Imputed Interest (172,244 ) Total lease liability $ 1,420,641 Current $ 360,839 Noncurrent $ 1,059,802 Weighted-average remaining lease term (years) 4.4 Weighted-average discount rate 5.4 % |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Supplemental Cash Flow Information [Abstract] | |
Schedule of Supplemental Cash Flow Information | The following table summarizes supplemental cash flows for the three-month periods ended March 31, 2019 and 2018: Supplemental Cash Information 2019 2018 Cash paid for interest $ 30,000 $ 37,000 Non-cash investing and financing activities: Impact of adoption of lease accounting standards $ 1,498,156 $ - (Loss) gain from change in fair value of interest rate swap derivatives $ (1,000 ) $ 15,000 Common stock issued upon conversion of convertible note $ 500,000 $ - Equity issued to purchase intangible assets $ 145,000 $ - |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 Packaging and Printing Plastics Technology Corporate Total Revenue $ 3,313,000 $ 1,053,000 $ 443,000 $ - $ 4,809,000 Depreciation and amortization 225,000 41,000 28,000 - 294,000 Interest expense 22,000 6,000 2,000 - 30,000 Amortized debt discount 1,000 - - - 1,000 Stock based compensation 4,000 - 23,000 4,000 31,000 Net Income (loss) 89,000 (17,000 ) (377,000 ) (145,000 ) (450,000 ) Identifiable assets 9,248,000 4,506,000 1,234,000 1,182,000 16,170,000 Three Months Ended March 31, 2018 Packaging and Printing Plastics Technology Corporate Total Revenue $ 2,918,000 $ 1,005,000 $ 454,000 $ - $ 4,377,000 Depreciation and amortization 167,000 30,000 149,000 - 346,000 Interest expense 23,000 6,000 12,000 8,000 49,000 Amortized debt discount 1,000 - 21,000 6,000 28,000 Stock based compensation - - 1,000 - 1,000 Net Income (loss) 247,000 79,000 (497,000 ) (235,000 ) (406,000 ) Identifiable assets 9,422,000 2,979,000 2,163,000 2,418,000 16,982,000 |
Schedule of Disaggregation of Revenue | The following tables disaggregate our business segment revenues by major source. Printed Products Revenue Information: Three months ended March 31, 2019 Packaging Printing and Fabrication $ 2,961,000 Commercial and Security Printing 352,000 Technology Integrated Plastic Cards and Badges 503,000 Plastic Cards, Badges and Accessories 550,000 Total Printed Products $ 4,366,000 Three months ended March 31, 2018 Packaging Printing and Fabrication $ 2,610,000 Commercial and Security Printing 308,000 Technology Integrated Plastic Cards and Badges 252,000 Plastic Cards, Badges and Accessories 753,000 Total Printed Products $ 3,923,000 Technology Sales, Services and Licensing Revenue Information: Three months ended March 31, 2019 Information Technology Sales and Services $ 74,000 Digital Authentication Products and Services 230,000 Royalties from Licensees 139,000 Total Technology Sales, Services and Licensing $ 443,000 Three months ended March 31, 2018 Information Technology Sales and Services $ 130,000 Digital Authentication Products and Services 178,000 Royalties from Licensees 147,000 Total Technology Sales, Services and Licensing $ 455,000 |
Basis of Presentation and Sig_4
Basis of Presentation and Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Significant Accounting Policies [Line Items] | ||||
Restricted cash | $ 109,892 | $ 555,831 | $ 130,326 | $ 256,005 |
Accumulated other comprehensive loss | (7,830) | (7,052) | ||
Right of use asset and lease liability | 1,489,156 | |||
Operating lease | 1,420,641 | |||
Cash | 1,336,754 | $ 3,728,086 | 2,317,659 | 4,188,623 |
Working capital | 479,000 | |||
Proceeds from sales of equity | $ 1,176,000 | $ 951,000 | ||
September 30, 2019 [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Capital raising | $ 2,000,000 | |||
Customer One [Member] | Sales Revenue, Goods, Net [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Concentration of credit risk, percentage | 35.00% | 24.00% | ||
Customer One [Member] | Accounts Receivable [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Concentration of credit risk, percentage | 43.00% | 27.00% | ||
Customer Two [Member] | Sales Revenue, Goods, Net [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Concentration of credit risk, percentage | 10.00% | 15.00% | ||
Customer Two [Member] | Accounts Receivable [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Concentration of credit risk, percentage | 3.00% | 3.00% |
Basis of Presentation and Sig_5
Basis of Presentation and Significant Accounting Policies - Schedule of Cash and Restricted Cash (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||||
