As
filed with the Securities and Exchange Commission on January 13, 2021
Registration
No. 333-249857
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
AMENDMENT
NO. 1 TO
FORM
S-1
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
DOCUMENT
SECURITY SYSTEMS, INC.
(Exact
Name of Registrant as Specified in Its Charter)
New
York
|
|
2650
|
|
16-1229730
|
(State
or other jurisdiction of
incorporation
or organization)
|
|
(Primary
Standard Industrial
Classification
Code Number)
|
|
(I.R.S.
Employer
Identification
No.)
|
200
Canal View Boulevard, Suite 104
Rochester,
New York 14623
+1-585-325-3610
(Address,
including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Frank
D. Heuszel
Chief
Executive Officer
Document
Security Systems, Inc.
200
Canal View Boulevard, Suite 104
Rochester,
New York 14623
+1-585-325-3610
(Name,
address, including zip code, and telephone number, including area code, of agent for service)
Copies
to:
Darrin
M. Ocasio
Sichenzia
Ross Ference LLP
1185
Avenue of the Americas
New
York, NY 10036
Telephone:
+1-212-930-9700
|
|
Mitchell
S. Nussbaum
Loeb
& Loeb LLP
345
Park Avenue
New
York, New York 10154
Telephone:
+1-212-407-4000
|
Approximate
date of commencement of proposed sale to public: As soon as practicable after this Registration Statement is declared effective.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box. [ ]
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number of the earlier effective registration statement for the
same offering. [ ]
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer
|
[ ]
|
Accelerated
filer
|
[ ]
|
Non-accelerated
filer
|
[X]
|
Smaller
reporting company
|
[X]
|
|
|
Emerging
growth company
|
[ ]
|
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
[ ]
CALCULATION
OF REGISTRATION FEE
Title
of Each Class of
Securities to Be Registered
|
|
Proposed
Maximum
Aggregate Offering
Price(1)(2)
|
|
|
Amount
of
Registration
Fee
|
|
|
|
|
|
|
|
|
|
|
Common
Stock, par value $0.02 per share (3)
|
|
$
|
23,000,000
|
|
|
$
|
2,509.30
|
(4)
|
(1)
|
Estimated
solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act
of 1933, as amended.
|
|
|
(2)
|
Includes
the aggregate offering price of the additional shares that the underwriters have the option to purchase to cover over-allotments,
if any.
|
|
|
(3)
|
Pursuant
to Rule 416 under the Securities Act, the shares of Common Stock registered hereby also include an indeterminate number of
additional shares of Common Stock as may from time to time become issuable by reason of stock splits, stock dividends, recapitalizations
or other similar transactions.
|
|
|
(4)
|
$2,258.37
previously paid. $250.93 paid herewith.
|
The
Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until
the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall
become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.
The
information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
PRELIMINARY
PROSPECTUS
|
Subject
to completion, dated January 13, 2021
|
DOCUMENT
SECURITY SYSTEMS, INC.
$20,000,000
Common
Stock
We
are offering shares
of our common stock in a firm commitment underwritten public offering.
Our
common stock is listed on the NYSE American LLC under the symbol “DSS.” The last reported sale price of our common
stock on the NYSE American LLC on January 12, 2021, was $6.34 per share.
The
public offering price per share of common stock will be determined between us and the underwriters based on market conditions
at the time of pricing, and may be at a discount to the then current market price. Therefore, the recent market price used throughout
this preliminary prospectus may not be indicative of the final offering price.
This
prospectus contains or incorporates by reference summaries of certain provisions contained in some of the documents described
herein, but reference is made to the actual documents for complete information. All the summaries are qualified in their entirety
by the actual documents. Copies of some of the documents referred to herein have been filed or have been incorporated by reference
as exhibits to the registration statement of which this prospectus forms a part, and you may obtain copies of those documents
as described in this prospectus under the heading “Where You Can Find More Information.”
Investing
in our common stock involves risks that are described in the “Risk Factors” beginning on page 7 of this prospectus
for a discussion of information that should be considered in connection with an investment in our common stock.
|
|
Per
Share
|
|
|
Total
|
|
Public
offering price
|
|
$
|
|
|
|
$
|
20,000,000
|
|
Underwriting
discount (1)
|
|
$
|
|
|
|
$
|
1,600,000
|
|
Proceeds,
before expenses, to us (1)
|
|
$
|
|
|
|
$
|
18,400,000
|
|
|
(1)
|
The
underwriters will receive compensation in addition to the underwriting discount. See the “Underwriting” section
of this prospectus for additional information regarding total underwriter compensation.
|
We
have granted a 45-day option to the underwriters to purchase up to
additional shares of common stock solely to cover over-allotments, if any.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The
underwriters expect to deliver the shares against payment therefor on or about ,
2021.
Aegis
Capital Corp.
The
date of this prospectus is , 2021
TABLE
OF CONTENTS
You
should rely only on the information contained or incorporated by reference in this prospectus and any related free writing prospectus
that we may provide to you in connection with this offering. We have not, and the underwriters have not, authorized any other
person to provide you with different information. If anyone provides you with different or inconsistent information, you should
not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the
offer or sale is not permitted. You should assume that the information appearing or incorporated by reference in this prospectus
is accurate only as of the date on the front cover of this prospectus or the date of the applicable document incorporated by reference.
Our business, financial condition, results of operations and prospects may have changed since that date.
For
investors outside the United States: Neither we nor any of the underwriters has done anything that would permit this offering
or possession or distribution of this prospectus or any free writing prospectus we may provide to you in connection with this
offering in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United
States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the
offering of the shares of our common stock and the distribution of this prospectus and any such free writing prospectus outside
of the United States.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains forward-looking statements. Such forward-looking statements include those that express plans, anticipation,
intent, contingency, goals, targets or future development and/or otherwise are not statements of historical fact. These forward-looking
statements are based on our current expectations and projections about future events and they are subject to risks and uncertainties
known and unknown that could cause actual results and developments to differ materially from those expressed or implied in such
statements.
In
some cases, you can identify forward-looking statements by terminology, such as “expects,” “anticipates,”
“intends,” “estimates,” “plans,” “believes,” “seeks,” “may,”
“should,” “could” or the negative of such terms or other similar expressions. Accordingly, these statements
involve estimates, assumptions and uncertainties that could cause actual results to differ materially from those expressed in
them. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this prospectus.
You
should read this prospectus (as it may be supplemented or amended) and the documents that we reference herein and therein and
have filed as exhibits to the registration statement, of which this prospectus is part, completely and with the understanding
that our actual future results may be materially different from what we expect. You should assume that the information appearing
in this prospectus is accurate as of the date on the front cover of this prospectus only. Because the risk factors referred to
above, as well as the risk factors referred to on page 7 of this prospectus and incorporated herein by reference, could cause
actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us or on our behalf,
you should not place undue reliance on any forward-looking statements. Further, any forward-looking statement speaks only as of
the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances
after the date on which the statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time
to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor
on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from
those contained in any forward-looking statements. We qualify all of the information presented in this prospectus, and particularly
our forward-looking statements, by these cautionary statements.
Except
to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking
statement, whether written or oral, that may be made from time to time, whether as a result of new information, future events
or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are
expressly qualified in their entirety by the cautionary statements contained above and throughout this prospectus and in the documents
incorporated by reference in this prospectus. We qualify all of our forward-looking statements by these cautionary statements.
IN
ADDITION TO THE ABOVE RISKS, BUSINESSES ARE OFTEN SUBJECT TO RISKS NOT FORESEEN OR FULLY APPRECIATED BY MANAGEMENT. IN REVIEWING
THIS PROSPECTUS AND THE DOCUMENTS INCORPORATED BY REFERENCE IN THIS PROSPECTUS, POTENTIAL INVESTORS SHOULD KEEP IN MIND THAT THERE
MAY BE OTHER POSSIBLE RISKS THAT COULD BE IMPORTANT.
PROSPECTUS
SUMMARY
This
summary highlights information contained in other parts of this prospectus and in the documents incorporated by reference. Because
it is a summary, it does not contain all of the information that you should consider in making your investment decision. Before
investing in our common stock, you should carefully read this prospectus and the documents incorporated by reference in their
entirety, including the “Risk Factors” included in this prospectus and incorporated by reference and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and the notes to
those financial statements incorporated by reference in this prospectus.
All
trademarks or trade names referred to in this prospectus are the property of their respective owners. Solely for convenience,
the trademarks and trade names in this prospectus are referred to without the ® and ™ symbols, but such references should
not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their
rights thereto. We do not intend the use or display of other companies’ trademarks and trade names to imply a relationship
with, or endorsement or sponsorship of us by, any other companies.
Company
Overview
Document
Security Systems, Inc. (together with its consolidated subsidiaries (unless the context otherwise requires), referred to herein
as “Document Security Systems,” “DSS,” “we,” “us,” “our” or the “Company”)
operates in eight business lines through eight (8) DSS subsidiaries located around the globe.
Of
the eight subsidiaries, three of those have historically been the core subsidiaries of the Company:
|
(1)
|
Premier
Packaging Corporation (DSS Packaging and Printing Group) operates in the paper board folding carton, smart packaging and document
security printing markets. It markets, manufactures and sells paper products designed to protect valuable information from
unauthorized scanning, copying, and digital imaging.
|
|
|
|
|
(2)
|
DSS
Digital Inc. and its subsidiaries (DSS Digital Group) research, develop, market and sell the Company’s digital products
worldwide. The primary product is AuthentiGuard®, which is a brand authentication application that integrates the Company’s
counterfeit deterrent technologies with proprietary digital data security-based solutions.
|
|
|
|
|
(3)
|
DSS
Technology Management 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
addition to the subsidiaries listed above, in 2019 and early 2020, DSS has created five new wholly owned subsidiaries:
|
(4)
|
DSS
Blockchain Security, Inc., intends to specialize in the development of blockchain security technologies for tracking and tracing
solutions for supply chain logistics and cyber securities across global markets.
|
|
|
|
|
(5)
|
Decentralize
Sharing Systems, Inc., seeks to provide services to assist companies in the new business model of the peer-to-peer decentralized
sharing marketplaces. It also has established a direct marketing or network marketing business line which is designed to sell
products or services directly to the public through independent distributors, rather than selling through the traditional
retail market.
|
|
|
|
|
(6)
|
DSS
Securities, Inc., has been established to develop or to acquire assets in the securities trading or management arena, and
to pursue two parallel streams of digital asset exchanges in multiple jurisdictions: (i) securitized token exchanges, focusing
on digitized assets from different vertical industries and (ii) utilities token exchanges, focusing on “blue-chip”
utility tokens from solid businesses.
|
|
|
|
|
(7)
|
DSS
BioHealth Security, Inc., is our business line which we will intend to invest in or to acquire companies related to the biohealth
and biomedical field, including businesses focused on the research to advance drug discovery and development for the prevention,
inhibition, and treatment of neurological, oncology and immuno-related diseases. This new division will place special focus
on open-air defense initiatives, which curb transmission of air-borne infectious diseases such as tuberculosis and influenza,
among others.
|
|
|
|
|
(8)
|
DSS
Secure Living, Inc., intends to develop top of the line advanced technology, energy efficiency, quality of life living environments
and home security for everyone for new construction and renovations of residential single and multifamily living facilities.
|
Our
four reporting segments are as follows:
DSS
Packaging and Printing Group - Operating under the name Premier Packaging Corporation, the DSS Packaging and Printing
Group produces custom packaging serving clients in the pharmaceutical, nutraceutical, beverage, specialty foods, photo packaging
and direct marketing industries, among others. The group also provides active and intelligent packaging and document security
printing services for end-user customers along with technical support for our technology licensees. The division produces a wide
array of printed materials, such as folding cartons and paperboard packaging, security paper, vital records, prescription paper,
birth certificates, secure coupons and parts tracking forms. The division also provides resources and production equipment for
our ongoing research and development of security printing, authentication and related technologies.
