UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 31, 2017
DOCUMENT SECURITY SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
| New York | 001-32146 | 16-1229730 | ||
|
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
|
200 Canal View Boulevard Suite 300 Rochester, NY |
14623 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (585) 325-3610
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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 13(a) of the Exchange Act. [ ]
Item 1.01 Entry into a Material Definitive Agreement
As previously reported, on December 31, 2011, Document Security Systems, Inc. (the “Company”) entered into a Convertible Promissory Note (the “Laufer Note”) with Mayer Laufer (“Laufer”) in the principal sum of $575,000. Also, as previously reported, the Laufer Note was amended on May 24, 2013, February 23, 2015 and April 12, 2016 to extend its maturity date, to eliminate its conversion feature, and to restructure its payment schedule.
On May 31, 2017, the Company entered into Convertible Promissory Note Amendment No. 4 (“Laufer Note Amendment No. 4”) amending the Laufer Note (i) to extend the Maturity Date to April 30, 2018 (the “Extended Note Maturity Date”) and (ii) to restructure the remaining principal and interest payments as specifically set forth in the Payment Schedule contained in Exhibit 10.1 to this Current Report on Form 8-K. Except as expressly amended by Laufer Note Amendment No. 4, all other terms and conditions of the Laufer Note and previously executed amendments thereto will remain in force through the Extended Note Maturity Date. Laufer is neither an affiliate of, nor a related party to the Company.
In consideration of Laufer’s agreement to enter into Laufer Note Amendment No. 4, the Company has agreed to issue Laufer 18,000 shares of its common stock.
The foregoing description is a summary only, does not purport to set forth the complete terms of Laufer Note Amendment No. 4, and is qualified in its entirety by reference to Convertible Promissory Note Amendment No. 4 filed as Exhibit 10.1 to this Current Report on Form 8-K.
Also, as previously reported, on May 24, 2013, the Company entered into a Promissory Note (the “CNE Note”) with Congregation Noam Elimelech (the “Lender”) in the principal sum of $850,000. Also, as previously reported, the CNE Note was amended on May 2, 2014, February 23, 2015 and April 12, 2016 to extend its maturity date and restructure its payment schedule.
On May 31, 2017, the Company entered into Promissory Note Amendment No. 4 (“CNE Note Amendment No. 4”) with Lender amending the CNE Note (i) to extend the Maturity Date to December 31, 2018 (the “Extended Maturity Date”) and (ii) to restructure the remaining principal and interest payments as specifically set forth in the Payment Schedule contained in Exhibit 10.2 to this Current Report on Form 8-K. Except as expressly amended by CNE Note Amendment No. 4, all other terms and conditions of the CNE Note and previously executed amendments thereto will remain in force through the Extended Maturity Date. The Lender is neither an affiliate of, nor a related party to the Company.
In consideration of Lender’s agreement to enter into CNE Note Amendment No. 4, the Company has agreed to issue Lender 18,000 shares of its common stock.
The foregoing description is a summary only, does not purport to set forth the complete terms of CNE Note Amendment No. 4, and is qualified in its entirety by reference to Promissory Note Amendment No. 4 filed as Exhibit 10.2 to this Current Report on Form 8-K.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of Registrant
The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
Item 3.02 Unregistered Sales of Equity Securities
The 36,000 shares of common stock issued in connection with and as partial consideration for the Laufer Note Amendment No. 4 and the CNE Note Amendment No. 4 discussed in Item 1.01 above were issued in private transactions pursuant to an exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended.
Item 9.01 Financial Statements and Exhibits
| (d) | Exhibits |
| Exhibit No. | Description | |
| 10.1 | Convertible Promissory Note Amendment No. 4 dated May 31, 2017. | |
| 10.2 | Promissory Note Amendment No. 4 dated May 31, 2017. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| DOCUMENT SECURITY SYSTEMS, INC. | ||
| Dated: June 5, 2017 | By: | /s/ Jeffrey Ronaldi |
| Jeffrey Ronaldi | ||
| Chief Executive Officer | ||
CONVERTIBLE PROMISSORY NOTE AMENDMENT No. 4
This CONVERTIBLE PROMISSORY NOTE AMENDMENT NO. 4 (the “ Amendment ”) is made as of May 31, 2017 (the “ Amendment Date ”) by and between DOCUMENT SECURITY SYSTEMS, INC. (“ Borrower ”), a corporation formed under the laws of the State of New York, with offices at 200 Canal View Boulevard, Suite 300, Rochester, New York 14623 and MAYER LAUFER (“ Lender ”).
