UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __)*
DOCUMENT SECURITY SYSTEMS, INC.
(Name of Issuer)
Common Stock, par value $0.02 per share
(Title of Class of Securities)
25614T200
(CUSIP Number)
J. Marvin Feigenbaum
124 W. 60th Street
Suite 33L
New York, NY 10023
+ 1 917 887 9949
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)
October 25, 2019
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box: ☐
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See § 240.13d-7(b) for other parties to whom copies are to be sent.
| * | The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. |
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
| CUSIP No. 25614T200 | 13D | Page 2 of 10 Pages |
| 1 |
NAME OF REPORTING PERSON
J. Marvin Feigenbaum |
| 2 |
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) ☒ (b) ☐ |
| 3 |
SEC USE ONLY
|
| 4 |
SOURCE OF FUNDS
PF |
| 5 |
CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ☐
|
| 6 |
CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America |
| NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH |
7 |
SOLE VOTING POWER
5,000 |
| 8 |
SHARED VOTING POWER
-0- | |
| 9 |
SOLE DISPOSITIVE POWER
5,000 | |
| 10 |
SHARED DISPOSITIVE POWER
-0- |
| 11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,000 |
| 12 |
CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ☐
|
| 13 |
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
0.0% |
| 14 |
TYPE OF REPORTING PERSON
IN |
| CUSIP No. 25614T200 | 13D | Page 3 of 10 Pages |
| 1 |
NAME OF REPORTING PERSON
Barinder Athwal |
| 2 |
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) ☒ (b) ☐ |
| 3 |
SEC USE ONLY
|
| 4 |
SOURCE OF FUNDS
PF |
| 5 |
CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ☐
|
| 6 |
CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America |
| NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH |
7 |
SOLE VOTING POWER
774,027* |
| 8 |
SHARED VOTING POWER
264,277 | |
| 9 |
SOLE DISPOSITIVE POWER
774,027* | |
| 10 |
SHARED DISPOSITIVE POWER
264,277 |
| 11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,038,304* |
| 12 |
CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ☐
|
| 13 |
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
3.5% |
| 14 |
TYPE OF REPORTING PERSON
IN |
| * | Includes vested warrants to purchase 26,667 shares of Common Stock. |
| CUSIP No. 25614T200 | 13D | Page 4 of 10 Pages |
| 1 |
NAME OF REPORTING PERSON
Brian Mirman |
| 2 |
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) ☒ (b) ☐ |
| 3 |
SEC USE ONLY
|
| 4 |
SOURCE OF FUNDS
PF |
| 5 |
CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ☐
|
| 6 |
CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America |
| NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH |
7 |
SOLE VOTING POWER
628,158 |
| 8 |
SHARED VOTING POWER
0 | |
| 9 |
SOLE DISPOSITIVE POWER
628,158 | |
| 10 |
SHARED DISPOSITIVE POWER
0 |
| 11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
628,158 |
| 12 |
CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ☐
|
| 13 |
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
2.1 % |
| 14 |
TYPE OF REPORTING PERSON
IN |
| CUSIP No. 25614T200 | 13D | Page 5 of 10 Pages |
Item 1. Security and Issuer
This statement on Schedule 13D (this “Schedule 13D”) relates to the common stock, par value $0.02 per share (“Common Stock”), of Document Security Systems, Inc., a New York corporation (the “Issuer” or the “Company”). The address of the Issuer’s principal executive office is 200 Canal View Boulevard, Suite 300, Rochester, NY 14623.
Item 2. Identity and Background
(a) This Schedule 13D is being filed by and on behalf of (i) J. Marvin Feigenbaum (“Feigenbaum”), (ii) Barinder Athwal (“Athwal”) and (iii) Brian Mirman (“Mirman”). Each of Feigenbaum, Athwal and Mirman are herein sometimes referred to as a “Reporting Person” and collectively as “Reporting Persons”. Each of the Reporting Persons is party to that certain Group Agreement, as further described in Item 4. Accordingly, the Reporting Persons are hereby filing a joint Schedule 13D.
