Document Security Systems, Inc. Announces Fourth Quarter and 2011 Year-End
Financial Results
ROCHESTER, N.Y., March 19, 2012 /PRNewswire via COMTEX/ -- Document Security
Systems, Inc. (DSS), a world-wide developer and manufacturer of security and
authentication solutions which prevent counterfeiting and brand fraud, reported
results for the fourth quarter and year ended December 31, 2011. Management will
host a teleconference and web cast today at 4:30 pm ET to discuss the results
with the investment community:
Time: 4:30 p.m. Eastern Time
Date: March 19th, 2012
Investor Dial-in (Toll Free): 877-407-9205
Investor Dial-In (International): 201-689-8054
Live Web Cast URL: investorcalendar.com
A replay of the teleconference will be available until April 2, 2012, which can
be accessed by dialing (877) 660-6853 if calling within the U.S. or (201)
612-7415 if calling internationally. Please enter account #286 and conference ID
#391059 to access the replay. The webcast will be available for replay within the
Investor Relations "Events & Presentations" section of the DSS home page located
at dsssecure.com.
Fourth Quarter 2011 Highlights
Sales of $4.2 million up 16% from the third quarter of 2011, up 2% from the
fourth quarter of 2010.
Gross profit of $1.2 million down 9% from the third quarter of 2011, up 8% from
the fourth quarter of 2010.
Gross margin percentage of 28% up from 26% in the fourth quarter of 2010.
Operating expenses decreased 5% from the third quarter of 2011 and decreased 13%
from the fourth quarter of 2010.
Net loss of $955,000, an increase of 26% from the third quarter of 2011, and a
decrease of 40% from the fourth quarter of 2010.
Net loss per share of $(0.05), compared to a net loss per share of $(0.04) during
the third quarter of 2011, and a net loss per share of $(0.11) during the fourth
quarter of 2010.
Full Year 2011 Highlights
Sales of $13.4 million, even with 2010.
Gross profit of $4.2 million up 13% from 2010.
Gross margin percentage of 31% up from 28% in 2010.
Operating expenses up 1% from 2010.
Net loss of $3.2 million, a 7% decrease from 2010.
Net loss per share of $(0.17) compared to $(0.20) in 2010.
Robert Fagenson, Chairman of the Board of Document Security Systems, stated:
"During 2011, we set in motion several significant initiatives that will help
shape our company going forward. First, we more fully committed ourselves to our
digital division through the acquisition of ExtraDev in May, and have been
bringing in talent and dedicating resources to that division ever since. Second,
our plastics division made a major push into more sophisticated products such as
RFID and smart cards which has materialized into significant performance
improvement at that division. We also have right-sized our printing division to
ensure long-term sustainability, with a focus on core security printing for our
government and corporate clients. Finally, we continued our focus on research and
development and expanded our patent and patent protection efforts, which we
expect will deliver long term benefits to our company."
Document Security System's CEO Patrick White said, "We were able to finish 2011
with a strong fourth quarter that allowed us to increase revenue despite a
significant reduction in printing sales. Our successful push towards higher
margin product sales in our plastics division and our digital division has
stabilized our core business and are positive trends for this company going
forward. As we enter 2012, we will build upon this foundation and continue to
focus on our core security technology offerings, especially in digital
applications, to take advantage of the myriad of opportunities that exist in the
security industry."
About DSS (Document Security Systems, Inc.)
DSS is comprised of four operating groups, DSS Plastics Group, DSS Printing
Group, DSS Packaging Group and DSS Digital Group. Through these divisions, DSS
provides counterfeit prevention and comprehensive brand and digital information
protection solutions to corporations, governments, and financial institutions
around the world. DSS develops and manufactures products and services containing
patented and patent pending optical deterrent technologies that help prevent
counterfeiting and brand fraud from the use of the most advanced scanners and
copiers in the market.
The Company owns numerous patented and patent-pending technologies and products.