DSS
Digital Group - This division researches, develops, markets and sells worldwide the Company’s digital products,
including and primarily our AuthentiGuard® product, which is a brand authentication application that integrates the Company’s
counterfeit deterrent technologies with proprietary digital data security-based solutions. The AuthentiGuard® product allows
our customers to implement a security mark utilizing conventional printing methods that is copy and counterfeit-resistant and
that can be read and recorded utilizing smartphones and other digital image capture devices, which can be utilized by that customer’s
suppliers, field personnel and end users throughout its global product supply and distribution chains.
DSS
Technology Management - Since its acquisition in 2013, DSS Technology Management’s primary mission has been to monetize
its various patent portfolios through commercial litigation and licensing. Except for investment in its social networking related
patents, we have historically partnered with various third-party funding groups in connection with patent monetization programs.
It is our intent to de-emphasize and ultimately wind down this business line. While Management will continue to assert and defend
the existing patents and purse potential infringements as they are identified, we do not intend to seek out new patent portfolios.
Direct
Marketing - Direct marketing or network marketing is designed to sell products or services directly to the public through
independent distributors, rather than selling through the traditional retail market. We believe this business has significant
growth potential in the now popular “gig economy”. Consistent with the Company’s strategic business plan and
vision, we plan to enter the direct marketing or network marketing industry and take advantage of the opportunities that exist.
We have entered into partnerships with existing direct marketing companies to access U.S., Canadian, Asian and Pacific Rim markets.
In addition, we have acquired various domestic and international operating licenses from those companies. Through the acquisitions
we have secured product licenses, formulas, existing sales networks, patents, web sites, and other resources to initiate sales
and revenue generation for this line and launched our HWHGIG and HWH Marketplace direct selling platforms.
Recent
Developments
American
Medical REIT Inc.
On
March 3, 2020 the Company, via its subsidiary DSS Securities, entered into a share subscription agreement and loan arrangement
with LiquidValue Asset Management Pte Ltd., AMRE Asset Management, Inc. and American Medical REIT Inc. under which it acquired
a 52.5% controlling ownership interest in AMRE Asset Management Inc. (“AAMI”) which currently has a 93% equity interest
in American Medical REIT Inc. (“AMRE”). AAMI is a real estate investment trust (“REIT”) management company
of which sets the strategic vision and formulate investment strategy and manages the assets and liabilities for AMRE. AMRE is
organized for the purposes of acquiring hospitals and other acute or post-acute care centers from leading clinical operators with
dominant market share in secondary and tertiary markets and leasing each property to a single operator under a triple-net lease.
To date, AAMI and AMRE has not generated revenue.
Alset
International Limited (formally Singapore eDevelopment Limited)
As
of March 31, 2020, the Company owned 83,174,129 ordinary shares of Alset International Limited (“Alset Intl”, formally
Singapore eDevelopment Limited), a company incorporated in Singapore and publicly listed on the Singapore Exchange Limited,
and warrants to purchase an additional 44,005,182 ordinary shares at an exercise price of SGD$0.04 (US$0.029) per share. On June
25, 2020, the Company exercised those warrants bringing its total ownership to 127,179,311 ordinary shares or approximately
10% of the outstanding shares of Alset Intl at September 30, 2020. As of June 30, 2020, the Company carried its investment
in Alset Intl at cost, less impairments under ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial
Liabilities”. During the third quarter of 2020, the Company determined that the investment has a readily determinable
fair value based on the volume of shares traded on the Singapore Exchange which evidences a ready market for shares, as well as
a consistent and observable market price. Accordingly, this investment is now classified as a marketable equity security
and is classified as a long-term asset on our consolidated balance sheets as the Company has the intent and ability to hold the
investments for a period of at least one year. The Company’s marketable equity securities are measured at fair value with
gains and losses recognized in other income (expense). At the time of the change in classification, the Company
recorded an unrealized gain of approximately $2.1 million. The Chairman of the Company, Mr. Heng Fai Ambrose Chan, is the Executive
Director and Chief Executive Officer of Alset Intl. Mr. Chan is also the majority shareholder of Alset Intl as well as the largest
shareholder of the Company. The fair value of the marketable equity security of Alset Intl as of September 30, 2020
was approximately $5,583,000.
Sharing
Services Global Corp.
As
of June 30, 2020, the Company had acquired and owned approximately 17% of the issued and outstanding shares of Sharing Services
Global Corp. (“SHRG”), a publicly traded company, as a marketable equity security investment. In the third
quarter of 2020, the Company, through a series of class A common shares acquisitions in July 2020, the Company acquired in
aggregate an ownership interest in SHRG of greater than 20%. At that time, it was determined that the Company had the ability
to exercise significant influence over SHRG. Accordingly, on July 22, 2020, the Company began prospectively utilizing the
equity method of accounting for its investment in SHRG in accordance with ASC Topic 323 and will recognize our share of
their earnings and losses within our consolidated statement of operations and comprehensive income (loss). Due to a lag in financial
reporting of SHRG, the Company has not recorded any share of earnings or losses during the period ended September 30, 2020. On
a go-forward basis, earnings or losses from SHRG will be recorded on a two-month lag. As of July 22, 2020, the Company owned 62,417,593
class A common shares of SHRG with an adjusted basis of $11.3 million. As of September 30, 2020, the Company held 62,457,378 class
A common shares, equating to a 32.2% ownership interest in SHRG, and prior to adopting the equity method had recorded unrealized
gains on marketable securities of approximately $6.1 million for the nine months then ended. As of July 22, 2020, the carrying
value of the Company’s equity method investment exceeded our share of the book value of SHRG’s underlying net
assets by approximately $9.5 million, which represents primarily intangible assets and goodwill arising from acquisitions.
Equipment
Line of Credit
On July 31, 2020, Premier
Packaging Corporation entered into a Loan Agreement and accompanying Term Note Non-Revolving Line of Credit Agreement with Citizens
Bank pursuant to which Citizens agreed to lend up to $900,000 to permit Premier Packaging Corporation 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 bears 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 Agreement). 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. As of September 30, 2020, the loan had
a balance of $0 and Premier Packaging Corporation still has available $900,000 for equipment borrowings.
Acquisition
of Impact BioMedical
On
August 21, 2020, we closed the share exchange agreement we entered into on April 27, 2020, with DSS BioHealth Security, Inc.,
our wholly owned subsidiary (“DBHS”), Alset Intl, and Global BioMedical Pte Ltd, a Singapore corporation and wholly
owned subsidiary of Alset Intl (“GBM”), pursuant to which, among other things, DBHS acquired all of the outstanding
capital stock of Impact BioMedical Inc., a Nevada corporation and wholly owned subsidiary of GBM (“Impact BioMedical”),
through a share exchange, with Impact BioMedical becoming a direct wholly owned subsidiary of DBHS. Impact BioMedical strives
to leverage its scientific know-how and intellectual property rights to provide solutions that have been plaguing the biomedical
field for decades. By tapping into the scientific expertise of its partners, Impact BioMedical has undertook a concerted effort
in the research and development (R&D), drug discovery and development for the prevention, inhibition, and treatment of neurological,
oncological and immune related diseases. The consideration for the Impact BioMedical shares was the following issued to GBM by
DSS: (i) 483,333 newly issued shares of common stock of DSS, nominally valued at $3,132,000, or $6.48 per share; and (ii) 46,868
newly issued shares of a new series of perpetual convertible preferred stock of DSS (the “Series A Preferred Stock”)
with a stated value of $46,868,000, or $1,000 per share, for a total consideration valued at $50 million. The Series A Preferred
Stock is convertible into shares of common stock of DSS at a conversion price of $6.48 of preferred stock stated value per share
of common stock, subject to a 19.9% beneficial ownership conversion limitation (a so-called “blocker”) based on the
total issued and outstanding shares of common stock of DSS beneficially owned by GBM. Holders of the Series A Preferred
Stock have no voting rights, except as required by applicable law or regulation, and no dividends will accrue or be payable on
the Series A Preferred Stock. The holders of Series A Preferred Stock are entitled to a liquidation preference of $1,000 per share,
and the Company has the right to redeem all or any portion of the then outstanding shares of Series A Preferred Stock, pro rata
among all holders, at a redemption price per share equal to the liquidation value per share. Both the Company and Alset Intl obtained
approvals of the acquisition transaction from their respective shareholders.
We
are currently in the process of completing the purchase price accounting and related allocations associated with the acquisition
of Impact BioMedical. Due to several factors, including a discount for illiquidity, the value of the Series A Preferred Stock
was discounted from $46,868,000 to $35,187,000, thus reducing the final consideration given to approximately $38,319,000. The
Company is also in the process of completing valuations and useful lives for certain Technology and In Process Research &
Development assets acquired in the transaction as well the non -controlling
interest portion of Impact BioMedical and its subsidiaries
and the purchase price allocation will be completed with finalization of those valuations. We expect the preliminary purchase
price accounting to be completed and reported in our Annual
Report on Form 10-K for the year ended December 31, 2020.
As of September 30, 2020, Impact Biomedical has not generated revenue.
On
October 16, 2020, GBM converted 4,293 shares of our Series A Preferred Stock having a par value of $0.02 per share in exchange
for 662,500 restricted shares of our common stock based upon a liquidation value of $1,000 and a conversion price of $6.48 per
share pursuant to Section 8.2(a) of the Certificate of Designation of Series A Convertible Preferred Stock.
Alset
Title Company
In
August 2020, the Company’s wholly owned subsidiary, DSS Securities, Inc., entered into a corporate venture to form
and operate a real estate title agency, under the name and flagging of Alset Title Company, Inc., a Texas corporation (“ATC”).
DSS Securities, Inc. will own 70% of this venture with the other two shareholders being attorneys necessary to complete
the state application and permitting process. There was no activity for the nine months ended September 30, 2020.
BMI
Capital International LLC
On
September 10, 2020, the Company’s wholly owned subsidiary, DSS Securities, Inc., entered into membership interest
purchase agreement with BMI Financial Group, Inc. a Delaware corporation (“BMIF”) and BMI Capital International LLC,
a Texas limited liability company (“BMIC”), whereby DSS Securities, Inc. purchased 14.9% membership interests
in BMIC for $100,000. DSS Securities also has the option to purchase an additional 10% of the outstanding membership interest.
This option expires on September 10, 2022. BMIC is a broker-dealer registered with the Securities and Exchange Commission, is
a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”), and is a member of the Securities Investor
Protection Corporation (“SIPC”). The Company’s chairman of the board and another independent board member of
the Company also have ownership interest in this joint venture.
Presidio
Property Trust
On October 7, 2020, DSS
Securities, Inc. took part in an initial public offering of Presidio Property Trust, Inc., a Maryland corporation (“Presidio”),
that invests primarily in commercial properties, such as office, industrial and retail properties, as well as in residential model
home properties, in regionally dominant markets across the United States. As part of this offering, we purchased 200,000 shares
of Presidio’s Series A Common Stock at $5.00 per share for a total purchase price of $1,000,000.
BioMed
Technologies Distribution Agreement and Share Subscription
Effective December 9, 2020,
Impact BioMedical entered into an exclusive distribution agreement with BioMed Technologies Asia Pacific Holdings Limited (“BioMed”),
which is focused on manufacturing natural probiotics, pursuant to which Impact BioMedical will directly market, advertise, promote,
distribute and sell certain BioMed products to resellers. The products to be distributed by Impact BioMedical include BioMed’s
PGut Premium ProbioticsTM, PGut Allergy ProbioticsTM, PGut SupremeSlim ProbioticsTM, PGut Kids
ProbioticsTM, and PGut Baby ProbioticsTM. Under the terms of the distribution agreement, Impact BioMedical
will have exclusive rights to distribute the products within the United States, Canada, Singapore, Malaysia, and South Korea and
non-exclusive distribution rights in all other countries. In exchange, Impact BioMedical agreed to certain obligations, including
mutual marketing obligations to promote sales of the products. The distribution agreement has an initial term of ten years and
may be terminated by Impact BioMedical at its option, at any time, and for any reason, or by BioMed for an uncured material breach
by Impact BioMedical or if Impact BioMedical becomes bankrupt or insolvent.
