DOCUMENT SECURITY SYSTEMS INC - FORM 8-K/A - EX-99.2 - November 6, 2020

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Exhibit 99.2

 

DOCUMENT SECURITY SYSTEMS. INC.

Unaudited Pro Forma Condensed Consolidated Balance Sheet

June 30, 2020

 

Balance Sheet

Ended June 30, 2020

 

   Pre-Acquisition
DSS (Purchaser)		   Record Purchase   Post-acquisition
DSS (Purchaser)		   ImpactBio
(Target)		   Proforma Adjustment
(Note 1)		   Proforma Adjustment
(Note 2)		   Consolidated
Financials		 
ASSETS                                   
Current Assets:                                   
Cash  $7,176,000        $7,176,000   $76,000             $7,252,000 
Accounts Receivable   2,445,000         2,445,000    -              2,445,000 
Inventory   1,774,000         1,774,000    -              1,774,000 
Current assets held for sale - discontinued operations   236,000         236,000    -              236,000 
Prepaid Expense and other current assets   510,000         510,000    23,000              533,000 
Total Current Assets   12,141,000    -    12,141,000    99,000    -    -    12,240,000 
Property plant and equipment, net   4,257,000         4,257,000    -              4,257,000 
Investment   3,445,000         3,445,000    -              3,445,000 
Marketable Securities   1,976,000         1,976,000    -              1,976,000 
Investment in Target   -    38,319,000    38,319,000    -    (90,000)   (38,229,000)   - 
Notes Receivable   522,000         522,000    -              522,000 
Non-current assets held for sale - discontinued operations   1,608,000         1,608,000                     
Other assets   311,000         311,000    -              311,000 
Right-of -use assets   37,000         37,000    -              37,000 
Goodwill   1,769,000         1,769,000    -              1,769,000 
Other intangible assets, net   1,347,000         1,347,000    -         38,319,000    39,666,000 
Total Assets  $27,413,000   $38,319,000   $65,732,000   $99,000   $(90,000)  $90,000   $65,831,000 
                                    
LIABILITIES AND SHAREHOLDERS’ EQUITY                                   
Current liabilities:                                   
Accounts Payable  $690,000        $690,000   $9,000             $699,000 
Accrued expenses and deferred revenue   883,000         883,000                   883,000 
Other current liabilities   522,000         522,000                   522,000 
Current liabilities held for sale - discontinued operations   274,000         274,000                   274,000 
Revolving line of credit   -         -                   - 
Current portion of lease liabilities   35,000         35,000                   35,000 
Current portion of long-term debt, net   426,000         426,000                   426,000 
Total Current Liabilities  $2,830,000   $-   $2,830,000   $9,000   $-   $-   $2,839,000 
Long-term debt, net   3,388,000         3,388,000                   3,388,000 
Long term lease liability   3,000         3,000                   3,000 
Non-current liabilities held for sale - discontinued operations   677,000                               
Other long-term liabilities   507,000         507,000                   507,000 
Deferred tax liability, net   44,000         44,000                   44,000 
Total Liabilities  $7,449,000   $-   $7,449,000   $9,000   $-   $-   $7,458,000 
                                  - 
Stockholders’ Equity                                 - 
Common Stock  $60,000   $-   $60,000   $125,000   $(125,000)       $60,000 
Convertible Preferred Stock   -    1,000    1,000    -              1,000 
Additional Paid in Capital   126,058,000    38,318,000    164,376,000    1,818,000    (1,818,000)        164,376,000 
Accumulated Deficit   (105,973,000)        (105,973,000)   (1,889,000)   1,889,000         (105,973,000)
Total Stockholders’ Equity (Deficit)   20,145,000    38,319,000    58,464,000    54,000    (54,000)   -    58,464,000 
Non-Controlling Interests   (181,000)        (181,000)   36,000    (36,000)   90,000    (91,000)
Total Stockholders’ Equity (Deficit)  $19,964,000   $38,319,000   $58,283,000   $90,000   $(90,000)  $90,000   $58,373,000 
                                    