This Amendment amends the Convertible Promissory Note (“ Note ”), dated December 30, 2011, made among Borrower and Lender, as follows. All capitalized terms used herein without definition shall have the meanings ascribed to them in the Note.
The parties agree as follows:
1. Section 1 of the Note shall be, and hereby is, amended to read in its entirety as follows:
| “1. | Maturity . The aggregate outstanding Principal Amount, together with all accrued interest thereon and expenses incurred by the Lender in connection herewith (cumulatively, the “Outstanding Amount”), shall be due and payable in full on the earliest to occur of (the earliest of such events being the “Maturity Date”): (i) April 30, 2018 (the “Scheduled Maturity Date”) and (ii) the acceleration of this Note upon the occurrence of an Event of Default.” |
2. Section 2 of the Note shall be, and hereby is, amended to read in its entirety as follows:
| “2. | Principal and Interest . Borrower shall continue to make principal payments in accordance with the attached Exhibit A (“Payment Schedule”) until the Maturity Date. In addition to the monthly principal payments, Borrower shall make monthly interest payments which shall accrue on the then outstanding balance of the Principal Amount at a fixed interest rate equal to 10% per annum. Accrued interest shall be payable in cash in arrears on the last day of each calendar month until the Principal Amount is paid in full. If at any time the outstanding Principal Amount shall be paid in full, then all accrued interest shall be payable at the time of such principal payment.” |
3. Note Ratified. Except as expressly amended hereby, the Note and previously executed amendments thereto are in all respects ratified and confirmed, and all of the terms, provisions and conditions thereof shall be and remain in full force and effect, and this Amendment and all of its terms, provisions and conditions shall be deemed to be a part of the Note.
4. No Events of Default. The Borrower confirms that, as of the date hereof, there exists no condition or event that constitutes (or that would after expiration of applicable grace or cure periods constitute) an Event of Default.
5. Costs and Expenses. Borrower agrees to pay any and all reasonable costs incurred in connection with preparation for closing, the closing, and post-closing items relating to this Amendment.
6. Governing Law. This Amendment, together with all of the rights and obligations of the parties hereto, shall be construed and interpreted in accordance with the laws of the State of New York, excluding the laws applicable to conflicts or choice of law.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly authorized representatives by their signatures below.
| LENDER | ||
| /s/ Mayer Laufer | ||
| Mayer Laufer |
| DOCUMENT SECURITY SYSTEMS, INC. (Borrower) | ||
| By: | /s/ Philip Jones | |
| Name: | Philip Jones | |
| Title: | Chief Financial Officer | |
| 2 |
Exhibit A
Payment Schedule
| $575,000 Convertible Promissory Note with Mayer Laufer Dated December 30, 2011 due May 31, 2017- extension until April 30, 2018 | ||||||||||||||||