In
connection with the distribution agreement, Impact BioMedical also entered into a subscription agreement with BioMed, pursuant
to which Impact BioMedical agreed to purchase 525 ordinary shares of BioMed at a purchase price of HK$9,333.33 per share for total
consideration of HK$4,900,000 (approximately US$630,000). The subscription agreement provides, among other things, Impact BioMedical
the right to appoint a new director to the board of BioMed. With respect to an issuance of shares to a third party by BioMed,
Impact BioMedical will have the right of first refusal to purchase such shares, as well as customary tag-along rights.
Paycheck
Protection Program
As
part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) which was established and provides for
loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses
of the qualifying business, subsidiaries
of the Company had applied for and received $1,072,000 under the Paycheck Protection Program. As of August 4, 2020, pursuant to
the terms of the SBA PPP program, the Company submitted applications for its subsidiaries Premier Packaging and DSS Digital for
a requested 100% loan forgiveness. In November and December 2020, Premier Packaging and DSS Digital received notification, respectively,
from the SBA that their loans in total approximating $969,000, inclusive of interest, had been forgiven. AAMI, also a subsidiary
of the Company, pursuant to the terms of the SBA PPP program, submitted its application for 100% loan forgiveness in October 2020
and still awaits SBA determination.
Employment
Agreement
On
November 19, 2020, the Company, DSS Cyber Security Pte. Ltd. (“DCS”), a subsidiary of the Company, and Mr. Heng Fai
Chan, the Chief Executive Officer of DCS and the Chairman of the Board of Directors of the Company, entered into an amendment
(the “2020 Amendment”) to Mr. Chan’s employment agreement (the “2019 Employment Agreement”) dated
September 23, 2019, effective January
1, 2020, pursuant to which (i) the term
of the 2019 Employment Agreement was extended to December 31, 2022 and (ii) Mr. Chan’s salary and bonus were adjusted and
redefined for the period from January 1, 2020 till December 31, 2022. Pursuant to the 2020 Amendment, Mr. Chan’s monthly
base salary has been reduced to $1 commencing January 1, 2020 and Mr. Chan is eligible to receive certain performance bonuses
based upon the annual market capitalization growth of the Company and the annual net asset value change of the Company. The growth
bonus will be equal to 5% of the year over year increase in DSS’s market capitalization, with the measurement of DSS’s
market capitalization determined by (a) the total number of outstanding shares of DSS common stock at fiscal year-end multiplied
by (b) the 10-day volume weighted average price of DSS common stock on the principal trading market prior to such year end. The
annual net value bonus will be equal to 5% of the year over year increase of DSS’s net asset value, with the measurement
of DSS’s fiscal year end net asset value (equal to DSS’s total assets minus total liabilities) calculated in accordance
with generally accepted accounting principles.
HWH
World Inc.
On
January 6, 2021, the Company, Alset Intl, Health Wealth Happiness Pte. Ltd. (“HWH”),
a wholly-owned subsidiary of Alset Intl, and HWH World Inc. (“HWH World”), a wholly-owned subsidiary of HWH, entered
into a binding term sheet, pursuant to which, subject to our due diligence on HWH World, necessary approvals and consents, and
the terms and conditions to be set forth in a definitive agreement, we will acquire and purchase all of the outstanding equity
interest in HWH World for a consideration of the lesser of $14.8 million or the value of HWH World assessed by an independent
third-party. . We would have the option to pay
the purchase price in cash or in shares of the our common stock at a rate of $6.32 per share, the average closing price of our
common stock for the five trading days prior to January 6, 2021. In accordance with the term sheet, the parties will enter into
a definitive acquisition agreement within three months from the date of the term sheet, or at a later date as mutually agreed,
and complete the transaction within six months from the date of the term sheet, or at a later date as mutually agreed. The term
sheet is legally binding and will terminate upon the earlier of (1) July 6, 2021, (2) mutual agreement by the parties to terminate,
or (3) the execution of the definitive agreement for the transaction. HWH World is a direct marketing company that sells cosmetic,
and nutraceutical products to an international market.
Financial
Impact of COVID-19 Pandemic
The
COVID-19 pandemic has created global economic turmoil and has potentially permanently impacted how many businesses operate and
how individuals will socialize and shop in the future. The Company continues to feel the effect of the COVID-19 business shutdowns
and consumer stay-at-home protections. But the effect of the economic shutdown has impacted our business lines differently; some
more severely than others. In most cases we believe the negative economic trends and reduced sales will recover over time. However,
management had determined that one of its business lines, DSS Plastics, has been more severely impacted by the pandemic than our
other divisions and we do not believe this is a short-term phenomenon. As a result, management has decided to fully impair
its goodwill related to DSS Plastics. The impact to DSS’s first quarter earnings of this impairment was approximately $685,000.
Exit
of Plastic Printing Business
On
May 22, 2020, our management announced that it had committed to a restructuring plan to further reduce our operating expenses
in response to the economic challenges and uncertainty resulting from the COVID-19 pandemic and its potential permanent impact
on our plastics business. As part of this restructuring, our management had decided to exit our plastic printing business line,
which we operate under Plastic Printing Professionals, Inc. (DSS Plastics Group), a wholly-owned subsidiary of the Company, and
to fully impair our goodwill related to DSS Plastics Group. The sale of DSS Plastics Group was consummated and closed on August
14, 2020. The remaining assets of DSS Plastics Group were either sold, separately disposed, or retained by other existing DSS
businesses lines.
In
addition, we have initiated efforts to sub-lease the DSS Plastics Group property, which has approximately 3.5 years remaining
on its lease term at an estimated annual lease cost of $240,000 per year. Ongoing costs in connection with the closing of this
business line will be associated primarily with lease related costs. Further, the impact to our earnings of the goodwill impairment
for our first quarter ended March 31, 2020, and the nine months ended September 30, 2020, was approximately $685,000
Corporate
Information
Our
principal executive offices are located at 200 Canal View Boulevard, Suite 104, Rochester, New York 14623, USA. Our telephone
number is +1-585-325-3610. Our corporate website is www.dsssecure.com. Information contained in or accessible through our
website is not part of this prospectus.
THE
OFFERING
Common
stock offered by us
|
|
shares
|
|
|
|
Common
stock outstanding prior to this offering ( as of January 7, 2021)
|
|
5,836,212
shares
|
|
|
|
Common
stock to be outstanding immediately following this offering
|
|
shares
|
|
|
|
Underwriters’
option to purchase additional shares from us
|
|
shares
|
|
|
|
Use
of proceeds
|
|
We
estimate that we will receive net proceeds from this offering of approximately $18.0
million, or approximately $20.7 million if the underwriter exercises its overallotment
option, after deducting the underwriting discounts and commissions and estimated offering
expenses payable by us. We currently intend to use the net proceeds from this offering,
together with our existing cash, to fund (1) the development and growth of our new business
lines, (2) acquisition opportunities, and (3) the Company’s general corporate
and working capital needs. We estimate that at least $9.5 million of the net proceeds
from this offering will be invested into our new business line growth and development,
$6.5 million will be used for possible acquisitions or investments in complementary
businesses, products, services, technologies or existing assets, and approximately $2.0
million will be used for general corporate and working capital needs. See “Use
of Proceeds” below.
|
|
|
|
Dividend
policy
|
|
We
have never paid cash dividends, and we do not anticipate paying a cash dividend in 2021.
We anticipate that we will retain any earnings and other cash resources for investment
in our business. The payment of dividends on our common stock is subject to the discretion
of our board of directors and will depend on our operations, financial position, financial
requirements, general business conditions, restrictions imposed by financing arrangements,
if any, legal restrictions on the payment of dividends and other factors that our board
of directors deems relevant.
|
|
|
|
Risk
factors
|
|
An
investment in our common stock involves a high degree of risk. You should read the “Risk Factors” section of this
prospectus for a discussion of factors to consider carefully before deciding to invest in shares of our common stock.
|
|
|
|
NYSE
American symbol
|
|
DSS
|
The
number of shares of common stock to be outstanding after this offering is based on 5,836,212 shares of common stock outstanding
at January 7, 2021, and excludes the following:
|
●
|
19,261
shares of common stock issuable upon exercise of stock options outstanding at a weighted-average exercise price of $150.44
per share;
|
|
|
|
|
●
|
40,681
shares of common stock issuable upon exercise of warrants outstanding at a weighted-average exercise price of $33.52 per share;
|
|
|
|
|
●
|
6,570,174
shares of common stock issuable upon conversion of the outstanding Series A Preferred
Stock, subject to a beneficial ownership conversion limitation; and
|
|
|
|
|
●
|
191,314
shares of common stock reserved and available for issuance under our equity compensation plans.
|
Unless
otherwise indicated, all information in this prospectus reflects or assumes no exercise by the underwriters of their option to
purchase up to
additional shares of common stock in this offering.
RISK
FACTORS
An
investment in our common stock is speculative and involves a high degree of risk including the risk of a loss of your entire investment.
You should carefully consider the risk factors filed as Exhibit 99.1 to our Current Report on Form 8-K filed with the Securities
and Exchange Commission on July 1, 2020, which are incorporated by reference in this prospectus, as well as those set forth below,
which update and supplement the risk factors in that Current Report. These risk factors contain, in addition to historical
information, forward looking statements that involve risks and uncertainties. Our actual results could differ significantly from
the results discussed in the forward looking statements. The occurrence of any of the adverse developments described in the following
risk factors and in the documents incorporated herein by reference could materially and adversely harm our business, financial
condition, results of operations or prospects. In such event, the value of our common stock could decline, and you could lose
all or a substantial portion of the money that you pay for our common stock. In addition, the risks and uncertainties discussed
below and in the documents incorporated herein by reference are not the only ones we face. Our business, financial condition,
results of operations or prospects could also be harmed by risks and uncertainties not currently known to us or that we currently
do not believe are material, and these risks and uncertainties could result in a complete loss of your investment. In assessing
the risks and uncertainties described below, you should also refer to the other information contained in this prospectus (as supplemented
or amended) and the documents incorporated by reference in this prospectus.
Risks
Relating to Our Business
We
have secured indebtedness, and a potential risk exists that we may be unable to satisfy our obligations to pay interest and principal
thereon when due or negotiate acceptable extensions or settlements.
We
have outstanding indebtedness (described below), most of which is secured by assets of various DSS subsidiaries and guaranteed
by the Company. Given our history of operating losses and our cash position, there is a risk that we may not be able to repay
indebtedness when due. If we were to default on any of our other indebtedness that require payments of cash to settle such default
and we do not receive an extension or a waiver from the creditor and the creditor were to foreclose on the secured assets, it
could have a material adverse effect on our business, financial condition and operating results.