(b) The principal business address of Feigenbaum is 124 W. 60th Street, Suite 33L, New York, New York 10023. The principal business address of Athwal is 14 Mule Road, Toms River, New Jersey 08755. The principal business address of Mirman is 2627 Hylan Blvd., Staten Island, New York 10306.
(c) The principal business of Feigenbaum is the CEO of Group F Holdings. The principal business of Athwal is operating a medical practice as a physician. The principal business of Mirman is operating a dental practice as a dentist.
(d) During the last five years, none of the Reporting Persons has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) During the last five years, none of the Reporting Persons has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceedings was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.
(f) Each of the Reporting Persons is a citizen of the United States.
| CUSIP No. 25614T200 | 13D | Page 6 of 10 Pages |
Item 3. Source and Amount of Funds or Other Consideration
Feigenbaum used approximately $1,800 (including brokerage commissions) in the aggregate to purchase 5,000 shares of Common Stock reported in this Schedule 13D. Athwal used approximately $3,450,000 (including brokerage commissions) in the aggregate to purchase 814,122 shares of Common Stock reported in this Schedule 13D. The vested warrants for 26,667 shares of Common Stock were issued to Athwal through a private placement in 2017 by the Issuer. Susan Athwal, the spouse of Athwal, used approximately $772,828 (including brokerage commissions) in the aggregate to purchase 264,277 shares of Common Stock beneficially owned by Athwal and reported in this Schedule 13D. Mirman used approximately $1,681,022 (including brokerage commissions) in the aggregate to purchase 628,158 shares of Common Stock reported in this Schedule 13D.
The source of the funds used to acquire the Common Stock reported herein as beneficially owned by (i) Feigenbaum is the personal funds of Feigenbaum, (ii) Athwal is the personal funds of Athwal, and in the case of Susan Athwal, the personal funds of Susan Athwal; and (iii) Mirman is the personal funds of Mirman.
Item 4. Purpose of the Transaction
The Reporting Persons purchased the Common Stock subject to this Statement for investment purposes. The Reporting Persons will review their investments in the Common Stock from time to time, and, subject to applicable law and regulation and depending upon certain factors, including, without limitation, the financial performance of the Company, the availability and price of the Common Stock or other securities related to the Company, and other general market and investment conditions, the Reporting Persons may determine to:
| ● | acquire additional Common Stock through open market purchases or otherwise; |
| ● | sell Common Stock through the open market or otherwise; or |
| ● | otherwise engage or participate in a transaction with the purpose or effect of changing or influencing the control of the Company. |
Such transactions may take place at any time and without prior notice. There can be no assurance, however, that any Reporting Person will take any such actions.
The Reporting Persons have informally agreed to cooperate to jointly deliver an advance notice of the Group’s intention to nominate individuals for election as directors at the Issuer’s 2019 annual meeting of stockholders in accordance with the Issuer’s bylaws and take any actions in furtherance thereof and coordinate the approval of each member of the Group of any filing with the Securities and Exchange Commission, press release, white paper, stockholder communication or other public communication.
| CUSIP No. 25614T200 | 13D | Page 7 of 10 Pages |
In addition, Reporting Persons and their representatives have engaged in, and expect to continue to engage in, discussions with members of management and the board of directors of the Issuer (the “Board”), other current or prospective stockholders, industry analysts, existing or potential strategic partners or competitors, investment and financing professionals, sources of credit and/or other third parties regarding a variety of matters relating to the Issuer, which may include, among other things, the Issuer’s business, management, capital structure and allocation, corporate governance, Board composition and strategic alternatives and direction, and may take other steps seeking to bring about changes to increase stockholder value as well as pursue other plans or proposals that relate to or could result in any of the matters set forth in clauses (a)-(j) of Item 4 of Schedule 13D.