Cash | $ 1,336,754 | $ 2,317,659 | $ 3,728,086 | $ 4,188,623 |
Restricted Cash | 109,892 | 130,326 | 555,831 | 256,005 |
Total | $ 1,446,646 | $ 2,447,985 | $ 4,283,917 | $ 4,444,628 |
Basis of Presentation and Sig_6
Basis of Presentation and Significant Accounting Policies - Schedule of Derivative Instruments (Details) | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Accounting Policies [Abstract] | |
Amount | $ 858,865 |
Variable Rate | 5.64% |
Fixed Cost | 5.87% |
Maturity Date | Aug. 30, 2021 |
Revenue (Details Narrative)
Revenue (Details Narrative) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Revenue from Contract with Customer [Abstract] | ||
Reserve for doubtful accounts | $ 50,000 | $ 50,000 |
Inventory - Schedule of Invento
Inventory - Schedule of Inventory (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Finished Goods | $ 996,365 | $ 1,144,695 |
WIP | 207,028 | 339,091 |
Raw Materials | 142,274 | 79,807 |
Inventory | $ 1,345,667 | $ 1,563,593 |
Investment (Details Narrative)
Investment (Details Narrative) | 3 Months Ended |
Mar. 31, 2019USD ($)$ / sharesshares | |
Impairment of investment | $ | $ 160,000 |
Investment | $ | $ 324,930 |
Singapore eDevelopment Limited [Member] | |
Number of shares own | shares | 21,196,552 |
Warrant term | 3 years |
Warrant to purchase of common shares | shares | 105,982,759 |
Warrant exercise price per share | $ / shares | $ 0.0298 |
Singapore eDevelopment Limited [Member] | Singapore, Dollars [Member] | |
Warrant exercise price per share | $ / shares | $ 0.040 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | Mar. 05, 2019 | Oct. 24, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 |
Goodwill [Line Items] | |||||
Amortization expense | $ 84,326 | $ 169,644 | |||
Payments to acquire intangible assets | 350,000 | 15,780 | |||
Number of shares issued value | 637,990 | $ 288,000 | |||
Aggregate cost of intangible assets | $ 1,291,868 | $ 881,411 | |||
Guangzhou Hotapps Technology Ltd [Member] | |||||
Goodwill [Line Items] | |||||
Agreement description | Guangzhou Hotapps Technology Ltd., ("Guangzhou Hotapps") a Chinese company, in exchange for a 2-year, $100,000 unsecured promissory note. In connection with this acquisition, the Company acquired the license to do business in China to which the Company allocated a value of $85,734 as well as a related deferred tax liability of $33,333 due to outside basis differences and recorded as an intangible asset that it will amortize over a five-year period. | ||||
Unsecured promissory note | $ 100,000 | ||||
Deferred tax liability | 85,734 | ||||
Payments to acquire intangible assets | $ 33,333 | ||||
Amortization period of intangible asset | 5 years | ||||
Advanced Cyber Security Corp [Member] | Master Distributor Agreement [Member] | |||||
Goodwill [Line Items] | |||||
Payments to acquire intangible assets | $ 350,000 | ||||
Amortization period of intangible asset | 36 months | ||||
Number of shares issued | 130,435 | ||||
Number of shares issued value | $ 144,783 | ||||
Aggregate cost of intangible assets | $ 494,783 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Dec. 31, 2018 | ||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 3,447,003 | $ 2,952,220 | |
Accumulated Amortization | 2,155,135 | 2,070,809 | |
Net Carrying Amount | 1,291,868 | 881,411 | |
Customer Lists, Licenses and Non-compete Agreements [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 1,778,848 | 1,284,065 | |
Accumulated Amortization | 887,698 | 823,884 | |
Net Carrying Amount | $ 891,150 | 460,181 | |
Customer Lists, Licenses and Non-compete Agreements [Member] | Minimum [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful Life | 3 years | ||
Customer Lists, Licenses and Non-compete Agreements [Member] | Maximum [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful Life | 10 years | ||
Patent Application Costs [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life, description | [1] | Varied | |
Gross Carrying Amount | $ 1,168,155 | 1,168,155 | |
Accumulated Amortization | 767,437 | 746,925 | |
Net Carrying Amount | 400,718 | 421,230 | |
Patents and Patent Rights [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 500,000 | 500,000 | |
Accumulated Amortization | 500,000 | 500,000 | |
Net Carrying Amount | |||