As
of September 30, 2020, we had the following significant amounts of outstanding indebtedness:
|
●
|
$1,110,000
due under a promissory note with Citizens Bank used to purchase our packaging division facility. We are required to pay monthly
installments of $7,000 with interest fixed at 4.22% until June 2029, at which time a balloon payment of the remaining principal
balance will be due. The promissory note is secured by a first mortgage on our packaging division facility.
|
|
|
|
|
●
|
$900,000
in a term note non-revolving line of credit with Citizens Bank used by Premier Packaging Corporation (“Premier Packaging”)
to purchase equipment. 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. The note had no borrowings against it as of September 30, 2020.
|
|
|
|
|
●
|
$801,000
in a term note non-revolving line of credit with Citizens Bank used by Premier Packaging Corporation (“Premier Packaging”)
to purchase equipment. The note is amortized over a 48-month period and payable in monthly installments of $13,000. Interest
accrues at 1 Month LIBOR plus 2.00%.
|
|
|
|
|
●
|
$100,000
in a zero-interest promissory note entered into by the Company’s DSS Asia subsidiary to acquire Guangzhou Hotapps Technology
Pte Ltd., a Chinese company. This note was paid in full in October 2020.
|
|
|
|
|
●
|
$800,000
revolving credit line with Citizens Bank by Premier Packaging payable in monthly installments of interest only. The revolving
credit line bears interest at 1 Month LIBOR plus 2.0% and had no borrowings against it at as of September 30, 2020.
|
|
|
|
|
●
|
$200,000
unsecured promissory note between AMRE and LiquidValue Asset Management Pte Ltd. The note calls for interest to be paid annually
on March 2 with interest fixed at 8.0% and matures on March 2, 2022. The holder is a related party owned by the Chairman of
the Company’s board of directors.
|
|
|
|
|
●
|
$1,072,000
under the Paycheck Protection Program, which was established as part of CARES Act, and
provides for loans to qualifying businesses for amounts up to 2.5 times of the average
monthly payroll expenses of the qualifying business. As of August 4, 2020, pursuant to
the terms of the SBA PPP program, the Company submitted applications for Premier Packaging
and DSS Digital for a requested 100% loan forgiveness. AAMI, pursuant to the terms of
the SBA PPP program, submitted its application for 100% loan forgiveness in October 2020.
|
The
Citizens credit facilities for the Company’s subsidiary, Premier Packaging, 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, 2019, Premier Packaging was in compliance with the annual covenants.
The
value of our intangible assets and investments may not be equal to their carrying values.
As
of September 30, 2020, we had approximately $39.5 million of net intangible assets. Approximately $38.3 million is associated
with the acquisition of Impact Biomedical, Inc. The Company is in the process of completing valuations and useful lives for certain
Technology and In Process Research & Development assets acquired in the transaction as well the non -controlling interest
portion of Impact BioMedical, Inc. and its subsidiaries and the purchase price allocation will be completed with finalization
of those valuations. We expect the preliminary purchase price accounting to be completed during the three months ending December
31, 2020. Approximately $287,000 of this amount are intangible assets which derive their value from patents or patent rights.
If licensing efforts and litigation are not successful, the values of these assets could be reduced. We are required to evaluate
the carrying value of such intangibles and goodwill and the fair value of investments whenever events or changes in circumstances
indicate that the carrying value of an intangible asset, including goodwill, and investment may not be recoverable. If any of
our intangible assets, goodwill or investments are deemed to be impaired then it will result in a significant reduction of the
operating results in such period. As noted above, management has determined that the goodwill of DSS Plastics has been permanently
and materially impaired due to the global pandemic and other market factors.
Risks
Relating to This Offering
Our
share price may be volatile and could decline substantially
The
market price of our common stock has been and may continue to be volatile. Many factors may cause the market price for our common
stock to decline, including:
|
●
|
shortfalls
in revenues, cash flows or continued losses from operations;
|
|
|
|
|
●
|
delays
in development or roll-out of any of our products;
|
|
|
|
|
●
|
announcements
by one or more competitors of new product acquisitions or technological innovations; and
|
|
|
|
|
●
|
unfavorable
outcomes from litigation.
|
In
addition, the stock market experiences extreme fluctuations in price and volume that particularly affect the market price of shares
of companies like ours. These price and volume fluctuations are often unrelated or disproportionate to the operating performance
of the affected companies. Because of this volatility, we may fail to meet the expectations of our stockholders or of securities
analysts, and our stock price could decline as a result. Declines in our stock price for any reason, as well as broad-based market
fluctuations or fluctuations related to our financial results or other developments, may adversely affect your ability to sell
your shares at a price equal to or above the price at which you purchased them. Decreases in the price of our common stock may
also lead to de-listing of our common stock.
Management
will have broad discretion as to the use of the proceeds from this offering, and we may not use the proceeds effectively.
We
have not allocated specific amounts of the net proceeds from this offering for any specific purpose. Accordingly, our management
will have broad discretion in the application of the net proceeds from this offering and could spend the proceeds in ways that
you do not agree with or that do not improve our results of operations or enhance the value of our common stock. See “Use
of Proceeds.” Our failure to apply these funds effectively could have a material adverse effect on our business, financial
results, operating results and/or cash flow and could cause the price of our common stock to decline.
You
will experience immediate and substantial dilution in the net tangible book value per share of the common stock you purchase.
Since
the price per share of our common stock being offered is higher than the net tangible book value per share of our common stock,
you will suffer substantial dilution in the net tangible book value of the common stock you purchase in this offering. Based on
the public offering price of $ per share, and after deducting the underwriting
discount and estimated offering expenses payable by us, if you purchase shares of common stock in this offering, you will suffer
immediate and substantial dilution of $ per share in the net tangible book
value of the common stock. See the section entitled “Dilution” in this prospectus for a more detailed discussion of
the dilution you will incur if you purchase common stock in this offering.
Our
outstanding options, warrants and convertible preferred stock, and the availability for resale of certain of the underlying shares,
may adversely affect the trading price of our common stock.
As
of January 7, 2021, there were outstanding:
●
|
stock
options to purchase approximately 19,261 shares of our common stock at a weighted-average exercise price of $150.44 per share;
|
|
|
●
|
40,681
shares of common stock issuable upon exercise of warrants outstanding at a weighted-average exercise price of $33.52 per share;
and
|
|
|
●
|
6,570,174
shares of common stock issuable upon conversion of the outstanding Series A Preferred Stock, subject to a beneficial ownership
conversion limitation.
|
|
|
●
|
Our
outstanding options, warrants and convertible preferred stock could adversely affect our ability to obtain future financing
or engage in certain mergers or other transactions, since the holders thereof may exercise them at a time when we may be able
to obtain additional capital through a new offering of securities on terms more favorable to us than the terms of outstanding
securities. For the life of the options, warrants and convertible preferred stock, the holders have the opportunity to profit
from a rise in the market price of our common stock without assuming the risk of ownership. The issuance of shares upon the
exercise of outstanding options, warrants and preferred stock would also dilute the ownership interests of our existing stockholders.
|
Additional
financing or future equity issuances may result in future dilution to our shareholders.
We
expect that we will need to raise additional funds in the future to finance our internal growth, our merger and acquisition plans,
investment activities, continued research and product development, and for other reasons. Any required additional financing may
not be available on terms acceptable to us, or at all. If we raise additional funds by issuing equity securities, you may experience
significant dilution of your ownership interest and the newly issued securities may have rights senior to those of the holders
of our common stock. The price per share at which we sell additional securities in future transactions may be higher or lower
than the price per share in this offering. Alternatively, if we raise additional funds by obtaining loans from third parties,
the terms of those financing arrangements may include negative covenants or other restrictions on our business that could impair
our operational flexibility and would also require us to fund additional interest expense. If adequate additional financing is
not available when required or is not available on acceptable terms, we may be unable to successfully execute our business plan.
Because
we do not currently intend to pay cash dividends on our common stock, stockholders will primarily benefit from an investment in
our stock only if it appreciates in value.
We
have never declared or paid any cash dividends on our shares of stock. We currently intend to retain all future earnings, if any,
for use in the operations and expansion of the business. As a result, we do not anticipate paying cash dividends in the foreseeable
future. Any future determination as to the declaration and payment of cash dividends or non-cash dividends will be at the discretion
of our board of directors and will depend on factors the board of directors deems relevant, including among others, our results
of operations, financial condition and cash requirements, business prospects, and the terms of any of our financing arrangements.
Accordingly, realization of a gain on stockholders’ investments will primarily depend on the appreciation of the price of
our stock. There is no guarantee that our stock will appreciate in value.
Other
Risks
Because
certain of our stockholders control a significant number of shares of our common stock, they may have effective control over actions
requiring stockholder approval.
As
of January 7, 2021, our directors, executive officers and principal stockholders (those beneficially owning in excess of
5%), and their respective affiliates, beneficially own approximately 33.4% of our outstanding shares of common stock. As a result,
these stockholders, acting together, could have the ability to control the outcome of matters submitted to our stockholders for
approval, including the election of directors and any merger, consolidation or sale of all or substantially all of our assets.
As such, these stockholders, acting together, could have the ability to exert influence over the management and affairs of our
company. Accordingly, this concentration of ownership might harm the market price of our common stock by:
|
●
|
delaying,
deferring or preventing a change in corporate control;
|
|
|
|
|
●
|
impeding
a merger, consolidation, takeover or other business combination involving us; or
|
|
|
|
|
●
|
discouraging
a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.
|
If
securities or industry analysts do not publish research or reports about our business, or if they change their recommendations
regarding our stock adversely, our stock price and trading volume could decline.
The
trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish
about us or our business. Our research coverage by industry and financial analysts is currently limited. Even if our analyst coverage
increases, if one or more of the analysts who cover us downgrade our stock, our stock price would likely decline. If one or more
of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial
markets, which in turn could cause our stock price or trading volume to decline.
USE
OF PROCEEDS
We
estimate that we will receive net proceeds of approximately $18.0 million from the sale of the shares of common stock offered
in this offering, or approximately $20.7 million if the underwriters exercise their over-allotment option in full, after
deducting the underwriting discounts and commissions and estimated offering expenses payable by us.
We
currently intend to use the net proceeds from this offering, together with our existing cash, to fund (1) the development and
growth of our new business lines, (2) acquisition opportunities, and (3) the Company’s general corporate and working
capital needs. We estimate that at least $9.5 million of the net proceeds from this offering will be invested into our
new business line growth and development, $6.5 million will be used for possible acquisitions or investments in
complementary businesses, products, services, technologies or existing assets, and approximately $2.0 million will be used
for general corporate and working capital needs.
We
may change the amount of net proceeds to be used specifically for any of the foregoing purposes. The amounts and timing of our
actual expenditures will depend upon numerous factors, including our sales and marketing and commercialization efforts, demand
for our products, our operating costs and the other factors described under “Risk Factors” in this prospectus. Accordingly,
our management will have significant discretion and flexibility in applying the net proceeds from this offering. Pending any use,
as described above, we intend to invest the net proceeds in high-quality, short-term, interest-bearing securities.
Although
we may use a portion of the net proceeds of this offering for the acquisition or licensing, as the case may be, of additional
technologies, other assets or businesses, or for other strategic investments or opportunities, we have no current understandings,
agreements or commitments to do so.
DIVIDEND
POLICY
We
have never paid cash dividends, and we do not anticipate paying a cash dividend in 2021. We anticipate that we will retain
any earnings and other cash resources for investment in our business. The payment of dividends, whether in cash or in non-cash
form, on our common stock is subject to the discretion of our board of directors and will depend on our operations, financial
position, financial requirements, general business conditions, restrictions imposed by financing arrangements, if any, legal restrictions
on the payment of dividends and other factors that our board of directors deems relevant.
