Item
1.01 Entry into a Material Definitive Agreement.
On
February 4, 2021, Document Security Systems, Inc., a New York corporation (the “Company”), entered into an
underwriting agreement (the “Underwriting Agreement”) with Aegis Capital Corp. (“Aegis”), as
representative of the underwriters named therein, which provided for the issuance and sale by the Company and the purchase
by the underwriters, in a firm commitment underwritten public offering (the “Offering”), of 12,319,346
shares of the Company’s common stock, $0.02 par value per share. Subject to the terms and conditions contained in the
Underwriting Agreement, the shares were sold at a public offering price of $2.80 per share, less certain underwriting
discounts and commissions. The Company also granted the underwriters a 45-day option to purchase up to 1,847,901 additional
shares of the Company’s common stock on the same terms and conditions for the purpose of covering any over-allotments
in connection with the Offering, which over-allotment option was exercised in full on February 9, 2021. The net offering
proceeds to the Company from the Offering are approximately $36.14 million, including the exercise of the underwriter’s
over-allotment option, and after deducting estimated underwriting discounts and commissions and other estimated offering
expenses. The Company intends to use the net proceeds from this offering to fund the development and growth of new business
lines, acquisition opportunities, and general corporate and working capital needs.
The
Offering closed on February 9, 2021 and was made pursuant to the Company’s shelf registration statement on Form S-3
(File No. 333-230740), which was declared effective by the Securities and Exchange Commission (the “SEC”) on May
8, 2019 under the Securities Act of 1933, as amended (the “Securities Act”), and the registration statement on
Form S-3MEF (File No. 333-252757). A final prospectus describing the terms of the Offering was filed with the SEC on
February 8, 2021 and is available on the SEC’s website located at http://www.sec.gov.
The
Underwriting Agreement contains customary representations, warranties and covenants of the Company, customary conditions to closing,
indemnification obligations of the Company and the Underwriter, including for liabilities under the Securities Act, and termination
and other provisions customary for transactions of this nature. As previously disclosed, pursuant to the prior underwriting agreement,
dated as of January 19, 2021, between the Company and Aegis, the Company and all of the Company’s executive officers and
directors agreed not to sell or transfer any securities of the Company held by them for a period of 90 days from January 22, 2021,
subject to limited exceptions, which agreements shall remain in full force and effect pursuant to the terms therein.
This
Current Report on Form 8-K contains forward-looking statements that involve risks and uncertainties, such as statements related
to the use of proceeds from the Offering, as well as other risks detailed from time to time in the Company’s filings with
the SEC.
The
foregoing summary of the Underwriting Agreement is qualified in its entirety by reference to the full text of the Underwriting
Agreement, a copy of which is filed herewith as Exhibit 1.1 to this Current Report on Form 8-K and incorporated herein by reference.