ROCHESTER, NY--(Marketwired - May 15, 2017) - Document Security Systems, Inc. (
- Quarter-Over-Quarter Revenue up 10% to $4.8 million
- 1Q 2017 Positive Adjusted EBITDA of $391,000 vs. 1Q 2016 Adjusted EBITDA Loss of ($107,000)
- Net Loss Per Share Reduced 80% from ($0.05) in 1Q 2016 to ($0.01) in 1Q 2017
Document Security Systems, Inc. (
"Our first quarter results demonstrate the continued execution of our strategy of focusing on revenue growth and high margin products," stated Jeff Ronaldi, CEO of DSS. "We're encouraged by the performance of previously announced relationships within our anti-counterfeiting, fraud protection and plastics card businesses as well as by the significant new opportunities we've identified within several of our expanding addressable markets. We remain dedicated to growing each of our revenue channels and increasing value to our shareholders," added Ronaldi.
First Quarter 2017 Financial Highlights
- Revenue for the first quarter of 2017 increased approximately 10% to $4.8 million from $4.3 million in the same year-ago quarter. During the first quarter of 2017, the Company's printed products revenue grew by $428,000 or 11%, and technology sales, services and licensing revenue increased by 1%, as compared to the first quarter of 2016.
- The Company posted an 84% improvement in its operating loss, as compared to the first quarter of 2016. Operating loss for the first quarter 2017 was ($86,000) versus an operating loss of ($537,000) for the first quarter 2016.
- The Company recorded a significant improvement in Adjusted EBITDA 1 for the first quarter ended March 31, 2017. Adjusted EBITDA for the first quarter of 2017 was $391,000 as compared to an Adjusted EBITDA loss of ($102,000) in the first quarter of 2016.
- Net loss for the Company's first quarter 2017 was reduced by 71% to ($184,000), or ($0.01) per share, as compared to a net loss of ($624,000), or ($0.05) per share, for the first quarter ended March 31, 2016.
A full analysis of results for the quarter ended March 31, 2017 is available in the Company's Form 10-Q, which is available on the Company's website at www.dsssecure.com or through the Securities and Exchange Commission's Edgar database at www.sec.gov .
ABOUT DOCUMENT SECURITY SYSTEMS
Document Security Systems, Inc.'s (
For more information on the AuthentiGuard Suite, please visit www.authentiguard.com .
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FORWARD-LOOKING STATEMENTS Forward-looking statements that may be contained in this press release, including, without limitation, statements related to the Company's plans, strategies, objectives, expectations, potential value, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act and contain words such as "believes," "anticipates," "expects," "plans," "intends" and similar words and phrases. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected in any forward-looking statement. In addition to the factors specifically noted in the forward-looking statements, other important factors, risks and uncertainties that could result in those differences include, but are not limited to, our ability to continue the growth in sales of AuthentiGuard and manage our expenses, as well as those risks disclosed in the "Risk Factors" section of the Company's Annual Report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission on March 28, 2017. Forward-looking statements that may be contained in this press release are being made as of the date of its release, and the Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements.