CAPITALIZATION
The
following table sets forth our capitalization as of September 30, 2020:
|
●
|
on
an actual basis; and
|
|
|
|
|
●
|
on
an as-adjusted basis to reflect the issuance and sale by us of shares
of our common stock in this offering at the public offering price of $ per
share, after deducting underwriting discounts and commissions and estimated offering expenses payable by us and the receipt
by us of the proceeds of such sale.
|
You
should read this information together with the section titled “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2019 and our Quarterly Report
on Form 10-Q for the quarter ended September 30, 2020, which are incorporated by reference in this prospectus, and our consolidated
financial statements and related notes incorporated by reference in this prospectus.
|
|
As
of September 30, 2020
|
|
|
|
Actual
|
|
|
As
Adjusted
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
|
|
Cash
|
|
$
|
11,645,000
|
|
|
$
|
29,634,000
|
|
Long-term
debt, net
|
|
$
|
3,041,000
|
|
|
$
|
3,041,000
|
|
Stockholders’
equity:
|
|
|
|
|
|
|
|
|
Preferred
stock, $.02 par value; 47,000 shares authorized, issued and outstanding (0 on December 31, 2019); Liquidation value $1,000
per share, $47,000,000 aggregate.
|
|
|
1,000
|
|
|
|
1,000
|
|
Common
stock, $0.02 par value; 200,000,000 shares authorized, 5,174,000 shares issued and outstanding (actual); issued and outstanding
(as adjusted)
|
|
|
103,000
|
|
|
|
|
|
Additional
paid-in capital
|
|
|
174,423,000
|
|
|
|
|
|
Non-controlling
interest in subsidiary
|
|
|
(307,000
|
)
|
|
|
|
|
Accumulated
deficit
|
|
|
(100,905,000
|
)
|
|
|
|
|
Total
shareholders’ equity
|
|
|
73,315,000
|
|
|
|
|
|
Total
capitalization
|
|
$
|
76,356,000
|
|
|
$
|
|
|
The
number of shares of our common stock to be outstanding upon completion of this offering is based on 5,174,000 shares of our common
stock outstanding as of September 30, 2020, and excludes:
|
●
|
19,261
shares of common stock issuable upon exercise of stock options outstanding at a weighted-average exercise price of $150.44
per share;
|
|
|
|
|
●
|
40,681
shares of common stock issuable upon exercise of warrants outstanding at a weighted-average exercise price of $33.52 per share;
|
|
|
|
|
●
|
7,232,670 shares
of common stock issuable upon conversion of the outstanding Series A Preferred Stock,
subject to a beneficial ownership conversion limitation; and
|
|
|
|
|
●
|
191,314
shares of common stock reserved and available for issuance under our equity compensation plans.
|
( See
“Prospectus Summary—The Offering” above for information on shares of common stock, options and warrants as of
January 7, 2021.)
DILUTION
If
you purchase our securities in this offering, your interest will be diluted to the extent of the difference between the public
offering price per share of our common stock and the net tangible book value per share of our common stock after this offering.
We calculate net tangible book value per share by dividing our net tangible assets (tangible assets less total liabilities) by
the number of shares of our common stock issued and outstanding as of September 30, 2020.
Our
net tangible book value at September 30, 2020, was $32,071,000, or $6.20 per share, based on 5,174,000 shares of our common stock
outstanding. After giving effect to the issuance and sale of shares
of common stock in this offering at the public offering price of $
per share, after deducting underwriting discounts and commissions and estimated offering expenses, our as adjusted net tangible
book value at September 30, 2020, would be $ or $
per share. This represents an immediate increase in pro forma net tangible book value of $ per share to existing stockholders
and an immediate dilution of $ per share to investors in this offering.
The following table illustrates this per share dilution:
Public
offering price per share of common stock
|
|
|
|
|
|
$
|
|
|
Net
tangible book value per share as of September 30, 2020
|
|
$
|
6.20
|
|
|
|
|
|
Increase
per share attributable to this offering
|
|
$
|
|
|
|
|
|
|
As
adjusted net tangible book value per share as of September 30, 2020, after this offering
|
|
|
|
|
|
$
|
|
|
Dilution
per share to new investors participating in this offering
|
|
|
|
|
|
$
|
|
|
If
the underwriters exercise in full their option to purchase additional shares of common stock at the public offering price of $
per share, the as adjusted net tangible book value after this offering would be $
per share, representing an increase in net tangible book value of $ per
share to existing stockholders and immediate dilution in net tangible book value of $
per share to purchasers in this offering at the public offering price.
To
the extent that outstanding options or warrants are exercised, or we issue new options under our equity incentive plans, you will
experience further dilution. In addition, we may choose to raise additional capital due to market conditions or strategic considerations
even if we believe we have sufficient funds for our current or future operating plans. To the extent that the additional capital
is raised through the sale of common stock or securities convertible or exchangeable into common stock, such issuance could result
in further dilution to our stockholders.
The
above table excludes, as of September 30, 2020:
|
●
|
19,261
shares of common stock issuable upon exercise of stock options outstanding at a weighted-average exercise price of $150.44
per share;
|
|
|
|
|
●
|
40,681
shares of common stock issuable upon exercise of warrants outstanding at a weighted-average exercise price of $33.52 per share;
|
|
|
|
|
●
|
7,232,670 shares
of common stock issuable upon conversion of the outstanding Series A Preferred Stock,
subject to a beneficial ownership conversion limitation; and
|
|
|
|
|
●
|
191,314
shares of common stock reserved and available for issuance under our equity compensation plans.
|
( See
“Prospectus Summary—The Offering” above for information on shares of common stock, options and warrants outstanding
as of January 7, 2021.)
MARKET
FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Our
common stock is listed on the NYSE American LLC stock exchange and trades under the symbol “DSS.”
As
of January 7, 2021, we had approximately 254 holders of record of our common stock. A substantially greater number
of holders of our common stock are “street name,” or beneficial, holders, whose shares of record are held through
banks, brokers, other financial institutions and registered clearing agencies.
PRINCIPAL
STOCKHOLDERS
The
following table sets forth beneficial ownership of our Common Stock based on 5,836,212 shares of our Common Stock issued and outstanding
as of January 7, 2021, by each person known by the Company to beneficially own more than 5% of the outstanding Common Stock,
and by each of our directors and executive officers, and by all of the Company’s directors and executive officers as a group.
The table also gives applicable percentage beneficial ownership based on shares
of our common stock assumed to be outstanding after completion of the offering, assuming no exercise by the underwriters of their
option to purchase additional shares of our common stock.
Each
person has sole voting and dispositive power over the shares listed opposite his or her name except as indicated in the footnotes
to the table, and each person’s address is c/o Document Security Systems, Inc., 200 Canal View Boulevard, Suite 104, Rochester,
New York 14623, unless otherwise indicated.
For
purposes of this table, beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission,
and includes any shares of Common Stock (including any shares issuable pursuant to warrants or options exercisable within 60 days
after January 7, 2021) that a person, directly or indirectly, through any contract, arrangement, understanding, relationship,
or otherwise, has or shares voting power (which includes the power to vote, or to direct the voting of, the shares) and/or investment
power (which includes the power to dispose, or to direct the disposition of, the shares).
The
percentages are calculated by dividing (a) the sum of the number of shares that person beneficially owns as of January 7, 2021 ,
plus the number of shares such person has the right to acquire within 60 days after January 7, 2021 , by (b) the sum of
the total number of shares of all shareholders outstanding on January 7, 2021 , plus the number of shares such person has
the right to acquire within 60 days of January 7, 2021 .
|
|
Number
of Shares
|
|
|
Percentage
of
Outstanding
Shares
Beneficially
Owned
|
|
Name
|
|
Beneficially
Owned
|
|
|
Before
Offering
|
|
|
After
Offering
|
|
Directors,
Director Nominees and Named Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
Chan
Heng Fai Ambrose (1)
|
|
|
1,936,918
|
|
|
|
33.0
|
%
|
|
|
|
%
|
John
“JT” Thatch
|
|
|
1,020
|
|
|
|
*
|
|
|
|
*
|
|
Lo
Wah Wai Lowell
|
|
|
1,359
|
|
|
|
*
|
|
|
|
*
|
|
Lee
Sassuan (Samson)
|
|
|
1,020
|
|
|
|
*
|
|
|
|
*
|
|
Josè
Escudero
|
|
|
1,020
|
|
|
|
*
|
|
|
|
*
|
|
Frank
D. Heuszel
|
|
|
2,493
|
|
|
|
*
|
|
|
|
*
|
|
Wu
William Wai Leung
|
|
|
1,020
|
|
|
|
*
|
|
|
|
*
|
|
Chan
Tung Moe
|
|
|
-
|
|
|
|
*
|
|
|
|
*
|
|
Jason
Grady
|
|
|
2,493
|
|
|
|
*
|
|
|
|
*
|
|
Todd
D. Macko
|
|
|
1,667
|
|
|
|
*
|
|
|
|
*
|
|
All
officers and directors as a group (10 persons)
|
|
|
1,949,010
|
|
|
|
33.4
|
%
|
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5%
Stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
Global
BioMedical Pte Inc. (2)
|
|
|
1,171,759
|
|
|
|
19.9
|
%
|
|
|
|
|
|
*
|
Less
than 1%.
|
|
|
|
|
(1)
|
Consists
of (a) 59,551 shares of Common Stock held by Heng Fai Holdings Limited; (b) 16,667 shares
of Common Stock held by BMI Capital Partners International Limited; (c) 22,767 shares
of Common Stock held by Hengfai Business Development Pte Ltd; (d) 451,293 shares of Common
Stock held individually; (e) 214,881 shares of Common Stock held by LiquidValue Development
Pte Ltd.; and (f) (i) 1,145,834 shares of Common Stock and (ii) 25,925 shares of Common
Stock that could be obtained upon the conversion of shares of Series A Preferred Stock
held by Global Biomedical Pte. Ltd., giving effect to a beneficial ownership conversion
limitation.
|
|
|
|
|
(2)
|
Consists
of (a) 1,145,834 shares of Common Stock and (b) 25,925 shares of Common Stock that could
be obtained upon the conversion of shares of Series A Preferred Stock, giving effect
to a beneficial ownership conversion limitation.
|
DESCRIPTION
OF COMMON STOCK
General
Our
authorized capital stock consists of 200,000,000 shares of common stock, $0.02 par value per share, 5,836,212 of which were issued
and outstanding, and 46,868 shares of Series A Preferred Stock, 42,575 of which were issued and outstanding, as of January
7, 2021.
The
following description of our common stock summarizes the material terms and provisions of the common stock that we may offer under
this prospectus but is not complete. For the complete terms of our common stock, please refer to our certificate of incorporation,
as amended ( the “Certificate of Incorporation”), which may be further amended from time to time, and
our fifth amended and restated by-laws, as may be further amended from time to time (the “By-laws”). The New
York Business Corporation Law (“NYBCL”) may also affect the terms of these securities.
Holders
of our common stock: (i) have equal rights to dividends from funds legally available therefore, ratably when, as and if declared
by the Company’s board of directors; (ii) are entitled to share ratably in all assets of the Company available for distribution
to holders of common stock upon liquidation, dissolution, or winding up of the affairs of the Company; (iii) do not have preemptive,
subscription or conversion rights and there are no redemption or sinking fund provisions applicable thereto; and (iv) are
entitled to one non-cumulative vote per share of common stock, on all matters which stockholders may vote on at all meetings of
stockholders. There is no cumulative voting for the election of directors. Each holder of our common stock is entitled to one
vote for each share of our common stock held on all matters submitted to a vote of stockholders.
Anti-Takeover
Effects of Certain Provisions of our Certificate of Incorporation, By-laws and the NYBCL
Section
912 of the NYBCL generally provides that a New York corporation may not engage in a business combination with an interested stockholder
for a period of five years following the interested stockholder’s becoming such. Such a business combination would be permitted
where it is approved by the board of directors before the interested stockholder’s becoming such. Covered business combinations
include certain mergers and consolidations, dispositions of assets or stock, plans for liquidation or dissolution, reclassifications
of securities, recapitalizations and similar transactions. An interested stockholder is generally a stockholder owning at least
20% of a corporation’s outstanding voting stock. In addition, New York corporations may not engage at any time with any
interested stockholder in a business combination other than: (i) a business combination approved by the board of directors before
the stock acquisition, or where the acquisition of the stock had been approved by the board of directors before the stock acquisition;
(ii) a business combination approved by the affirmative vote of the holders of a majority of the outstanding voting stock not
beneficially owned by the interested stockholder at a meeting called for that purpose no earlier than five years after the stock
acquisition; or (iii) a business combination in which the interested stockholder pays a formula price designed to ensure that
all other stockholders receive at least the highest price per share that is paid by the interested stockholder and that meets
certain other requirements.
