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Posted On: 08/14/2019 7:11:07 AM
Post# of 82686
Total other expense $(39,000)$3,496,000 -101% $(67,000)$3,422,000 102% Income (loss) before income taxes (1,031,000) 2,678,000 -138% (1,481,000) 2,271,000 -165% Income tax expense (benefit) - - 0% - - 0% Net income (loss) $(1,031,000)$2,678,000 -138% $(1,481,000)$2,271,000 165% Earnings (loss) per common share: Basic $(0.05)$0.16 -131% $(0.07)$0.14 150%Diluted $(0.05)$0.16 -131% $(0.07)$0.13 154%
DOCUMENT SECURITY SYSTEMS, INC. AND SUBSIDIARIESConsolidated Statements of Cash FlowsFor the Six Months Ended June 30,(unaudited) 2019 2018 Cash flows from operating activities: Net income (loss) $(1,481,272) $2,271,367 Adjustments to reconcile net income (loss) to net cash used by operating activities: Depreciation and amortization 631,147 692,483 Stock based compensation 58,610 86,173 Paid in-kind interest - 12,000 Amortization of deferred financing costs and debt discount 600 33,899 Gain on extinguishment of liabilities, net - (3,532,659) Decrease (increase) in assets: Accounts receivable (346,301) 118,491 Inventory 291,482 289,513 Prepaid expenses and other current assets 53,895 (27,771) Increase (decrease) in liabilities: Accounts payable 216,496 303,907 Accrued expenses (249,903) (90,318) Other liabilities (897,858) (606,928) Net cash used by operating activities (1,723,104) (449,843) Cash flows from investing activities: Purchase of property, plant and equipment (261,555) (311,402) Purchase of intangible assets (350,000) (20,137) Net cash used by investing activities (611,555) (331,539) Cash flows from financing activities: Payments of long-term debt (121,560) (758,302) Borrowings from convertible note 500,000 - Issuances of common stock, net of issuance costs 4,879,844 - Receipt of subscription receivable, net of issuance costs - 288,000 Net cash provided (used) by financing activities 5,258,284 (470,302) Net increase (decrease) in cash and cash equivalents 2,923,625 (1,251,684) Cash and restricted cash at beginning of period 2,447,985 4,444,628 Cash and restricted cash at end of period $5,371,610 $3,192,944
1 ADJUSTED EBITDA
The Company uses Adjusted EBITDA as a non-GAAP financial performance measurement. The Company calculates Adjusted EBITDA by adding back to net income (loss): interest, income taxes, depreciation and amortization expense, and impairment charges as further adjusted to add back stock-based compensation expense and non-recurring items. Adjusted EBITDA is provided to investors to supplement the results of operations reported in accordance with GAAP. Management believes that Adjusted EBITDA provides an additional tool for investors to use in comparing the Company’s financial results with other companies in the industry, many of which also use Adjusted EBITDA in their communications to investors. By excluding non-cash charges such as amortization, depreciation, stock-based compensation and impairment charges, as well as non-operating charges for interest and income taxes, investors can evaluate the Company's operations and its ability to generate cash flows from operations and can compare its results on a more consistent basis to the results of other companies in the industry. Management also uses Adjusted EBITDA to establish internal budgets and goals, and evaluate performance of its business units and management, and evaluate potential acquisitions. The Company considers Adjusted EBITDA to be an important indicator of the Company's operational strength and performance of its business and a useful measure of the Company's historical and prospective operating trends. However, there are significant limitations to the use of Adjusted EBITDA since it excludes interest income and expense and income taxes and non-recurring items such as goodwill impairments, each of which impact the Company's profitability and operating cash flows, as well as depreciation, amortization, impairment charges and stock-based compensation. The Company believes that these limitations are compensated by clearly identifying the difference between the two measures. Consequently, Adjusted EBITDA should not be considered in isolation or as a substitute for net income and loss presented in accordance with GAAP. Adjusted EBITDA as defined by the Company may not be comparable with similarly named measures provided by other entities. The following is a reconciliation of net income (loss) to Adjusted EBITDA income (loss):
Non-GAAP Financial Performance Measure Three Months Ended June 30, Six Months Ended June 30, 2019 2018 % change 2019 2018 % change (unaudited)(unaudited) (unaudited)(unaudited) Net loss: $(1,031,000)$2,677,000 -139% $(1,481,000)$2,271,000 -165%Add backs: Depreciation & amortization 337,000 347,000 -3% 631,000 692,000 -9%Stock based compensation 25,000 85,000 -71% 59,000 86,000 -31%Interest, net 40,000 31,000 Interest, net 40,000 31,000 29% 66,000 77,000 -14%Amortization of deferred financing costs and debt discount 1,000 6,000 -83% 1,000 34,000 -97% Adjusted EBITDA$(628,000)$3,146,000 -120% $(724,000)$3,160,000 -123% Adjusted EBITDA, by group (unaudited) Printed Products$(19,000)$177,000 -111% $351,000 $728,00