| DOCUMENT SECURITY SYSTEMS, INC. AND SUBSIDIARIES | |||||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||||
| (Unaudited) | |||||||||||||
| Three Months Ended March 31, 2017 | Three Months Ended March 31, 2016 | % change | |||||||||||
| Revenue | |||||||||||||
| Printed products | $ | 4,403,000 | $ | 3,975,000 | 11 | % | |||||||
| Technology sales, services and licensing | 368,000 | 364,000 | 1 | % | |||||||||
| Total revenue | $ | 4,771,000 | $ | 4,339,000 | 10 | % | |||||||
| Costs and expenses | |||||||||||||
| Cost of goods sold, exclusive of depreciation and amortization | $ | 2,788,000 | $ | 2,611,000 | 7 | % | |||||||
| Sales, general and administrative compensation | 898,000 | 852,000 | 5 | % | |||||||||
| Depreciation and amortization | 343,000 | 361,000 | -5 | % | |||||||||
| Professional fees | 161,000 | 424,000 | -62 | % | |||||||||
| Stock based compensation | 134,000 | 74,000 | 81 | % | |||||||||
| Sales and marketing | 94,000 | 76,000 | 24 | % | |||||||||
| Rent and utilities | 152,000 | 138,000 | 10 | % | |||||||||
| Other operating expenses | 227,000 | 227,000 | 0 | % | |||||||||
| Research and development | 60,000 | 113,000 | -47 | % | |||||||||
| Total costs and expenses | $ | 4,857,000 | $ | 4,876,000 | 0 | % | |||||||
| Operating income (loss) | (86,000 | ) | (537,000 | ) | -84 | % | |||||||
| Other expenses | |||||||||||||
| Interest expense | $ | (58,000 | ) | $ | (77,000 | ) | -25 | % | |||||
| Amortized debt discount | (35,000 | ) | (5,000 | ) | 600 | % | |||||||
| Other expense | $ | (93,000 | ) | $ | (82,000 | ) | 13 | % | |||||
| Loss before income taxes | (179,000 | ) | (619,000 | ) | -71 | % | |||||||
| Income tax expense | 5,000 | 5,000 | 0 | % | |||||||||
| Net loss | $ | (184,000 | ) | $ | (624,000 | ) | -71 | % | |||||
| Loss per common share: | |||||||||||||
| Basic and diluted | $ | (0.01 | ) | $ | (0.05 | ) | -80 | % | |||||
| Shares used in computing loss per common share: | |||||||||||||
| Basic and diluted | 13,624,522 | 12,970,487 | 5 | % | |||||||||
| DOCUMENT SECURITY SYSTEMS, INC. AND SUBSIDIARIES | ||||||||||
| Consolidated Balance Sheets | ||||||||||
| As of | ||||||||||
| March 31, 2017 | December 31, 2016 | |||||||||
| ASSETS | (Unaudited) | |||||||||
| Current assets: | ||||||||||
| Cash | $ | 4,866,070 | $ | 5,871,738 | ||||||
| Restricted cash | 421,671 | 177,609 | ||||||||
| Accounts receivable, net of $50,000 allowance for uncollectible accounts | 2,024,970 | 1,890,981 | ||||||||
| Inventory | 1,203,523 | 1,206,377 | ||||||||
| Prepaid expenses and other current assets | 377,365 | 350,289 | ||||||||
| Total current assets | 8,893,599 | 9,496,994 | ||||||||
| Property, plant and equipment, net | 4,467,292 | 4,573,841 | ||||||||
| Other assets | 45,821 | 45,821 | ||||||||
| Goodwill | 2,453,349 | 2,453,349 | ||||||||
| Other intangible assets, net | 1,730,948 | 1,896,018 | ||||||||
| Total assets | $ | 17,591,009 | $ | 18,466,023 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 1,793,627 | $ | 2,212,653 | ||||||
| Accrued expenses and deferred revenue | 1,187,096 | 1,290,593 | ||||||||
| Other current liabilities | 2,982,175 | 2,996,310 | ||||||||
| Short-term debt | 3,538,129 | - | ||||||||
| Current portion of long-term debt, net | 1,112,335 | 1,202,335 | ||||||||
| Total current liabilities | 10,613,362 | 7,701,891 | ||||||||
| Long-term debt, net | 1,651,079 | 5,249,569 | ||||||||
| Other long-term liabilities | 2,035,444 | 2,184,843 | ||||||||
| Deferred tax liability, net | 50,356 | 45,619 | ||||||||
| Commitments and contingencies (Note 6) | ||||||||||
| Stockholders' equity | ||||||||||
| Common stock, $.02 par value; 200,000,000 shares authorized, 13,652,903 shares issued and outstanding (13,502,653 on December 31, 2016) | 273,058 | 270,053 | ||||||||
| Additional paid-in capital | 104,468,804 | 104,338,002 | ||||||||