DSS uses its covert and overt technologies to protect a wide range of documents
including, but not limited to, consumer packaging, vital records, ID Cards/RFID,
smart cards, passports, gift certificates, checks and coupons. The Company also
protects digital information via secure cloud computing and disaster recovery
services. Furthermore, DSS uses its extensive knowledgebase to provide
comprehensive brand protection solutions to its customers. From risk analysis and
vulnerability assessment, to systems integration and monitoring, DSS offers the
advanced tools and knowledgebase needed to protect the world's most valuable and
at-risk brands. DSS's customized solutions are designed to protect against
product diversion, counterfeit, and other costly and damaging occurrences. In
addition, DSS offers commercial printing services.
For more information on DSS and its subsidiaries, please visit
dsssecure.com. Follow DSS on Facebook, click HERE.
For more information:
Investor Relations Document Security Systems (585) 325-3610 Email:
ir@documentsecurity.com
Safe Harbor Statement
The statements contained in this press release that are not purely historical are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934,
as amended, and are intended to be covered by the safe harbors created thereby.
These forward-looking statements include, but are not limited to, statements
regarding expectations for future financial performance, potential sales from new
and existing customers, expected benefits from the Company's cost cutting efforts
and/or statements preceded by, followed by or that include the words "believes,"
"could," "expects," "anticipates," "estimates," "intends," "plans," "projects,"
"seeks," or similar expressions, all of which involve uncertainty and risk. Many
of these risks and uncertainties are discussed in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2011 filed with the Securities
and Exchange Commission (the "SEC"), and in any subsequent reports filed with the
SEC, all of which are available at the SEC's website at sec.gov. It is
possible the company's future financial performance may differ from expectations
due to a variety of factors including, but not limited to, the risks referred to
above, and changes in economic and business conditions in the world, increased
competitive activity, achieving sales levels to fulfill revenue expectations,
consolidation among its competitors and customers, technology advancements,
unexpected costs and charges, adequate funding for plans, changes in interest and
foreign exchange rates, regulatory and other approvals and failure to implement
all plans, for whatever reason. It is not possible to foresee or identify all
such factors. Any forward-looking statements in this report are based on current
conditions; expected future developments and other factors it believes are
appropriate in the circumstances. Prospective investors are cautioned that such
statements are not a guarantee of future performance and actual results or
developments may differ materially from those projected. The company makes no
commitment to update any forward-looking statement included herein, or disclose
any facts, events or circumstances that may affect the accuracy of any
forward-looking statement.
TABLES FOLLOW.
DOCUMENT SECURITY SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
For The Years Ended December 31,For The Three Months Ended December 31,
2011201020112010
Revenue(unaudited)(unaudited)
Printing$3,227,457$4,697,142$884,994$1,208,791
Packaging5,940,0775,752,6012,144,4782,300,495
Plastic IDs and cards2,769,0852,290,788681,889469,158
Licensing and digital solutions1,446,985641,050495,316151,999
Total revenue13,383,60413,381,5814,206,6774,130,443
Costs of revenue
Printing2,928,4103,799,108845,600978,656
Packaging4,430,8604,386,8291,667,9191,713,374
Plastic IDs and cards1,698,4391,504,844467,360361,701
Licensing and digital solutions154,0165,47667,139-
Total costs of revenue9,211,7259,696,2573,048,0183,053,731
Gross profit4,171,8793,685,3241,158,6591,076,712
31%28%28%26%
Operating expenses:
Selling, general and administrative7,075,8226,136,1521,863,0341,694,359
Research and development285,450265,36076,95261,274
Impairment of intangible assets-376,481-376,481
Amortization of intangibles284,716803,46879,300183,801