On October 29, 2019, the Reporting Persons notified the Issuer of their intent to nominate such number of directors at the Issuer’s 2019 annual meeting necessary to replace the board in its entirety. This, by implication, would result in changes to the incumbent board of directors if the nominees were elected. In addition, the Reporting Persons issued a public letter to shareholders of the Issuer, which is attached hereto as Exhibit 99.1 and incorporated herein by reference.
Item 5. Interest in Securities of the Issuer
(a) – (b) The aggregate number of shares of Common Stock to which this Schedule 13D relates is 1,61,671,462 shares of Common Stock (including vested warrants for 26,667 shares of Common Stock), constituting approximately 5.6% of the outstanding Common Stock. All percentages set forth herein are based upon a total of 29,721,907 shares of Common Stock outstanding as of August 13, 2019, as reported on the Issuer’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 13, 2019.
Feigenbaum has the power to vote and direct the disposition of the 5,000 shares of Common Stock held by him. The percentage of shares represents 0.0% of the Company’s outstanding stock.
Athwal has the power to vote and direct the disposition of 747,360 shares of Common Stock directly beneficially owned by him and has the shared power to vote and direct the disposition of the 264,277 shares of Common Stock beneficially owned by him and directly owned by Susan Athwal, his spouse. The percentage of shares represents approximately 3.4% of the Company’s outstanding stock.
Mirman has the power to vote and direct the disposition of the 628,158 shares of Common Stock directly beneficially owned by him. The percentage of shares represents approximately 2.1% of the Company’s outstanding stock.
The Reporting Persons may be deemed to have formed a “group” within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended. Each Reporting Person disclaims beneficial ownership of any shares of Common Stock beneficially owned by any other Reporting Person.
(c) Schedule A annexed hereto lists all transactions in securities of the Issuer by the Reporting Persons during the past 60 days.
(d) No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, the Shares.
(e) Not applicable.
| CUSIP No. 25614T200 | 13D | Page 8 of 10 Pages |
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer
As described above in Item 4, the Reporting Persons have entered into an informal agreement with respect to the shares of Common Stock held by them, which description is incorporated herein by reference.
Other than as described herein, there are no contracts, arrangements, understandings or relationships among the Reporting Persons, or between the Reporting Persons and any other person, with respect to the securities of the Issuer.
Item 7. Material to be Filed as Exhibits
| Schedule A Transactions in Securities |
| 99.1 Press Release issued by the Reporting Persons on October 29, 2019 |
| 99.2 Joint Filing Agreement, dated as of October 31, 2019, by and among the Reporting Persons. |
| CUSIP No. 25614T200 | 13D | Page 9 of 10 Pages |
SIGNATURE
After reasonable inquiry and to the best of the undersigned knowledge and belief, each of the undersigned certifies that the information set forth on this statement is true and correct.
| Dated: November 1, 2019 | |
| /s/ J. Marvin Feigenbaum | |
| J. Marvin Feigenbaum | |
| /s/ Barinder Athwal | |
| Barinder Athwal | |
| /s/ Brian Mirman | |
| Brian Mirman |
| CUSIP No. 25614T200 | 13D | Page 10 of 10 Pages |
SCHEDULE A
Transactions in the Shares of Common Stock During the Past Sixty Days
| Nature of the Transaction | Shares Purchased |
Price Per Share($) |
Date of Purchase |
J. MarVIN FEIGENBAUM
| Purchase of Common Stock | 5,000 | 0.36 | October 15, 2019 |
SUSAN ATHWAL (BENEFICIALLY OWNED BY BARINDER ATHWAL)
| Purchase of Common Stock | 2,900 | 0.38 | September 9, 2019 | |||
| Purchase of Common Stock | 976 | 0.39 | September 17, 2019 |
Exhibit 99.1
CONCERNED Shareholders OF DOCUMENT SECURITY SYSTEMS TO NOMINATE A FULL SLATE OF HIGHLY QUALIFIED DIRECTOR CANDIDATES FOR ELECTION AT UPCOMING ANNUAL MEETING SCHEDULED FOR DECEMBER 9, 2019
NEW YORK, NY - October 29, 2019 J. Marvin Feigenbaum, Barinder Athwal and Brian Mirman (collectively, the “Concerned Shareholders”) shareholders of Document Security Systems, Inc. (“DSS” or the “Company”) (NYSE-American: DSS), with an ownership interest of approximately 5.5% of the Company’s outstanding shares, today announced that they will be nominating a full slate of highly qualified candidates for election to the Board of Directors (the “Board”) at the Company’s 2019 Annual Meeting of Shareholders (the “Annual Meeting”), which is currently scheduled to be held on December 9, 2019. The Concerned Shareholders expect that the Company’s nine current Board members will be standing for election at the Annual Meeting.