A
corporation may opt out of the interested stockholder provisions described in the preceding paragraph by expressly electing not
to be governed by such provisions in its by-laws, which must be approved by the affirmative vote of a majority of votes of the
outstanding voting stock of such corporation and is subject to further conditions. However, our By-laws do not contain any provisions
electing not to be governed by Section 912 NYBCL. Under our By-laws, any corporate action to be taken by vote of the shareholders,
shall be authorized by a majority of votes cast at a meeting of shareholders by the holders of shares entitled to vote thereon.
Transfer
Agent and Registrar
The
Transfer Agent and Registrar for our common stock is American Stock Transfer and Trust Company, LLC, 6201 15th Ave., Brooklyn,
NY 11219, USA, +1-800-937-5449 or +1-718-921-8124.
UNDERWRITING
Aegis
Capital Corp. is acting as the representative of the underwriters of the offering. We have entered into an underwriting agreement
dated , 2021,
with the representative. Subject to the terms and conditions of the underwriting agreement, we have agreed to sell to the underwriters
named below and the underwriters named below have agreed to purchase, at the public offering price less the underwriting discounts
and commissions set forth on the cover page of this prospectus, the following number of shares of our common stock:
Underwriter
|
|
Number
of Shares
|
|
Aegis
Capital Corp.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
underwriters are committed to purchase all the shares of common stock offered by us other than those covered by the option to
purchase additional shares described below, if they purchase any shares. The obligations of the underwriters may be terminated
upon the occurrence of certain events specified in the underwriting agreement. Furthermore, pursuant to the underwriting agreement,
the underwriters’ obligations are subject to customary conditions, representations and warranties contained in the underwriting
agreement, such as receipt by the underwriters of officers’ certificates and legal opinions.
We
have agreed to indemnify the underwriters against specified liabilities, including liabilities under the Securities Act of 1933,
as amended, and to contribute to payments the underwriters may be required to make in respect thereof.
The
underwriters are offering the common stock, subject to prior sale, when, as and if issued to and accepted by them, subject to
approval of legal matters by their counsel and other conditions specified in the underwriting agreement. The underwriters reserve
the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.
The
underwriters propose to offer the common stock offered by us to the public at the public offering price set forth on the cover
of this prospectus. In addition, the underwriters may offer some of the common stock to other securities dealers at such price
less a concession of $ per share. After the initial offering, the public offering price and concession to dealers may be changed.
We
have granted the underwriters an over-allotment option. This option, which is exercisable for up to 45 days after the date of
this prospectus, permits the underwriters to purchase a maximum of additional shares of common stock from us to cover over-allotments.
If the underwriters exercise all or part of this option, they will purchase shares of common stock covered by the option at the
public offering price that appears on the cover page of this prospectus, less the underwriting discount. If this option is exercised
in full, the total price to the public will be $20,600,000.
Discounts
and Commissions. The following table shows the public offering price, underwriting discount, non-accountable underwriters’
expense allowance and proceeds, before expenses, to us. The information assumes either no exercise or full exercise by the underwriters
of their over-allotment option.
|
|
|
|
|
Total
|
|
|
|
Per
Share
|
|
|
Without
Over-
Allotment
|
|
|
With
Over-
Allotment
|
|
Public
offering price
|
|
$
|
|
|
|
$
|
20,000,000
|
|
|
$
|
23,000,000
|
|
Underwriting
discount (8%)
|
|
$
|
|
|
|
$
|
1,600,000
|
|
|
$
|
1,840,000
|
|
Non-accountable
expense allowance (1%)
|
|
$
|
|
|
|
|
200,000
|
|
|
|
230,000
|
|
Proceeds,
before expenses, to us
|
|
$
|
|
|
|
$
|
18,200,000
|
|
|
$
|
20,930,000
|
|
We
have also agreed to pay all expenses relating to the offering, including (a) all filing fees and expenses relating to the registration
of the shares to be sold in the offering (including shares sold upon exercise of the underwriters’ over-allotment option)
with the Securities and Exchange Commission; (b) all fees associated with the review of the offering by FINRA and all fees and
expenses relating to the listing of such shares on the NYSE American; (c) all fees, expenses and disbursements relating to the
registration, qualification or exemption of securities offered under the “blue sky” securities laws designated by
the underwriters; (d) all fees, expenses and disbursements relating to the registration, qualification or exemption of securities
offered under the securities laws of foreign jurisdictions designated by the underwriters; (e) transfer and/or stamp taxes, if
any, payable upon the transfer of the shares from the Company to the representative; (f) fees and expenses of our accountants;
and (g) fees and expenses of the representative, including representative’s legal counsel, not to exceed $75,000.
We
estimate that the total expenses of the offering, excluding underwriting discount and non-accountable expense allowance, will
be approximately $206,000.
Discretionary
Accounts. The underwriters do not intend to confirm sales of the securities offered hereby to any accounts over which they
have discretionary authority.
Lock-Up
Agreements. Pursuant to certain “lock-up” agreements, (a) our executive officers and directors as of the pricing
date of the offering, have agreed, subject to certain exceptions, not to offer, issue, sell, contract to sell, encumber, grant
any option for the sale of or otherwise dispose of any securities of the Company without the prior written consent of the representative,
for a period of 90 days from the date of the offering, and (b) we, and any successor, have agreed, subject to certain exceptions,
not to for a period of 90 days from the date of the pricing of the offering (1) offer, sell or otherwise transfer or dispose of,
directly or indirectly, any shares of capital stock of the Company or (2) file or caused to be filed any registration statement
with the SEC relating to the offering of any shares of our capital stock or any securities convertible into or exercisable or
exchangeable for shares of our capital stock.
This
lock-up provision applies to common stock and to securities convertible into or exchangeable or exercisable for common stock.
It also applies to common stock owned now or acquired later by the person executing the agreement or for which the person executing
the agreement later acquires the power of disposition. The exceptions permit, among other things and subject to restrictions,
the issuance of common stock upon the exercise of outstanding stock options and warrants or other outstanding convertible securities.
Right
of First Refusal. The representative shall have a right of first refusal to act as sole book-running manager for any and all
future public equity offerings of the Company or any successor as follows: until nine months after the closing date of the offering
if the gross proceeds from the offering (before underwriting discounts and commissions and estimated offering expenses) are at
least $15.0 million, or until twelve months after the closing date of the offering if the gross proceeds from the offering (before
underwriting discounts and commissions and estimated offering expenses) are at least $18.5 million.
Electronic
Offer, Sale and Distribution of Shares. A prospectus in electronic format may be made available on the websites maintained
by one or more of the underwriters or selling group members, if any, participating in this offering and one or more of the underwriters
participating in this offering may distribute prospectuses electronically. The representative may agree to allocate a number of
shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will
be allocated by the underwriters and selling group members that will make internet distributions on the same basis as other allocations.
Other than the prospectus in electronic format, the information on these websites is not part of this prospectus or the registration
statement of which this prospectus forms a part, has not been approved or endorsed by us or any underwriter in its capacity as
underwriter, and should not be relied upon by investors.
Other
Relationships. Certain of the underwriters and their affiliates have provided, and may in the future provide, various investment
banking, commercial banking and other financial services for us and our affiliates for which they have received, and may in the
future receive, customary fees; however, except as disclosed in this prospectus, we have no present arrangements with any of the
underwriters for any further services.
Stabilization.
In connection with this offering, the underwriters may engage in stabilizing transactions, overallotment transactions, syndicate
covering transactions, penalty bids and purchases to cover positions created by short sales.
|
●
|
Stabilizing
transactions permit bids to purchase shares so long as the stabilizing bids do not exceed a specified maximum, and are engaged
in for the purpose of preventing or retarding a decline in the market price of the shares while the offering is in progress.
|
|
|
|
|
●
|
Overallotment
transactions involve sales by the underwriters of shares in excess of the number of shares the underwriters are obligated
to purchase. This creates a syndicate short position which may be either a covered short position or a naked short position.
In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of shares
that they may purchase in the overallotment option. In a naked short position, the number of shares involved is greater than
the number of shares in the overallotment option. The underwriters may close out any short position by exercising their overallotment
option and/or purchasing shares in the open market.
|
|
●
|
Syndicate
covering transactions involve purchases of shares in the open market after the distribution has been completed in order to
cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will
consider, among other things, the price of shares available for purchase in the open market as compared with the price at
which they may purchase shares through exercise of the overallotment option. If the underwriters sell more shares than could
be covered by exercise of the overallotment option and, therefore, have a naked short position, the position can be closed
out only by buying shares in the open market. A naked short position is more likely to be created if the underwriters are
concerned that after pricing there could be downward pressure on the price of the shares in the open market that could adversely
affect investors who purchase in the offering.
|
|
|
|
|
●
|
Penalty
bids permit the representative to reclaim a selling concession from a syndicate member when the shares originally sold by
that syndicate member are purchased in stabilizing or syndicate covering transactions to cover syndicate short positions.
|
These
stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market
price of our shares or common stock or preventing or retarding a decline in the market price of our shares or common stock. As
a result, the price of our common stock in the open market may be higher than it would otherwise be in the absence of these transactions.
Neither we nor the underwriters make any representation or prediction as to the effect that the transactions described above may
have on the price of our common stock. These transactions may be effected on NYSE American.
Passive
Market Making. In connection with this offering, underwriters and selling group members may engage in passive market making
transactions in our common stock on the NYSE American marketplace in accordance with Rule 103 of Regulation M under the Exchange
Act, during a period before the commencement of offers or sales of the shares and extending through the completion of the distribution.
A passive market maker must display its bid at a price not in excess of the highest independent bid of that security. However,
if all independent bids are lowered below the passive market maker’s bid, that bid must then be lowered when specified purchase
limits are exceeded.
Offer
restrictions outside the United States
Other
than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the securities
offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus
may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in
connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances
that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this
prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution
of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered
by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.
China
The
information in this document does not constitute a public offer of the securities, whether by way of sale or subscription, in
the People’s Republic of China (excluding, for purposes of this paragraph, Hong Kong Special Administrative Region, Macau
Special Administrative Region and Taiwan). The securities may not be offered or sold directly or indirectly in the People’s
Republic of China to legal or natural persons other than directly to “qualified domestic institutional investors.”
Hong
Kong
Each
underwriter has represented and agreed that:
|
●
|
it
has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any of our common stock other than
(i) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and
any rules made under that Ordinance; or (ii) in other circumstances which do not result in the document being a “prospectus”
as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the
meaning of that Ordinance; and
|
|
|
|
|
●
|
it
has not issued or had in its possession for the purposes of issue, and will not issue or have in its possession for the purposes
of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to our common stock, which
is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted
to do so under the securities laws of Hong Kong) other than with respect to shares of our common stock which are or are intended
to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the Securities
and Futures Ordinance and any rules made under that Ordinance.
|
Singapore
This
prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and
any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares
may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription
or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section
274 of the Securities and Futures Act, Chapter 289 of Singapore, or the SFA, (ii) to a relevant person pursuant to Section 275(1),
or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or (iii)
otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject
to compliance with conditions set forth in the SFA.