| Beginning Balance | Principal Payment | $ 575,000 | Interest | Interest due | ||||||||||||
| 1/31/2015 | 10 | % | 4,792 | |||||||||||||
| 2/28/2015 | $ | 15,000 | 560,000 | 10 | % | 4,792 | ||||||||||
| 3/31/2015 | $ | 15,000 | 545,000 | 10 | % | 4,667 | ||||||||||
| 4/30/2015 | $ | 15,000 | 530,000 | 10 | % | 4,542 | ||||||||||
| 5/31/2015 | $ | 15,000 | 515,000 | 10 | % | 4,417 | ||||||||||
| 6/30/2015 | $ | 15,000 | 500,000 | 10 | % | 4,292 | ||||||||||
| 7/31/2015 | $ | 15,000 | 485,000 | 10 | % | 4,167 | ||||||||||
| 8/31/2015 | $ | 15,000 | 470,000 | 10 | % | 4,042 | ||||||||||
| 9/30/2015 | $ | 15,000 | 455,000 | 10 | % | 3,917 | ||||||||||
| 10/31/2015 | $ | 15,000 | 440,000 | 10 | % | 3,792 | ||||||||||
| 11/30/2015 | $ | 15,000 | 425,000 | 10 | % | 3,667 | ||||||||||
| 12/31/2015 | $ | 15,000 | 410,000 | 10 | % | 3,542 | ||||||||||
| 1/31/2016 | $ | 15,000 | 395,000 | 10 | % | 3,417 | ||||||||||
| 2/29/2016 | $ | 15,000 | 380,000 | 10 | % | 3,292 | ||||||||||
| 3/31/2016 | $ | 15,000 | 365,000 | 10 | % | 3,167 | ||||||||||
| 4/30/2016 | $ | 15,000 | 350,000 | 10 | % | 3,042 | ||||||||||
| 5/31/2016 | $ | 15,000 | 335,000 | 10 | % | 2,917 | ||||||||||
| 6/30/2016 | $ | 15,000 | 320,000 | 10 | % | 2,792 | ||||||||||
| 7/31/2016 | $ | 15,000 | 305,000 | 10 | % | 2,667 | ||||||||||
| 8/31/2016 | $ | 15,000 | 290,000 | 10 | % | 2,542 | ||||||||||
| 9/30/2016 | $ | 15,000 | 275,000 | 10 | % | 2,417 | ||||||||||
| 10/31/2016 | $ | 15,000 | 260,000 | 10 | % | 2,292 | ||||||||||
| 11/30/2016 | $ | 15,000 | 245,000 | 10 | % | 2,167 | ||||||||||
| 12/31/2016 | $ | 15,000 | 230,000 | 10 | % | 2,042 | ||||||||||
| 1/31/2017 | $ | 15,000 | 215,000 | 10 | % | 1,917 | ||||||||||
| 2/28/2017 | $ | 15,000 | 200,000 | 10 | % | 1,792 | ||||||||||
| 3/31/2017 | $ | 15,000 | 185,000 | 10 | % | 1,667 | ||||||||||
| 4/30/2017 | $ | 15,000 | 170,000 | 10 | % | 1,542 | ||||||||||
| 5/31/2017 | $ | 15,000 | 155,000 | 10 | % | 1,417 | ||||||||||
| Extension | ||||||||||||||||
| 6/30/2017 | $ | 15,000 | 140,000 | 10 | % | 1,292 | ||||||||||
| 7/31/2017 | $ | 15,000 | 125,000 | 10 | % | 1,167 | ||||||||||
| 8/31/2017 | $ | 15,000 | 110,000 | 10 | % | 1,042 | ||||||||||
| 9/30/2017 | $ | 15,000 | 95,000 | 10 | % | 917 | ||||||||||
| 10/31/2017 | $ | 15,000 | 80,000 | 10 | % | 792 | ||||||||||
| 11/30/2017 | $ | 15,000 | 65,000 | 10 | % | 667 | ||||||||||
| 12/31/2017 | $ | 15,000 | 50,000 | 10 | % | 542 | ||||||||||
| 1/31/2018 | $ | 15,000 | 35,000 | 10 | % | 417 | ||||||||||
| 2/28/2018 | $ | 15,000 | 20,000 | 10 | % | 292 | ||||||||||
| 3/31/2018 | $ | 15,000 | 5,000 | 10 | % | 167 | ||||||||||
| 4/30/2018 | $ | 5,000 | - | 10 | % | 42 | ||||||||||
| 3 |
PROMISSORY NOTE AMENDMENT No. 4
This PROMISSORY NOTE AMENDMENT NO. 4 (the “ Amendment ”) is made as of May 31, 2017 (the “ Amendment Date ”) by and between DOCUMENT SECURITY SYSTEMS, INC. (the “ Borrower ”), a corporation formed under the laws of the State of New York, with offices at 200 Canal View Boulevard, Suite 300, Rochester, New York 14623 and CONGREGATION NOAM ELIMELECH (the “ Lender ”).