The Concerned Shareholders also announced today that that they have issued an open letter to DSS shareholders, which, among other things, details the extensive and prolonged underperformance at DSS, the mismanagement by the DSS Board of Company resources and the absence of appropriate corporate governance standards. The text of the letter is as follows:
Dear Fellow Shareholders,
The undersigned shareholders of Document Security Systems, Inc. (“DSS”) are writing today to our fellow shareholders as we believe that DSS is deeply undervalued and that opportunities exist to unlock significant value for the benefit of all shareholders. The first step needed towards recovery is to replace in its entirety the existing board of directors of DSS.
The undersigned shareholders currently hold, in the aggregate, a 5.5% beneficial interest in DSS. In anticipation of the 2019 annual meeting of the shareholders of DSS, which is December 9, 2019, we will be delivering to DSS a formal notice nominating such number of highly qualified candidates for election at the 2019 annual meeting of the shareholders (the “2019 Annual Meeting”) to replace in its entirety the current board of directors and preparing and filing a preliminary proxy statement and accompanying proxy cards relating to our director nominees. We are awaiting certain information from the DSS management in order to complete and submit the formal notice of nomination.
We believe that management and the board of DSS have not been properly focused on maximizing shareholder value. DSS’ stock price has plummeted by more than 50% since May 31, 2019, primarily due to the terribly poor management performance by both the board and management and the registered stock offering in June 2019 by DSS at a price per share of less than 50% of the then market price of the DSS stock. Mr. Heng Fai Ambrose Chan, the Chairman of the Board of Directors of DSS, purchased approximately 10% of the offering at this deeply discounted price. As of May 31, 2019, the stock price closed at $1.00 and on June 6, 2019, following the disclosure of the registered offering at per share price of $0.50, the stock price closed at approximately $0.46. Since then, the stock price has only declined and has, as of the writing of this letter, hit an all-time low closing price of $0.31 per share. Without an immediate change in direction and focus of the DSS management and the board, we see no prospect of recovery of the stock price or improvement of the Company’s performance. We believe that the terms of the offering, as well as Mr. Chan’s participation, fail the test of commercially responsible behavior and good corporate governance and were inconsistent with the Board’s fiduciary duty to the shareholders.
1
Further, the proceeds of said offering were ostensibly to be used for research, product and brand development and strategic initiatives. Unfortunately, nearly five months following the offering we have not seen any such development or strategic initiatives in this area. Instead, the funds raised have been utilized to increase management salaries and other outlays that do not directly deliver any shareholder benefit.
We also find the rate of management and Board turnover to be deeply disturbing. The resignation in March 2019 of the then CEO, Jeffrey Ronaldi (who continued to serve on the DSS Board), and the assignment of the CEO position, on an interim basis, to the then CFO, Philip Jones, who subsequently resigned from all positions the following month in April 2019, stretches all credulity. It is unreasonable to believe that the DSS Board has a credible business plan with this rapid change of senior management in such a short period of time. Mr. Ronaldi’s subsequent resignation from the Board only adds to our concern.
