Business News
Document Security Systems, Inc. Reports Second Quarter 2009 Operating Results
Friday 14. August 2009 - -- Security and Commercial Print Sales increase 68% -- Operating expenses decrease by 42% -- Net loss decreased by 20%
Document Security Systems, Inc. (NYSE AMEX: DMC; “DSS”), a leader in patented protection against counterfeiting and unauthorized copying, scanning and photo imaging, reported results for the second quarter ended June 30, 2009.
Revenue for the second quarter of 2009 was $2.2 million, an increase of 2% over the second quarter of 2008. Security and commercial print sales increased 68% during the quarter which reflects the impact of the Companys acquisition of DPI Secuprint, a commercial printer, in December, 2008. This increase was primarily offset by a decrease in royalty revenue of 79% which reflects the impact of a non-recurring royalty of $542,000 recorded in the second quarter of 2008 that affected the comparison. Excluding this item, revenue for the second quarter of 2009 would have increased 34% from the second quarter of 2008.
Operating expenses for the second quarter of 2009 were $1.5 million compared with $2.6 million in 2008, a decrease of 42% despite the inclusion in the 2009 quarter of approximately $397,000 in operating expenses at the Companys newly acquired commercial printing operation. The cost reductions were the result of significant decreases in selling, general & administrative compensation costs, professional fees, sales and marketing costs, stock based compensation costs and intangible amortization costs.
Net loss for the second quarter of 2009 was reduced by 20% to $975,000, or $0.07 per share, compared with a net loss of $1.2 million, or $0.9 per share, for the second quarter of 2008. Adjusted EBITDA for the second quarter of 2009 was a loss of $400,000 or $0.03 per share, from positive Adjusted EBITDA of $85,000, or $0.01 per share, in the second quarter of 2008. (See Reconciliation of GAAP to Non-GAAP Financial Measures table). In addition, the Companys use of cash from operations during the second quarter was approximately $149,000, a significant improvement from the Companys historical levels.
Second Quarter Highlights
Announced a non-binding letter of intent to spin off Legalstore.com subsidiary to Internet Media Services (IMS) headed by Ray Meyers, formerly of Eboz.com. If completed, DSS shareholders of a future record date would receive shares in a new publicly traded entity (Legalstore.com). Closing and setting of the record date are tentatively scheduled to occur in September- October 2009 time frame.
Installed first phase of building security features in new DPI print facility
Completed initial security print projects for large consumer product companies.
Completed digital viewer software for DSS cyber security product – AuthentiGuard DX
Newly acquired DPI subsidiary wins two new packaging clients
DSSs Plastic Printing subsidiary, P3 completed print tests for two large international integrators
Robert Fagenson, Chairman of the Board of Document Security Systems, stated, “During the second quarter of 2009, we benefited from our cost cutting efforts of the past year. Despite an extremely challenging sales environment, we reduced our net losses and significantly reduced the use of cash for operations. As economic conditions improve, we believe we will see continued improvement on both our top line and bottom line results, including reaching Adjusted EBITDA breakeven levels as quickly as possible.”
Document Security Systems CEO Patrick White said, “During the second quarter we attracted several new large security and plastic print clients outside our local area. Most of the new customer activities are in the quoting and testing stages, however we believe that these new customer opportunities and discussions will be reflected in our financial results during the rest of 2009 and beyond. We believe that with our cost cutting in place we are very well positioned for the economic recovery that we all expect to take shape during the latter half of this year.”