Where
the shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
|
●
|
a
corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold
investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor;
or
|
|
|
|
|
●
|
a
trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of
the trust is an individual who is an accredited investor,
|
|
|
|
|
●
|
shares,
debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest (howsoever
described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the
shares pursuant to an offer made under Section 275 of the SFA except:
|
|
|
|
|
●
|
to
an institutional investor (for corporations, under Section 274 of the SFA) or to a relevant person defined in Section 275(2)
of the SFA, or to any person pursuant to an offer that is made on terms that such shares, debentures and units of shares and
debentures of that corporation or such rights and interest in that trust are acquired at a consideration of not less than
$200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or
by exchange of securities or other assets, and further for corporations, in accordance with the conditions specified in Section
275 of the SFA;
|
|
|
|
|
●
|
where
no consideration is or will be given for the transfer; or
|
|
|
|
|
●
|
where
the transfer is by operation of law.
|
LEGAL
MATTERS
The
validity of the issuance of the securities offered hereby will be passed upon for us by Sichenzia Ross Ference LLP, New York,
New York. Certain legal matters in connection with this offering will be passed upon for the underwriters by Loeb & Loeb LLP,
New York, NY.
EXPERTS
The
consolidated financial statements of Document Security Systems, Inc., and Subsidiaries as of and for the years ended December
31, 2019 and 2018, incorporated in this prospectus by reference to the Company’s Annual Report on Form 10-K for the year
ended December 31, 2019, have been audited by Freed Maxick CPAs, P.C., an independent registered public accounting firm, as stated
in its report incorporated by reference herein, and have been so incorporated in reliance upon such report and upon the authority
of such firm as experts in accounting and auditing.
The
consolidated financial statements of Impact BioMedical Inc., and subsidiaries as of and for the years ended December 31, 2019
and 2018, incorporated in this prospectus by reference to the Company’s Amendment No. 1 filed on June 8, 2020 to Current
Report on Form 8-K dated April 27, 2020, have been audited by Turner, Stone & Company, L.L.P., an independent registered public
accounting firm, as stated in its report incorporated by reference herein, and have been so incorporated in reliance upon such
report and upon the authority of such firm as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We
file periodic reports, proxy statements and other information with the SEC. Our filings are available to the public over the Internet
at the SEC’s web site at http://www.sec.gov. We will also provide you with a copy of any or all of the reports or documents
that have been incorporated by reference into this prospectus or the registration statement of which it is a part upon written
or oral request, and at no cost to you. If you would like to request any reports or documents from the Company, please contact
Frank D. Heuszel at 585-325-3610.
Our
Internet address is www.dsssecure.com. We have not incorporated by reference into this prospectus the information on our
website, and you should not consider it to be a part of this document. Our web address is included in this document as an inactive
textual reference only.
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION
FOR
SECURITIES ACT LIABILITIES
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling
us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable. In addition, indemnification may be limited by
state securities laws.
INCORPORATION
OF DOCUMENTS BY REFERENCE
This
prospectus is part of the registration statement, but the registration statement includes and incorporates by reference additional
information and exhibits. The Securities and Exchange Commission permits us to “incorporate by reference” the information
contained in documents we file with the Securities and Exchange Commission, which means that we can disclose important information
to you by referring you to those documents rather than by including them in this prospectus. Information that is incorporated
by reference is considered to be part of this prospectus and you should read it with the same care that you read this prospectus.
Information that we file later with the Securities and Exchange Commission will automatically update and supersede the information
that is either contained, or incorporated by reference, in this prospectus, and will be considered to be a part of this prospectus
from the date those documents are filed.
We
are incorporating by reference the following documents that we have filed with the SEC (other than any filing or portion thereof
that is furnished, rather than filed, under applicable SEC rules):
|
●
|
our
Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 31, 2020;
|
|
|
|
|
●
|
our
Quarterly Reports on Form 10-Q for the quarter ended March 31, 2020, filed with the SEC on May 14, 2020; for the quarter ended
June 30, 2020, filed with the SEC on August 14, 2020; and for the quarter ended September 30, 2020, filed with the SEC on
October 23, 2020,;
|
|
|
|
|
●
|
our
Current Reports on Form 8-K filed with the SEC on January 15, 2020 (as amended February
27, 2020), February 12, 2020, February 21, 2020, February 25, 2020, March 6, 2020, March
17, 2020, April 6, 2020, April 17, 2020, May 1, 2020 (as amended June 8, 2020),
May 5, 2020, May 7, 2020, May 29, 2020, June 19, 2020, July 1, 2020, July 7, 2020, July
31, 2020, August 11, 2020, August 19, 2020, August 27, 2020 (as amended November 6,
2020), September 25, 2020, October 30, 2020, November 19, 2020, November 25, 2020,
December 9, 2020, December 23, 2020, and January 6, 2021 ;
|
|
|
|
|
●
|
The
information under the captions “Election of Directors,” “Directors,
Executive Officers and Corporate Governance” and “Executive Compensation,”
in our definitive proxy statement on Form 14A for our 2020 Annual Meeting of Stockholders,
filed with the SEC on November 2, 2020; and
|
|
|
|
|
●
|
the
description of our Common Stock, which is registered under Section 12 of the Exchange Act, in our registration statement on
Form 8-A, filed with the SEC on April 19, 2004, including any amendments or reports filed for the purpose of updating such
description.
|
We
also incorporate by reference all additional documents that we file with the Securities and Exchange Commission under the terms
of Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act that are made after the initial filing date of the registration statement
of which this prospectus is a part until the offering of the particular securities covered by this prospectus has been completed.
We are not, however, incorporating, in each case, any documents or information that we are deemed to furnish and not file in accordance
with Securities and Exchange Commission rules.
You
may request a copy of these filings at no cost, by writing or telephoning us at the following address or telephone number:
Frank
D. Heuszel
Document
Security Systems, Inc.
200
Canal View Boulevard, Suite 104
Rochester,
NY 14623
Tel:
+1-585-325-3610
Except
as expressly provided above, no other information, including none of the information on our website, is incorporated by reference
into this prospectus.
Any
statement contained in a document incorporated or deemed to be incorporated by reference in this prospectus will be deemed modified,
superseded or replaced for purposes of this prospectus to the extent that a statement contained in this prospectus modifies, supersedes
or replaces such statement.
$20,000,000
Common
Stock
DOCUMENT
SECURITY SYSTEMS, INC.
PROSPECTUS
,
2021
Aegis
Capital Corp.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
13. Other Expenses of Issuance and Distribution
The
following table sets forth the costs and expenses, other than the underwriting discounts and commissions, payable by the registrant
in connection with the sale of common stock being registered. All amounts are estimates except for the SEC registration fee, the
Financial Industry Regulatory Authority, or FINRA, filing fee and NYSE American LLC additional listing fee.
Item
|
|
Amount
to
be paid
|
|
SEC
registration fee
|
|
$
|
2,509
|
|
FINRA
filing fee
|
|
|
3,105
|
|
NYSE
American LLC additional listing fee
|
|
|
[*]
|
|
Printing
fees and expenses
|
|
|
-
|
|
Legal
fees and expenses
|
|
|
110,000
|
|
Accounting
fees and expenses
|
|
|
15,000
|
|
Underwriter’s
expenses
|
|
|
75,000
|
|
Transfer
agent’s fees and expenses
|
|
|
5,000
|
|
Miscellaneous
fees and expenses
|
|
|
-
|
|
Total
|
|
$
|
210,614
|
|
Item
14. Indemnification of Directors and Officers
Under
the provisions of the certificate of incorporation and by-laws of the registrant, as amended, as of the date of this Registration
Statement, each person who is or was a director, officer or employee of registrant shall be indemnified by the registrant to the
full extent permitted or authorized by the Business Corporation Law of the State of New York, provided that no such indemnification
shall be made if a judgment or other final adjudication adverse to such person establishes that his or her acts were committed
in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated, or
that he or she personally gained in fact a financial profit or other advantage to which he or she was not legally entitled, and
provided further that no such indemnification shall be required with respect to any settlement or other non-adjudicated disposition
of any threatened or pending action or proceeding unless the Company has given its prior consent to such settlement or other disposition.
Under
such law, to the extent that such person is successful on the merits of defense of a suit or proceeding brought against such person
by reason of the fact that such person is a director or officer of the registrant, such person shall be indemnified against expenses
(including attorneys’ fees) reasonably incurred in connection with such action. If unsuccessful in defense of a third-party
civil suit or a criminal suit is settled, such a person shall be indemnified under such law against both (a) expenses (including
attorneys’ fees) and (b) judgments, fines and amounts paid in settlement if such person acted in good faith and in a manner
such person reasonably believed to be in, or not opposed to, the best interests of the registrant, and with respect to any criminal
action, had no reasonable cause to believe such person’s conduct was unlawful. If unsuccessful in defense of a suit brought
by or in the right of the registrant, or if such suit is settled, such a person shall be indemnified under such law only against
expenses (including attorney’s fees) incurred in the defense or settlement of such suit if such person acted in good faith
and in a manner such person reasonably believed to be in, or not opposed to, the best interests of the registrant.
Item
15. Recent Sales of Unregistered Securities
July
3, 2018
On
July 3, 2018, the Company closed the sale of 7,143 shares of its common stock, par value $0.02 per share, to a related party accredited
investor, Heng Fai Holdings Limited. The purchase price was $42.00 per share, for total proceeds of $300,000. The shares of common
stock were issued and sold in reliance upon the exemption from registration contained in Section 4(a)(2) of the Securities Act.
December
17, 2018
On
December 17, 2018, the Company sold 20,408 shares of its common stock to an accredited investor, at a price of $29.40 per share.
The shares of common stock were issued and sold in reliance upon the exemption from registration contained in Section 4(a)(2)
of the Securities Act.
February
18, 2019
On
February 18, 2019, the Company entered into a Convertible Promissory Note with LiquidValue Development Pte Ltd in the principal
sum of $500,000, of which up to $500,000 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 14,881 shares of common stock (the “Maximum Conversion Amount”), at
a conversion price of $33.60 per share. Effective on March 25, 2019, LiquidValue Development Pte Ltd exercised its conversion
option and converted the Maximum Conversion Amount under the Note. The shares of common stock were issued in reliance upon the
exemption from registration contained in Section 4(a)(2) of the Securities Act.
March
2019
In
March 2019, the Company issued 130,435 shares of the Company’s common stock 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 shares of common stock were issued in reliance upon the exemption from registration contained in Section 4(a)(2) of the
Securities Act.
November
1, 2019
On
November 1, 2019, the Company entered into and closed on a subscription agreement (the “Subscription Agreement”) with
Mr. Heng Fai Ambrose Chan, Chairman of the Board of Directors of the Company. Pursuant to the Subscription Agreement, Mr. Chan
purchased 200,000 shares of the Company’s common stock at a purchase price of $9.11 per share, resulting in gross proceeds
to the Company of $1,822,200, before deductions for placement agent fees and other expenses (the “Offering”).
Aegis
Capital Corp. (the “Placement Agent”) acted as the exclusive placement agent for the Offering. In connection with
the Offering, the Placement Agent received commissions of 8.0% of the total proceeds raised in the Offering, a non-accountable
expense allowance equal to 1.0% of the total proceeds raised in the Officering, and a reimbursement of $35,000 of accountable
expenses.
The
common stock sold in the Offering described above were not registered under the Securities Act, or the securities laws of any
state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(a)(2) and Rule 506(b) of
Regulation D promulgated under the Securities Act, since, among other things, the transactions did not involve a public offering
and the securities were acquired for investment purposes only and not with a view to or for sale in connection with any distribution
thereof.
October
16, 2020
On
October 16, 2020, the Company issued 662,500 shares of the Company’s common stock upon the conversion of 4,293 shares
of Series A Preferred Stock. Shares of Series A Preferred Stock have a liquidation value of $1,000 per share and may be
converted into shares of the Company’s common stock at a conversion price of $6.48 per share, subject to a 19.9% beneficial
ownership conversion limitation based on the total issued and outstanding shares of common stock of the Company beneficially owned
by the holder. There is no cash or other consideration paid by the holder converting the shares and, accordingly, there is no
cash or other consideration received by the Company.