| Accumulated other comprehensive loss | (38,444 | ) | (45,343 | ) | ||||||
| Accumulated deficit | (101,462,650 | ) | (101,278,611 | ) | ||||||
| Total stockholders' equity | 3,240,768 | 3,284,101 | ||||||||
| Total liabilities and stockholders' equity | $ | 17,591,009 | $ | 18,466,023 | ||||||
| DOCUMENT SECURITY SYSTEMS, INC. AND SUBSIDIARIES | ||||||||||
| Consolidated Statements of Cash Flows | ||||||||||
| For the Three Months Ended March 31, | ||||||||||
| (Unaudited) | ||||||||||
| 2017 | 2016 | |||||||||
| Cash flows from operating activities: | ||||||||||
| Net loss | $ | (184,039 | ) | $ | (624,022 | ) | ||||
| Adjustments to reconcile net loss to net cash from (used by) operating activities: | ||||||||||
| Depreciation and amortization | 342,774 | 360,501 | ||||||||
| Stock based compensation | 133,807 | 73,724 | ||||||||
| Paid in-kind interest | 18,000 | 19,500 | ||||||||
| Change in deferred tax provision | 4,737 | 4,737 | ||||||||
| Amortization of deferred financing costs | 35,288 | 5,290 | ||||||||
| Decrease (increase) in assets: | ||||||||||
| Accounts receivable | (133,989 | ) | 183,443 | |||||||
| Inventory | 2,854 | (52,383 | ) | |||||||
| Prepaid expenses and other current assets | (27,076 | ) | (123,456 | ) | ||||||
| Restricted cash | (244,062 | ) | 10,154 | |||||||
| Increase (decrease) in liabilities: | ||||||||||
| Accounts payable | (419,482 | ) | 219,506 | |||||||
| Accrued expenses and other liabilities | (259,678 | ) | (145,657 | ) | ||||||
| Net cash used by operating activities | (730,866 | ) | (68,663 | ) | ||||||
| Cash flows from investing activities: | ||||||||||
| Purchase of property, plant and equipment | (66,206 | ) | (51,827 | ) | ||||||
| Purchase of intangible assets | (4,949 | ) | (67,792 | ) | ||||||
| Net cash used by investing activities | (71,155 | ) | (119,619 | ) | ||||||
| Cash flows from financing activities: | ||||||||||
| Payments of long-term debt | (203,647 | ) | (202,439 | ) | ||||||
| Issuances of common stock, net of issuance costs | - | - | ||||||||
| Net cash used by financing activities | (203,647 | ) | (202,439 | ) | ||||||
| Net increase (decrease) in cash | (1,005,668 | ) | (390,721 | ) | ||||||
| Cash at beginning of period | 5,871,738 | 1,440,256 | ||||||||
| Cash at end of period | $ | 4,866,070 | $ | 1,049,535 | ||||||
1 ADJUSTED EBITDA The Company uses Adjusted EBITDA as a non-GAAP financial performance measurement. Adjusted EBITDA is calculated by the Company 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, and impairments of investments and intangible assets. 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 evaluate potential acquisitions, establish internal budgets and goals, and evaluate performance of its business units and management. 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 loss to Adjusted EBITDA loss:
| Three Months Ended March 31, | ||||||||||||
| 2017 | 2016 | % change | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Net Loss: | $ | (184,000 | ) | $ | (624,000 | ) | -71 | % | ||||
| Add backs: | ||||||||||||
| Depreciation & amortization | 343,000 | 361,000 | -5 | % | ||||||||
| Stock based compensation | 134,000 | 74,000 | 81 | % | ||||||||
| Interest expense | 58,000 | 77,000 | -25 | % | ||||||||
| Amortization of note discount | 35,000 | 5,000 | 600 | % | ||||||||
| Income Taxes | 5,000 | 5,000 | 0 | % | ||||||||
| Adjusted EBITDA | 391,000 | (102,000 | ) | -483 | % | |||||||
| Adjusted EBITDA, by group (unaudited) | ||||||||||||
| Printed Products | $ | 773,000 | $ | 616,000 | 25 | % | ||||||
| Technology Management | (79,000 | ) | (355,000 | ) | -78 | % | ||||||
| Corporate | (303,000 | ) | (363,000 | ) | -17 | % | ||||||
| 391,000 | (102,000 | ) | -483 | % | ||||||||
For more information: Investor Relations Jody Janson Document Security Systems, Inc. (585) 232-5442 Email: Email Contact