[1] | Patent application costs are amortized over their expected useful life which is generally the remaining legal life of the patent. As of March 31, 2019, the weighted average remaining useful life of these assets in service was approximately 7 years. |
Intangible Assets - Schedule _2
Intangible Assets - Schedule of Intangible Assets (Details) (Parenthetical) | 3 Months Ended |
Mar. 31, 2019 | |
Patent Application Costs [Member] | |
Weighted average remaining useful life | 7 years |
Short Term and Long-Term Debt (
Short Term and Long-Term Debt (Details Narrative) - USD ($) | Mar. 30, 2019 | Feb. 18, 2019 | Oct. 24, 2018 | Apr. 28, 2015 | Aug. 30, 2011 | Mar. 31, 2019 | Dec. 31, 2018 | Dec. 02, 2017 | Jul. 26, 2017 | Dec. 06, 2013 |
Debt Instrument [Line Items] | ||||||||||
Common stock par value | $ .02 | $ .02 | ||||||||
Two Term Notes [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, maturity date | Nov. 30, 2023 | |||||||||
Debt interest rate | 5.37% | |||||||||
Monthly payments | $ 13,657 | |||||||||
Debt instrument, face amount | $ 673,691 | $ 684,554 | ||||||||
Promissory Notes [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Purchase price for Real Estate acquired | $ 1,500,000 | |||||||||
Purchase price for Real Estate acquired, loan obtained | 1,200,000 | |||||||||
Non Revolving Line of Credit Agreement [Member] | Citizens [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of credit, maximum borrowing amount | $ 339,600 | 339,600 | $ 1,200,000 | |||||||
Debt interest rate | 2.00% | |||||||||
Non Revolving Line of Credit Agreement [Member] | Citizens Bank [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of credit, maximum borrowing amount | $ 800,000 | |||||||||
Debt interest rate | 2.00% | |||||||||
Equipment Acquisition Line of Credit [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt interest rate | 4.49% | 2.00% | ||||||||
RBS Citizens [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of credit, maximum borrowing amount | $ 800,000 | |||||||||
Interest rate additional rate above LIBOR | 6.24% | |||||||||
Debt instrument, maturity date | May 31, 2019 | |||||||||
Credit facility, amount outstanding | $ 0 | 0 | ||||||||
RBS Citizens [Member] | Promissory Notes [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt interest rate | 5.87% | |||||||||
Monthly payments | $ 7,658 | |||||||||
Debt instrument, carrying amount | $ 858,865 | 869,865 | ||||||||
Debt instrument maturity date, description | The Promissory Note matures in August 2021 at which time a balloon payment of the remaining principal balance will be due. | |||||||||
RBS Citizens [Member] | Permanent Loan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate additional rate above LIBOR | 5.64% | |||||||||
Monthly payments | $ 450,000 | |||||||||
Debt instrument, carrying amount | $ 305,000 | 315,000 | ||||||||
Debt instrument, term | 5 years | |||||||||
Debt instrument maturity date, description | The note matures in July 2019 at which time a balloon payment of the remaining principal balance of $300,000 is due. | |||||||||
Interest accrued in the period | $ 2,500 | |||||||||
Debt instrument, final balloon payment | $ 300,000 | |||||||||
RBS Citizens [Member] | Permanent Loan [Member] | Maximum [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, carrying amount | $ 450,000 | |||||||||
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% | 5.64% | ||||||||
RBS Citizens [Member] | LIBOR [Member] | Permanent Loan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate additional rate above LIBOR | 3.15% | |||||||||
Citizens [Member] | Term Loan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, maturity date | Apr. 28, 2020 | |||||||||
Debt instrument, carrying amount | $ 525,000 | $ 122,041 | $ 149,542 | |||||||
Debt instrument, term | 60 months | |||||||||
Interest rate on outstanding term loan | 3.62% | |||||||||
Credit facility agreement, monthly principal payment | $ 9,591 | |||||||||
Guangzhou Hotapps Technology Ltd [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, maturity date | Oct. 24, 2020 | |||||||||
Unsecured promissory note | $ 100,000 | |||||||||
LiquidValue Development Pte Ltd [Member] | Convertible Promissory Note [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt interest rate | 8.00% | |||||||||
Debt instrument, face amount | $ 500,000 | |||||||||
Common stock par value | $ 0.02 | |||||||||
Debt conversion price per share | $ 1.12 | |||||||||
LiquidValue Development Pte Ltd [Member] | Convertible Promissory Note [Member] | Maximum [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, term | 12 months | |||||||||
