#2..Failure to approve staggered board.......
This has several ramifications. First the board make up will now be 4 representatives from DSS and 4 representatives from LTG. The ninth position will be filled by Richard Cohen.
Purchase Price Allocation if Lexington is determined to be the accounting acquirer:
In accordance with the accounting treatment of the Merger as a reverse acquisition, the fair value of the outstanding equity of the accounting acquiree immediately prior to the Merger is used to calculate the purchase price of the net assets by the combined company. The purchase price is allocated to the fair value of the acquired company’s assets and liabilities on the date of the Merger, with any remainder assigned to goodwill. The pro-forma unaudited balance sheet as of December 31, 2012 presented below reflects the allocation of the preliminary estimated purchase price of approximately $68 million which is the expected estimated fair value of DSS’s outstanding common stock on the date of the Merger based on share price of $3.12 which was the closing price of DSS common stock on May 3, 2013, and the outstanding stock of DSS as of May 3, 2013. The final purchase price allocation will depend significantly on DSS’s future share price and the final estimate of the fair value of the intangible assets acquired, and consequently, might significantly differ from the values presented in these pro-forma statements. While DSS uses its best estimates and assumptions as part of the purchase price allocation process to value, the assets acquired, the purchase price allocation is preliminary and could change during the measurement period (not to exceed one year) if new information is obtained about the facts and circumstances that existed as of the Merger date that, if known, would have resulted in the recognition of additional or changes to the value of the assets and liabilities presented in this proforma.
Purchase Price Allocation if DSS is determined to be the accounting acquirer:
In accordance with the accounting treatment of the Merger as a business combination in accordance with the Business Combination Topic of the FASB ASC 805. Under the guidance, the assets and liabilities of the acquired business, Lexington, are recorded at their fair values at the date of acquisition. The excess of the purchase price over the estimated fair values is recorded as goodwill, if any. If the fair value of the assets acquired exceeds the purchase price and the liabilities assumed then a gain on acquisition is recorded. The consideration transferred is measured based on the expected fair value of the DSS common stock, preferred stock and warrant issued by DSS to Lexington. The estimated fair value of the aggregate of 26,850,000 shares of DSS common stock and DSS preferred stock to be issued is $3.12 per share based on the closing price on May 3, 2013. For the purposes of this pro forma estimate, the fair value of the preferred shares is based on their immediate convertibility to DSS common stock. The fair value 4,859,894 warrants to be issued by DSS is estimated to be $6,103,231 using the Black-Scholes-Merton option pricing model. As a result, the total purchase price of approximately $90 million is allocated to the fair value of the assets of Lexington on the date of the Merger. The Company measured the identifiable assets acquired and liabilities assumed based on the acquisition date fair value. While DSS uses its best estimates and assumptions as part of the purchase price allocation process to value, the assets acquired, the purchase price allocation is preliminary and could change during the measurement period (not to exceed one year) if new information is obtained about the facts and circumstances that existed as of the Merger date that, if known, would have resulted in the recognition of additional or changes to the value of the assets and liabilities presented in this proforma.
What has to be considered is what does the price on the date of the "official filing" next week have on these values?