This Amendment amends the Promissory Note (“ Note ”), dated May 24, 2013, made among Borrower and Lender, as follows. All capitalized terms used herein without definition shall have the meanings ascribed to them in the Note.
The parties agree as follows:
1. Section 1 of the Note shall be, and hereby is, amended to read in its entirety as follows:
| “1. | Maturity . The aggregate outstanding Principal Amount, together with all accrued interest thereon and expenses incurred by the Lender in connection herewith (cumulatively, the “Outstanding Amount”), shall be due and payable in full on the earliest to occur of (the earliest of such events being the “Maturity Date”): (i) December 31, 2018 (the “Scheduled Maturity Date”) and (ii) the acceleration of this Note upon the occurrence of an Event of Default.” |
2. Section 2 of the Note shall be, and hereby is, amended to read in its entirety as follows:
| “2. | Principal and Interest . Borrower shall continue to make principal payments in accordance with the attached Exhibit A (“Payment Schedule”) until the Maturity Date. In addition to the monthly principal payments, Borrower shall make monthly interest payments which shall accrue on the then outstanding balance of the Principal Amount at a fixed interest rate equal to 9% per annum. Accrued interest shall be payable in cash in arrears on the last day of each calendar month until the Principal Amount is paid in full. If at any time the outstanding Principal Amount shall be paid in full, then all accrued interest shall be payable at the time of such principal payment.” |
3. Note Ratified. Except as expressly amended hereby, the Note and previously executed amendments thereto are in all respects ratified and confirmed, and all of the terms, provisions and conditions thereof shall be and remain in full force and effect, and this Amendment and all of its terms, provisions and conditions shall be deemed to be a part of the Note.
4. No Events of Default. The Borrower confirms that, as of the date hereof, there exists no condition or event that constitutes (or that would after expiration of applicable grace or cure periods constitute) an Event of Default.
5. Costs and Expenses. Borrower agrees to pay any and all reasonable costs incurred in connection with preparation for closing, the closing, and post-closing items relating to this Amendment.
6. Governing Law. This Amendment, together with all of the rights and obligations of the parties hereto, shall be construed and interpreted in accordance with the laws of the State of New York, excluding the laws applicable to conflicts or choice of law.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly authorized representatives by their signatures below.
| CONGREGATION NOAM ELIMELECH (Lender) | |||
| /s/ Mayer Laufer | |||
| By: | Mayer Laufer | ||
| Title: | President | ||
| DOCUMENT SECURITY SYSTEMS, INC. (Borrower) | |||
| /s/ Philip Jones | |||
| By: | Philip Jones | ||
| Title: | Chief Financial Officer | ||
| 2 |
Exhibit A
Payment Schedule
| $850,000 Promissory Note with Congregation Noam Elimelech Dated May 24, 2013 due May 31, 2017- extension until December 31, 2018 |