Debt conversion into common stock | 446,428 |
Other Liabilities (Details Narr
Other Liabilities (Details Narrative) - USD ($) | Nov. 14, 2016 | Jul. 08, 2013 | Mar. 31, 2019 | Mar. 31, 2018 | Jul. 31, 2017 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2018 |
Payment to acquire intangible assets | $ 350,000 | $ 15,780 | ||||||
Intangible assets book value | 3,447,003 | $ 2,952,220 | $ 2,952,220 | |||||
Other liabilities short term | 1,846,281 | 2,255,942 | 2,255,942 | |||||
Payment of estimated future inter parts review costs | 161,671 | |||||||
Selling, general and administrative costs | 1,776,815 | 1,782,568 | ||||||
Reduction of the liability | 260,550 | |||||||
Payment milestones amount | 4,808,920 | $ 4,377,554 | ||||||
Current liabilities | 5,117,939 | 5,423,206 | 5,423,206 | |||||
LED Patent Portfolio [Member] | ||||||||
Selling, general and administrative costs | $ 47,500 | $ 80,000 | 86,500 | |||||
LED Patent Portfolio [Member] | Through November 30, 2019 [Member] | ||||||||
Selling, general and administrative costs | 86,850 | |||||||
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 | 1,632,000 | |||||||
Other liabilities short term | 1,398,000 | |||||||
Payment of estimated future inter parts review costs | 2,500,000 | |||||||
Payment of related party cost | 1,500,000 | |||||||
Allocated to working capital | 694,800 | |||||||
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] | ||||||||
Proceeds from related party debt | 750,000 | 750,000 | ||||||
Current liabilities | $ 448,000 | $ 476,000 | $ 476,000 |
Lease Liability (Details Narrat
Lease Liability (Details Narrative) | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Leases [Abstract] | |
Lease description | The remaining lease terms on our operating leases range from less than one year to approximately five years |
Additional operating lease for equipment | $ 118,219 |
Lease term | 4 years |
Lease Liability - Schedule of F
Lease Liability - Schedule of Future Minimum Lease Payments (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Leases [Abstract] | ||
2019 | $ 297,105 | |
2020 | 392,987 | |
2021 | 303,956 | |
2022 | 284,130 | |
2023 | 290,499 | |
Thereafter | 24,208 | |
Total lease payments | 1,592,885 | |
Less: Imputed Interest | (172,244) | |
Total lease liability | 1,420,641 | |
Current | 360,839 | |
Noncurrent | $ 1,059,802 | |
Weighted-average remaining lease term | 4 years 4 months 24 days | |
Weighted-average discount rate | 5.40% |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Mar. 05, 2019 | Feb. 18, 2019 | Dec. 17, 2018 | Jul. 03, 2018 | Mar. 29, 2018 | Aug. 30, 2017 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 |
Value of shares of common stock sold | $ 637,990 | $ 288,000 | ||||||||
Proceeds from sale of stock | $ (6,793) | |||||||||
Common stock par value | $ .02 | $ .02 | ||||||||
Stock compensation expense | $ 30,701 | |||||||||
Stock compensation expense, description | The Company had stock compensation expense of approximately $30,701 or less than $0.01 basic and diluted earnings per share ($1,200; or less than $0.01 basic and diluted earnings per share) | |||||||||
Heng Fai Holdings Limited [Member] | ||||||||||
Number of shares of common stock sold | 612,245 | 214,286 | ||||||||
Purchase price per share | $ 0.98 | |||||||||
Advanced Cyber Security Corp [Member] | Licensing and Distribution Agreement [Member] | ||||||||||
Number of shares of common stock sold | 130,435 | |||||||||
Purchase price per share | $ 1.15 | |||||||||
LiquidValue Development Pte Ltd [Member] | Convertible Promissory Note [Member] | ||||||||||
Debt instrument, face amount | $ 500,000 | |||||||||
Common stock par value | $ 0.02 | |||||||||
Debt conversion price per share | $ 1.12 | |||||||||
LiquidValue Development Pte Ltd [Member] | Convertible Promissory Note [Member] | Maximum [Member] | ||||||||||
Debt conversion into common stock | 446,428 | |||||||||
Two Related Party Investors [Member] | Unregistered Common Stock [Member] | ||||||||||
Number of shares of common stock sold | 1,200,000 | |||||||||
Warrant term | 5 years | |||||||||
Warrant to purchase of common shares | 240,000 | |||||||||
Warrant exercise price per shares | $ 1 | |||||||||
Value of shares of common stock sold | $ 900,000 | |||||||||
Proceeds from sale of stock | $ 300,000 | |||||||||
Subscription receivable | $ 300,000 | |||||||||
Financing costs | $ 12,000 | |||||||||