Operating expenses7,645,9887,581,4612,019,2862,315,915
Operating loss(3,474,109)(3,896,137)(860,627)(1,239,203)
Other income (expense):
Change in fair value of derivative liability360,922---
Interest expense(259,142)(290,087)(89,431)(62,005)
Loss on equity investment-(121,393)--
Amortizaton of note discount-(420,385)-(298,189)
Other income-143,061--
00
----------------------
Loss before income taxes(3,372,329)(4,584,941)(950,058)(1,599,397)
Income (tax benefit) expense(150,183)(1,122,091)4,7384,737
Net loss$(3,222,146)$(3,462,850)$(954,796)$(1,604,134)
Other comprehensive income (loss):
Interest rate swap income (loss)(84,854)(25,834)(88,532)6,000
--------------------------------------------
Comprehensive Loss$(3,307,000)$(3,488,684)$(1,043,328)$(1,598,134)
Net loss per share -basic and diluted:$(0.17)$(0.20)$(0.05)$(0.11)
Dividend per share$-$0.01$-$-
Weighted average common shares outstanding, basic and diluted19,454,04617,755,14119,507,80614,700,453
DOCUMENT SECURITY SYSTEMS, INC.AND SUBSIDIARIES
Consolidated Balance Sheets
As of December 31,
20112010
ASSETS
Current assets:
Cash$717,679$4,086,574
Accounts receivable, net of allowance
of$76,000 ($66,000- 2010)1,595,7502,227,877
Inventory783,442601,359
Prepaid expenses and other current assets95,399231,190
-
------------
Total current assets3,192,2707,147,000
Property, plant and equipment, net4,019,8292,543,494
Other assets244,356325,953
Goodwill3,322,7993,084,121
Other intangible assets, net2,043,2121,847,859
Total assets$12,822,466$14,948,427
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$1,666,963$1,828,138
Accrued expenses and other current liabilities1,142,6291,286,529
Revolving lines of credit763,736614,833
Short-term loan from related party150,000-
Current portion of long-term debt460,598300,000
Current portion of capital lease obligations88,17288,776
Total current liabilities4,272,0984,118,276
Revolving note from related party-583,000
Long-term debt, net of unamortized discount of $88,000 ($0-2010)2,819,7831,578,242
Interest rate swap hedging liabilities110,68825,834
Capital lease obligations11,13398,532
Deferred tax liability108,72789,779
Derivative liabilities-3,866,836
Commitments and contingencies (see Note 12)
Stockholders' equity
Common stock, $.02 par value;200,000,000 shares authorized, 19,513,132 shares issued and outstanding
(19,391,319 in 2010)390,262387,825
Additional paid-in capital48,395,24144,178,569
Accumulated other comprehensive loss(110,688)(25,834)
Accumulated deficit(43,174,778)(39,952,632)
Total stockholders' equity5,500,0374,587,928
Total liabilities and stockholders' equity$12,822,466$14,948,427
DOCUMENT SECURITY SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Years Ended December 31,
20112010
Cash flows from operating activities:
Net loss$(3,222,146)$ (3,462,850)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization766,9771,261,122
Stock based compensation398,090423,471
Amortization of note discount-420,385
Loss on equity investment-121,393
Change in fair value of derivative liability(360,922)-
Deferred tax benefit(169,131)(1,141,040)
Intangible asset impairment-376,481
(Increase) decrease in assets:
Accounts receivable701,482200,339
Inventory(182,083)86,977
Prepaid expenses and other assets112,911(101,465)
Increase (decrease) in liabilities:
Accounts payable(229,528)(209,516)
Accrued expenses and other current liabilities59,845265,450
----------------------
Net cash used by operating activities(2,124,505)(1,759,253)
Cash flows from investing activities:
Purchase of property, plant and equipment(523,596)(157,422)
Purchase of other intangible assets(72,069)(269,729)
Acquisition of business61,995(2,000,000)
----------------------
Net cash used by investing activities(533,670)(2,427,151)
Cash flows from financing activities:
Net (payments) borrowings on revolving lines of credit(90,256)342,428
Borrowings on long-term debt-1,553,242
Payments of long-term debt(359,399)(250,000)
Payments of capital lease obligations(88,003)(73,283)
Issuance of common stock, net of issuance costs(173,062)6,251,696
----------------------
Net cash (used) provided by financing activities(710,720)7,824,083
----------------------
Net (decrease) increase in cash(3,368,895)3,637,679
Cash beginning of period4,086,574448,895
Cash end of period$717,679$ 4,086,574 |