Total Liabilities & Stockholders’ Equity  $27,413,000   $38,319,000   $65,732,000   $99,000   $(90,000)  $90,000   $65,831,000 

 

 
 

 

Consolidated Statement of Operations

For the six months Ended June 30, 2020

 

   DSS  
(Purchaser)		   Impact BioMedical
(Target)		   Proforma Adjustment
(Note 1)		   Proforma Adjustment
(Note 2)		   Consolidated
Proforma		 
Revenue:                         
Printed products  $5,434,000   $-   $      -   $    -   $5,434,000 
Technology sales, services and licensing   836,000    -    -    -    836,000 
Direct selling   1,078,000    -    -    -    1,078,000 
Total revenue  $7,348,000   $-   $-   $-   $7,348,000 
Costs and expense                         
Costs of revenue, exclusive of deprecation and amortization  $4,439,000   $-   $-   $-   $4,439,000 
Selling, general and administrative (including stock based compensation)   4,487,000    361,000    -    -    4,848,000 
Deprecation and amortization   578,000    -    -    -    578,000 
Impairment of Goodwill   -    -    -    -    - 
Total Operating Expense   9,504,000    361,000    -    -    9,865,000 
Operating Loss   (2,156,000)   (361,000)   -    -    (2,517,000)
Other Income (expense)                         
Interest Income   51,000    -    -    -    51,000 
Interest Expense   (73,000)   -    -    -    (73,000)
Unrealized gain on Marketable Securities   584,000    -    -    -    584,000 
Amortization of deferred financing costs a debt discount   (1,000)   -    -    -    (1,000)
Total Other Expense   561,000    -    -    -    561,000 
Income (loss) before income tax   (1,595,000)   (361,000)   -    -    (1,956,000)
                          
Income tax benefit   -    -    -    -    - 
                          
Loss from continuing operations  $(1,595,000)  $(361,000)  $-   $-   $(1,956,000)
Loss from discontinued operations   (1,278,000)   -    -    -    (1,278,000)
                          
Net loss   (2,873,000)   (361,000)   -    -    (3,234,000)
Add: loss attributed to noncontrolling interest   181,000    119,000    -    -    300,000 
                          
Net Loss from continuing operations attributable to common stockholders  $(1,414,000)  $(242,000)  $-   $-   $(1,656,000)
                          
Other comprehensive income (loss)                         
Interest rate swap loss   -    -    -    -    - 
Settlement of Interest rate swap   -    -    -    -    - 
                          
Comprehensive income (loss)  $(2,873,000)  $(361,000)  $-   $-   $(3,234,000)

 

 
 

 

Note 1: Elimination of ImpactBio equity Investment in subsidiary 90,000  
    Accumulated Deficit 1,889,000  
    Common Stock   125,000
    Additional Paid in Capital   1,818,000
    Non-Controlling Interests   36,000
         
Note 2: Record assets acquired Other intangible assets, net 38,319,000  
    Investment in subsidiary   38,229,000
    Non-Controlling Interests   90,000
         
Note 3: Document Security Systems, Inc. has determined that the accounting treatment of the perpetual convertible preferred shares offered should be treated as permanent equity and will be classified as such on the Company’s balance sheet. It was determined that due to several factors, including a discount for liquidation, the value of the Series A Preferred Stock was discounted from $46,868,000 to $35,187,000, thus reducing the total consideration given to approximately $38,319,000 from the initial purchase price of $50,000,000.  
   
   
           
Note 4: Document Security Systems, Inc. is performing a valuation of the assets as well as the non-controlling interest portion of Impact BioMedical, Inc. and its subsidiaries. For purposes of this pro forma, and until the valuation is complete, the purchase price of $38,318,000 is included in Other intangible assets, net and no amortization recorded.  
   

 

 

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