-52%Technology (503,000) 3,232,000 116% (517,000) 2,920,000 118%Corporate (106,000) (263,000)-60% (558,000) (488,000)14% (628,000) 3,146,000 -120% (724,000) 3,160,000
-123%
DOCUMENT SECURITY SYSTEMS, INC. AND SUBSIDIARIESConsolidated Statements of Cash FlowsFor the Six Months Ended June 30,(unaudited) 2019 2018 Cash flows from operating activities: Net income (loss) $(1,481,272) $2,271,367 Adjustments to reconcile net income (loss) to net cash used by operating activities: Depreciation and amortization 631,147 692,483 Stock based compensation 58,610 86,173 Paid in-kind interest - 12,000 Amortization of deferred financing costs and debt discount 600 33,899 Gain on extinguishment of liabilities, net - (3,532,659) Decrease (increase) in assets: Accounts receivable (346,301) 118,491 Inventory 291,482 289,513 Prepaid expenses and other current assets 53,895 (27,771) Increase (decrease) in liabilities: Accounts payable 216,496 303,907 Accrued expenses (249,903) (90,318) Other liabilities (897,858) (606,928) Net cash used by operating activities (1,723,104) (449,843) Cash flows from investing activities: Purchase of property, plant and equipment (261,555) (311,402) Purchase of intangible assets (350,000) (20,137) Net cash used by investing activities (611,555) (331,539) Cash flows from financing activities: Payments of long-term debt (121,560) (758,302) Borrowings from convertible note 500,000 - Issuances of common stock, net of issuance costs 4,879,844 - Receipt of subscription receivable, net of issuance costs - 288,000 Net cash provided (used) by financing activities 5,258,284 (470,302) Net increase (decrease) in cash and cash equivalents 2,923,625 (1,251,684) Cash and restricted cash at beginning of period 2,447,985 4,444,628 Cash and restricted cash at end of period $5,371,610 $3,192,944
1 ADJUSTED EBITDA
The Company uses Adjusted EBITDA as a non-GAAP financial performance measurement. The Company calculates Adjusted EBITDA by adding back to net income (loss): interest, income taxes, depreciation and amortization expense, and impairment charges as further adjusted to add back stock-based compensation expense and non-recurring items. Adjusted EBITDA is provided to investors to supplement the results of operations reported in accordance with GAAP. Management believes that Adjusted EBITDA provides an additional tool for investors to use in comparing the Company’s financial results with other companies in the industry, many of which also use Adjusted EBITDA in their communications to investors. By excluding non-cash charges such as amortization, depreciation, stock-based compensation and impairment charges, as well as non-operating charges for interest and income taxes, investors can evaluate the Company's operations and its ability to generate cash flows from operations and can compare its results on a more consistent basis to the results of other companies in the industry. Management also uses Adjusted EBITDA to establish internal budgets and goals, and evaluate performance of its business units and management, and evaluate potential acquisitions. The Company considers Adjusted EBITDA to be an important indicator of the Company's operational strength and performance of its business and a useful measure of the Company's historical and prospective operating trends. However, there are significant limitations to the use of Adjusted EBITDA since it excludes interest income and expense and income taxes and non-recurring items such as goodwill impairments, each of which impact the Company's profitability and operating cash flows, as well as depreciation, amortization, impairment charges and stock-based compensation. The Company believes that these limitations are compensated by clearly identifying the difference between the two measures. Consequently, Adjusted EBITDA should not be considered in isolation or as a substitute for net income and loss presented in accordance with GAAP. Adjusted EBITDA as defined by the Company may not be comparable with similarly named measures provided by other entities. The following is a reconciliation of net income (loss) to Adjusted EBITDA income (loss):
Non-GAAP Financial Performance Measure Three Months Ended June 30, Six Months Ended June 30, 2019 2018 % change 2019 2018 % change (unaudited)(unaudited) (unaudited)(unaudited) Net loss: $(1,031,000)$2,677,000 -139% $(1,481,000)$2,271,000 -165%Add backs: Depreciation & amortization 337,000 347,000 -3% 631,000 692,000 -9%Stock based compensation 25,000 85,000 -71% 59,000 86,000 -31%Interest, net 40,000 31,000 Interest, net 40,000 31,000 29% 66,000 77,000 -14%Amortization of deferred financing costs and debt discount 1,000 6,000 -83% 1,000 34,000 -97% Adjusted EBITDA$(628,000)$3,146,000 -120% $(724,000)$3,160,000 -123% Adjusted EBITDA, by group (unaudited) Printed Products$(19,000)$177,000 -111% $351,000 $728,00
-52%Technology (503,000) 3,232,000 116% (517,000) 2,920,000 118%Corporate (106,000) (263,000)-60% (558,000) (488,000)14% (628,000) 3,146,000 -120% (724,000) 3,160,000
-123%
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