Item
16. Exhibits and financial statement schedules
(a)
Exhibits
Exhibit
|
|
Description
|
1.1
|
|
Form
of Underwriting Agreement. *
|
3.1
|
|
Certificate
of Incorporation of Document Security Systems, Inc., as amended (incorporated by reference to exhibit 3.1 to Form 10-K dated
March 31, 2011)
|
3.2
|
|
Certificate
of Amendment of the Certificate of Incorporation of Document Security Systems, Inc. (incorporated by reference to exhibit
3.1 to Form 8-K dated August 25, 2016).
|
3.3
|
|
Certificate
of Amendment of the Certificate of Incorporation of Document Security Systems, Inc. (incorporated by reference to exhibit
3.1 to Form 8-K dated August 27, 2020).
|
3.4
|
|
Certificate of Correction to the Certificate of Amendment of Certificate of Incorporation of Document Security Systems, Inc. (incorporated by reference to exhibit 3.1 to Form 8-K/A dated November 6, 2020).
|
3.5
|
|
Fifth
Amended and Restated By-Laws of Document Security Systems, Inc. (incorporated by reference to exhibit 3.1 to Form 8-K dated
April 26, 2019).
|
4.1
|
|
Specimen
Common Stock Certificate of the Registrant (incorporated by reference to exhibit 4.1 to Form S-3 dated April 5, 2019).
|
5.1
|
|
Opinion
of Sichenzia Ross Ference LLP. *
|
10.1
|
|
Document
Security Systems, Inc. 2013 Employee, Director and Consultant Equity Incentive Plan (incorporated by reference to Annex H
to Proxy Statement/Prospectus contained in the Registration Statement on Form S-4 originally filed with the SEC on November
26, 2012).
|
10.2
|
|
Investment
Agreement dated as of February 13, 2014 by and among DSS Technology Management, Inc., Document Security Systems, Inc., Fortress
Credit Co LLC and the Investors named therein (incorporated by reference to exhibit 10.1 to Form 8-K dated February 18, 2014).
|
10.3
|
|
Form
of Securities Purchase Agreement for September 2015 Financing (incorporated by reference to exhibit 10.1 to Form 8-K dated
September 17, 2015).
|
10.4
|
|
Form
of Common Stock Purchase Warrant for September 2015 Financing (incorporated by reference to exhibit 10.2 to Form 8-K dated
September 17, 2015).
|
10.5
|
|
Form
of amended Securities Purchase Agreement for September 2015 Financing (incorporated by reference to exhibit 10.1 to Form 8-K
dated October 2, 2015).
|
10.6
|
|
Form
of amended Securities Purchase Agreement (incorporated by reference to exhibit 10.1 to Form 8-K dated November 30, 2015).
|
10.7
|
|
Patent
Purchase Agreement between Document Security Systems, Inc. and Intellectual Discovery Co., Ltd. dated November 10, 2016 (incorporated
by reference to exhibit 10.28 to Form 10-K dated March 28, 2017).
|
10.8
|
|
Patent
License Agreement between Document Security Systems, Inc. and Intellectual Discovery Co., Ltd. dated November 10, 2016 (incorporated
by reference to exhibit 10.29 to Form 10-K dated March 28, 2017).
|
10.9
|
|
Proceeds
Investment Agreement between Document Security Systems, Inc. and Brickell Key Investments LP dated November 14, 2016 (incorporated
by reference to exhibit 10.30 to Form 10-K dated March 28, 2017).
|
10.10
|
|
Common
Stock Purchase Warrant between Document Security Systems, Inc. and Brickell Key Investments LP dated November 14, 2016 (incorporated
by reference to exhibit 10.31 to Form 10-K dated March 28, 2017).
|
10.11
|
|
First
Amendment to Investment Agreement and Certain Other Documents between DSS Technology Management, Inc., Document Security Systems,
Inc., Fortress Credit Co LLC and Investors dated December 2, 2016 (incorporated by reference to exhibit 10.32 to Form 10-K
dated March 28, 2017).
|
10.12
|
|
Form
of Loan Agreement between Premier Packaging Corporation and Citizens Bank, N.A. (incorporated by reference to exhibit 10.1
to Form 8-K dated July 28, 2017).
|
10.13
|
|
Form of Term Note Non-Revolving Line of Credit Agreement between Premier Packaging Corporation and Citizens Bank, N.A. (incorporated by reference to exhibit 10.2 to Form 8-K dated July 28, 2017).
|
10.14
|
|
Form
of Security Agreement between Premier Packaging Corporation and Citizens Bank, N.A. (incorporated by reference to exhibit
10.3 to Form 8-K dated July 28, 2017).
|
10.15
|
|
Form
of Common Stock Purchase Warrant (incorporated by reference to exhibit 4.1 to Form 8-K dated September 6, 2017).
|
10.16
|
|
Form
of Securities Purchase Agreement (incorporated by reference to exhibit 10.1 to Form 8-K dated September 6, 2017).
|
10.17
|
|
Securities
Exchange Agreement, dated September 12, 2017, between Document Security Systems, Inc. and Hengfai Business Development Pte.
Ltd. (incorporated by reference to exhibit 10.1 to Form 8-K dated September 15, 2017).
|
10.18
|
|
Form
of Loan Agreement between Plastic Printing Professionals, Inc. and Citizens Bank, N.A. (incorporated by reference to exhibit
10.1 to Form 8-K dated December 6, 2017).
|
10.19
|
|
Form
of Term Note Non-Revolving Line of Credit Agreement between Plastic Printing Professionals, Inc. and Citizens Bank, N.A. (incorporated
by reference to exhibit 10.2 to Form 8-K dated December 6, 2017).
|
10.20
|
|
Form
of Security Agreement between Plastic Printing Professionals, Inc. and Citizens Bank, N.A. (incorporated by reference to exhibit
10.3 to Form 8-K dated December 6, 2017).
|
10.21
|
|
2021 Employment Agreement entered by and between the Company and Frank Heuszel on November 13, 2020 (incorporated by reference to exhibit 10.1 to Form 8-K dated November 19, 2020).
|
10.22
|
|
Executive
Employment Agreement with Mr. Jason Grady (incorporated by reference to exhibit 10.2 to Form 10-Q dated November 13, 2019).
|
10.23
|
|
Executive
Employment Agreement with Mr. Heng Fai Ambrose Chan (incorporated by reference to exhibit 10.3 to Form 10-Q dated November
13, 2019).
|
10.23a
|
|
2020 Amendment to Executive Employment Agreement with Mr. Heng Fai Ambrose Chan (incorporated by reference to exhibit 10.1 to Form 8-K dated November 25, 2020).
|
10.24
|
|
Document
Security Systems, Inc. 2020 Employee, Director and Consultant Equity Incentive Plan (incorporated by reference to exhibit
10.24 to Form 10-K dated March 31, 2020).
|
10.25
|
|
Term
Sheet dated March 3, 2020 (incorporated by reference to exhibit 10.1 to Form 8-K dated March 6, 2020).
|
10.26
|
|
Promissory
Note dated March 3, 2020 (incorporated by reference to exhibit 10.2 to Form 8-K dated March 6, 2020).
|
10.27
|
|
Form
of Warrant (incorporated by reference to exhibit 10.3 to Form 8-K dated March 6, 2020).
|
10.28
|
|
Stockholder
Agreement (incorporated by reference to exhibit 10.4 to Form 8-K dated March 6, 2020).
|
10.29
|
|
Term
Sheet dated March 12, 2020 (incorporated by reference to exhibit 10.29 to Form 10-K dated March 31, 2020).
|
10.30
|
|
Share
Exchange Agreement dated as of April 27, 2020, among Document Security Systems, Inc., DSS BioHealth Security, Inc., Singapore
eDevelopment Limited and Global BioMedical Pte Ltd. (incorporated by reference to exhibit 10.4 to Form 8-K dated May 1, 2020)
|
21.1
|
|
Subsidiaries
of Document Security Systems, Inc. *
|
23.1
|
|
Consent
of Freed Maxick CPAs, P.C. **
|
23.2
|
|
Consent
of Turner, Stone & Company, L.L.P. **
|
99.1
|
|
Impact
BioMedical’s Audited Consolidated Financial Statements and the notes related thereto (incorporated by reference to exhibit
99.1 to Form 8-K/A dated June 8, 2020).
|
99.2
|
|
Impact
BioMedical’s Interim Unaudited Consolidated Financial Statement and the notes related thereto (incorporated by reference
to exhibit 99.2 to Form 8-K/A dated June 8, 2020).
|
99.3
|
|
Unaudited
Pro Forma Condensed Combined Financial Statements of DSS and Impact BioMedical and the notes related thereto (incorporated
by reference to exhibit 99.3 to Form 8-K/A dated June 8, 2020).
|
99.4
|
|
Unaudited Pro Forma Interim Condensed Combined Financial Statements of DSS and Impact BioMedical and the notes related thereto (incorporated by reference to exhibit 99.1 to Form 8-K/A dated November 6, 2020).
|
99.5
|
|
Distribution
Agreement by and between Impact BioMedical Inc. and BioMed Technologies Asia Pacific Holdings Limited effective December 18,
2020 (incorporated by reference to exhibit 99.1 to Form 8-K dated December 23, 2020).
|
99.6
|
|
Term Sheet by and among Document Security Systems, Inc., Alset International Limited, Health Wealth Happiness Pte. Ltd., and HWH World Inc. dated January 6, 2021 (incorporated by reference to exhibit 99.1 to Form 8-K dated January 6, 2021).
|
|
*
|
To
be filed by amendment
|
|
**
|
Filed
herewith
|
Item
17. Undertakings
(a)
|
The
undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933,
each filing of the registrant’s annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange
Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to section 15(d)
of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
|
|
|
(b)
|
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the
opinion of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered,
the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of such issue.
|
|
|
(c)
|
The
undersigned Registrant hereby undertakes that:
|
|
(1)
|
For
purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
|
|
|
|
|
(2)
|
For
the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
Signatures
Pursuant
to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Amendment No. 1 to Registration
Statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in Rochester, New York, on January
13, 2021.
|
Document
Security Systems, Inc.
|
|
|
|
|
By:
|
/s/
Frank D. Heuszel
|
|
|
Frank
D. Heuszel
|
|
|
Chief
Executive Officer
|
|
|
|
|
By:
|
/s/
Todd D Macko
|
|
|
Todd
D. Macko
|
|
|
Interim
Chief Financial Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
Frank D. Heuszel
|
|
Chief
Executive Officer
|
|
January
13, 2021
|
Frank
D. Heuszel
|
|
Principal
Executive Officer and Director
|
|
|
|
|
|
|
|
/s/
Todd D. Macko
|
|
Interim
Chief Financial Officer,
|
|
January
13, 2021
|
Todd
D. Macko
|
|
Principal
Financial and Accounting Officer
|
|
|
|
|
|
|
|
*
|
|
Chairman
of Board of Document Security Systems, Inc.,
|
|
January
13, 2021
|
Heng
Fai Ambrose Chan
|
|
Director
and CEO of DSS International Inc.
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
January
13, 2021
|
José
Escudero
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
January
13, 2021
|
Sassuan
Lee
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
January
13, 2021
|
John
Thatch
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
January
13, 2021
|
Wah
Wai Lowell Lo
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
January
13, 2021
|
Tung
Moe Chan
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
January
13, 2021
|
Wai
Leung William Wu
|
|
|
|
|
*
By:
|
/s/
Frank D. Heuszel
|
|
|
Frank
D. Heuszel
|
|
|
Attorney-in-fact
|
|
DSS (AMEX:DSS)
Historical Stock Chart
From Mar 2024 to Apr 2024
DSS (AMEX:DSS)
Historical Stock Chart
From Apr 2023 to Apr 2024