Related Party Accredited Investor [Member] | ||||||||||
Purchase price per share | $ 1.40 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information - Schedule of Supplemental Cash Flow Information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Supplemental Cash Flow Information [Abstract] | ||
Cash paid for interest | $ 30,000 | $ 37,000 |
Impact of adoption of lease accounting standards | 1,498,156 | |
(Loss) gain from change in fair value of interest rate swap derivatives | (1,000) | 15,000 |
Common stock issued upon conversion of convertible note | 500,000 | |
Equity issued to purchase intangible assets | $ 145,000 |
Segment Information (Details Na
Segment Information (Details Narrative) | 3 Months Ended |
Mar. 31, 2019Integer | |
Segment Reporting [Abstract] | |
Number of operating segment | 5 |
Segment Information - Schedule
Segment Information - Schedule of Operations by Reportable Segment (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Segment Reporting Information [Line Items] | |||
Revenue | $ 443,000 | $ 455,000 | |
Depreciation and amortization | 294,407 | 345,667 | |
Interest expense | 29,665 | 49,138 | |
Stock based compensation | 30,701 | 1,251 | |
Net Income (loss) | (450,450) | (406,091) | |
Identifiable assets | 16,169,714 | $ 15,279,786 | |
Operating Segments [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenue | 4,809,000 | 4,377,000 | |
Depreciation and amortization | 294,000 | 346,000 | |
Interest expense | 30,000 | 49,000 | |
Amortized debt discount | 1,000 | 28,000 | |
Stock based compensation | 31,000 | 1,000 | |
Net Income (loss) | (450,000) | (406,000) | |
Identifiable assets | 16,170,000 | 16,982,000 | |
Operating Segments [Member] | Packaging and Printing [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenue | 3,313,000 | 2,918,000 | |
Depreciation and amortization | 225,000 | 167,000 | |
Interest expense | 22,000 | 23,000 | |
Amortized debt discount | 1,000 | 1,000 | |
Stock based compensation | 4,000 | ||
Net Income (loss) | 89,000 | 247,000 | |
Identifiable assets | 9,248,000 | 9,422,000 | |
Operating Segments [Member] | Plastics [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenue | 1,053,000 | 1,005,000 | |
Depreciation and amortization | 41,000 | 30,000 | |
Interest expense | 6,000 | 6,000 | |
Amortized debt discount | |||
Stock based compensation | |||
Net Income (loss) | (17,000) | 79,000 | |
Identifiable assets | 4,506,000 | 2,979,000 | |
Operating Segments [Member] | Technology [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenue | 443,000 | 454,000 | |
Depreciation and amortization | 28,000 | 149,000 | |
Interest expense | 2,000 | 12,000 | |
Amortized debt discount | 21,000 | ||
Stock based compensation | 23,000 | 1,000 | |
Net Income (loss) | (377,000) | (497,000) | |
Identifiable assets | 1,234,000 | 2,163,000 | |
Operating Segments [Member] | Corporate [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenue | |||
Depreciation and amortization | |||
Interest expense | 8,000 | ||
Amortized debt discount | 6,000 | ||
Stock based compensation | 4,000 | ||
Net Income (loss) | (145,000) | (235,000) | |
Identifiable assets | $ 1,182,000 | $ 2,418,000 |
Segment Information - Schedul_2
Segment Information - Schedule of Disaggregation of Revenue (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Reporting Information [Line Items] | ||
Total Printed Products | $ 4,366,000 | $ 3,923,000 |
Total Technology Sales, Services and Licensing | 443,000 | 455,000 |
Packaging Printing and Fabrication [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Printed Products | 2,961,000 | 2,610,000 |
Commercial and Security Printing [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Printed Products | 352,000 | 308,000 |
Technology Integrated Plastic Cards and Badges [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Printed Products | 503,000 | 252,000 |
Plastic Cards, Badges and Accessories [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Printed Products | 550,000 | 753,000 |
Information Technology Sales and Services [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Technology Sales, Services and Licensing | 74,000 | 130,000 |
Digital Authentication Products and Services [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Technology Sales, Services and Licensing | 230,000 | 178,000 |
Royalties from Licensees [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Technology Sales, Services and Licensing | $ 139,000 | $ 147,000 |