Equally troubling is the resignation in the past few months of four independent directors, two of whom were appointed only in May 2019. Independent directors serve the important function of independent oversight, to ensure that Board decisions and procedures are consistent with best corporate governance practice and serve solely shareholder interests. The spate of independent director resignations can only indicate, we believe, less than desirable corporate governance standards. The laconic disclosures by DSS that the resignations were not on account of any disagreement with management stretch the imagination. We do not believe that the current presumed independents on the DSS Board are independent as required under relevant law and NYSE-American regulations.
We believe substantial change is warranted in order to provide fresh perspective, renewed accountability to shareholders, and importantly, the objectivity to make decisions that are in the best interests of DSS and all of its shareholders.
Accordingly, we intend to nominate a slate of highly accomplished director candidates for election at the 2019 Annual Meeting to replace the current self-serving board. We constructed a slate of director candidates that have diverse and complementary skill sets and experience spanning the areas of operations, manufacturing, financial, technology, marketing, banking, risk management that, in the aggregate, possess the expertise gravely needed at DSS and who take their fiduciary duties with the requisite respect. Our director nominees will be prepared to drive DSS forward and act solely in the best interests of all shareholders. We are nominating directors who, if elected, would replace the current Board in its entirety. We believe this level of change is appropriate in light of the dismal operational results and substantial shareholder value destruction DSS has experienced over the past several years. Our qualified slate has formulated a recovery plan for the Company that will include maximizing shareholder value locked up in current Company assets and lines of business and exploring new opportunities open to the Company.
2
Please look for our preliminary proxy statement which we anticipate filing in the next several days which will contain important information as to the director candidates, and reasons for the changes.
We look forward to hearing the views of shareholders and remain open to engaging constructively with DSS management. Our goal is to represent the best interests of all shareholders, and we believe that our nominees have the experience and track record to drive the much-needed change at DSS.
| Sincerely, | ||
| /s/ J. Marvin Feigenbaum | ||
| J. Marvin Feigenbaum | ||
| /s/ Barinder Athwal | ||
| Barinder Athwal | ||
| /s/ Brian Mirman | ||
| Brian Mirman |
CERTAIN INFORMATION REGARDING THE CONCERNED SHAREHOLDERS
THE CONCERNED SHAREHOLDERS STRONGLY ADVISE ALL STOCKHOLDERS OF THE COMPANY TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS THE CONCERNED SHAREHOLDERS EXPECT TO FILE AS SAME BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC’S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE CONCERNED SHAREHOLDERS WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE CONCERNED SHAREHOLDERS’ PROXY SOLICITOR.
As of the date hereof, Barinder Athwal beneficially owns 1,011,637 shares of Common Stock, $0.02 par value per share, of the Company (the “Common Stock”), Brian Mirman beneficially owns 628,158 shares of Common Stock and J. Marvin Feigenbaum beneficially owns 5,000 shares of Common Stock.
Investor Contact:
John Ferguson
Saratoga Proxy
(212) 257-1311 / (888) 368-0379
info@saratogaproxy.com
3
Exhibit 99.2
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(k)(1) promulgated under the Securities Exchange Act of 1934, as amended, the undersigned hereby agree to the joint filing with each of the Reporting Persons (as such term is defined in the Schedule 13D referred to below) on behalf of each of them of a statement on Schedule 13D (including amendments thereto) with respect to the Common Stock, $0.02 par value, of Document Security Systems, Inc., a New York corporation, and that this agreement may be included as an exhibit to such joint filing. The undersigned acknowledge that each shall be responsible for the timely filing of any amendments, and for the completeness and accuracy of the information concerning the undersigned or contained herein and therein, but shall not be responsible for the completeness and accuracy of the information concerning the others.
IN WITNESS WHEREOF, the undersigned hereby execute this agreement as of October 31, 2019.
| /s/ J. Marvin Feigenbaum | |
| J. Marvin Feigenbaum | |
| /s/ Barinder Athwal | |
| Barinder Athwal | |
| /s/ Brian Mirman | |
| Brian Mirman |