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INVESTMENTS
12 Months Ended
Dec. 31, 2013
INVESTMENTS [Abstract]  
INVESTMENTS

NOTE 5 - INVESTMENTS

 

In March 2013, DSS Technology Management made its first of a series of investments in VirtualAgility, Inc. ("VirtualAgility"), a developer of programming platforms that facilitate the creation of business applications without programming or coding. The initial investment consisted of a $200,000 non-recourse note plus an equity stake of 1/8 of 7% of the outstanding common stock of VirtualAgility, for a total cash investment of $250,000. Each non-recourse note, when purchased, is eligible for a preferred return of $1,250,000, plus a variable return of 1.875% based on gross proceeds derived from VirtualAgility's patent portfolio, if any. In addition, VirtualAgility granted DSS Technology Management a total of seven additional options to make additional quarterly investments of $250,000 apiece, under the same terms as the first investment. If all of such options are exercised, DSS Technology Management will have invested an aggregate of $2,000,000, consisting of $1,600,000 in non-recourse notes that would be eligible for an aggregate preferred return of $10,000,000 plus up to 15% of variable returns and, based on the current capitalization of VirtualAgility, DSS Technology Management would also own approximately 7% of the outstanding common stock of VirtualAgility. In May 2013, DSS Technology Management created a subsidiary called VirtualAgility Technology Investments, LLC ("VATI") and transferred its ownership of the VirtualAgility investment and future investment options to VATI. Also in May 2013, a third-party investor and became a 40% member of VATI. In exchange, the investor contributed $250,000 into VATI which was used to exercise one of the investments in VirtualAgility per the terms described above. As of July, 2013, DSS Technology Management owned 60% of VATI. In conjunction with its purchase accounting, the Company assessed the fair value of the VirtualAgility investment, including the expected exercise of future investment options as of the acquisition date, at approximately $10,750,000 which became the cost basis of the investment as July 1, 2013. A relief from royalty methodology was used to value the potential proceeds to be derived from the patent portfolio and the analysis included a discounted cash flow which estimated future net cash flows resulting from the licensing and enforcement of the VirtualAgility patent portfolio based on information as of the date of acquisition, considering assumptions and estimates related to potential infringers of the patents, applicable industries, usage of the underlying patented technologies, estimated license fee revenues, contingent legal fee arrangements, other estimated costs, tax implications and other factors. A discount rate consistent with the risks associated with achieving the estimated net cash flows was used to estimate the present value of estimated net cash flows. The measurement of the VirtualAgility investment constitutes a Level 3 input. In August 2013, the Company contributed $250,000 into VATI which used the funds to make an additional investment in VirtualAgility per the terms described above. In November 2013, the other member of VATI contributed $250,000 into VATI which used the funds to make an additional investment in VirtualAgility per the terms described above. As of December 31, 2013, VATI owned 438,401 shares of common stock of VirtualAgility. As of December 31, 2013, DSS Technology Management owned 60% of VATI. VATI did not record any income or loss during the year ended December 31, 2013.

  

On February 14, 2014, DSS Technology Management made an additional investment in VirtualAgility, consisting of a non-recourse note and equity totaling $250,000, and as a result, increased its ownership percentage in VATI to 68%.

 

In January and February 2014, the Company made investments of $100,000 and $400,000, respectively, for an aggregate of 594,530 shares of common stock in Express Mobile, Inc., a developer of custom mobile applications and websites. The investment will be recorded using the cost method.