| Beginning Balance | Principal Payment | $ 850,000 | Interest | Interest due | ||||||||||||
| 1/31/2015 | 9 | % | 6,375 | |||||||||||||
| 2/28/2015 | $ | 15,000 | 835,000 | 9 | % | 6,375 | ||||||||||
| 3/31/2015 | $ | 15,000 | 820,000 | 9 | % | 6,263 | ||||||||||
| 4/30/2015 | $ | 15,000 | 805,000 | 9 | % | 6,150 | ||||||||||
| 5/31/2015 | $ | 15,000 | 790,000 | 9 | % | 6,038 | ||||||||||
| 6/30/2015 | $ | 15,000 | 775,000 | 9 | % | 5,925 | ||||||||||
| 7/31/2015 | $ | 15,000 | 760,000 | 9 | % | 5,813 | ||||||||||
| 8/31/2015 | $ | 15,000 | 745,000 | 9 | % | 5,700 | ||||||||||
| 9/30/2015 | $ | 15,000 | 730,000 | 9 | % | 5,588 | ||||||||||
| 10/31/2015 | $ | 15,000 | 715,000 | 9 | % | 5,475 | ||||||||||
| 11/30/2015 | $ | 15,000 | 700,000 | 9 | % | 5,363 | ||||||||||
| 12/31/2015 | $ | 15,000 | 685,000 | 9 | % | 5,250 | ||||||||||
| 1/31/2016 | $ | 15,000 | 670,000 | 9 | % | 5,138 | ||||||||||
| 2/29/2016 | $ | 15,000 | 655,000 | 9 | % | 5,025 | ||||||||||
| 3/31/2016 | $ | 15,000 | 640,000 | 9 | % | 4,913 | ||||||||||
| 4/30/2016 | $ | 15,000 | 625,000 | 9 | % | 4,800 | ||||||||||
| 5/31/2016 | $ | 15,000 | 610,000 | 9 | % | 4,688 | ||||||||||
| 6/30/2016 | $ | 15,000 | 595,000 | 9 | % | 4,575 | ||||||||||
| 7/31/2016 | $ | 15,000 | 580,000 | 9 | % | 4,463 | ||||||||||
| 8/31/2016 | $ | 15,000 | 565,000 | 9 | % | 4,350 | ||||||||||
| 9/30/2016 | $ | 15,000 | 550,000 | 9 | % | 4,238 | ||||||||||
| 10/31/2016 | $ | 15,000 | 535,000 | 9 | % | 4,125 | ||||||||||
| 11/30/2016 | $ | 15,000 | 520,000 | 9 | % | 4,013 | ||||||||||
| 12/31/2016 | $ | 15,000 | 505,000 | 9 | % | 3,900 | ||||||||||
| 1/31/2017 | $ | 15,000 | 490,000 | 9 | % | 3,788 | ||||||||||
| 2/28/2017 | $ | 15,000 | 475,000 | 9 | % | 3,675 | ||||||||||
| 3/31/2017 | $ | 15,000 | 460,000 | 9 | % | 3,563 | ||||||||||
| 4/30/2017 | $ | 15,000 | 445,000 | 9 | % | 3,450 | ||||||||||
| 5/31/2017 | $ | 15,000 | 430,000 | 9 | % | 3,338 | ||||||||||
| Extension | ||||||||||||||||
| 6/30/2017 | $ | 15,000 | 415,000 | 9 | % | 3,225 | ||||||||||
| 7/31/2017 | $ | 15,000 | 400,000 | 9 | % | 3,113 | ||||||||||
| 8/31/2017 | $ | 15,000 | 385,000 | 9 | % | 3,000 | ||||||||||
| 9/30/2017 | $ | 15,000 | 370,000 | 9 | % | 2,888 | ||||||||||
| 10/31/2017 | $ | 15,000 | 355,000 | 9 | % | 2,775 | ||||||||||
| 11/30/2017 | $ | 15,000 | 340,000 | 9 | % | 2,663 | ||||||||||
| 12/31/2017 | $ | 15,000 | 325,000 | 9 | % | 2,550 | ||||||||||
| 1/31/2018 | $ | 15,000 | 310,000 | 9 | % | 2,438 | ||||||||||
| 2/28/2018 | $ | 15,000 | 295,000 | 9 | % | 2,325 | ||||||||||
| 3/31/2018 | $ | 15,000 | 280,000 | 9 | % | 2,213 | ||||||||||
| 4/30/2018 | $ | 25,000 | 255,000 | 9 | % | 2,100 | ||||||||||
| 5/31/2018 | $ | 30,000 | 225,000 | 9 | % | 1,913 | ||||||||||
| 6/30/2018 | $ | 30,000 | 195,000 | 9 | % | 1,688 | ||||||||||
| 7/31/2018 | $ | 30,000 | 165,000 | 9 | % | 1,463 | ||||||||||
| 8/31/2018 | $ | 30,000 | 135,000 | 9 | % | 1,238 | ||||||||||
| 9/30/2018 | $ | 30,000 | 105,000 | 9 | % | 1,013 | ||||||||||
| 10/31/2018 | $ | 30,000 | 75,000 | 9 | % | 788 | ||||||||||
| 11/30/2018 | $ | 30,000 | 45,000 | 9 | % | 563 | ||||||||||
| 12/31/2018 | $ | 45,000 | - | 9 | % | 338 | ||||||||||
| 3 |