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<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 14pt"><B>UNITED STATES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 12pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 14pt"><B>SECURITIES
AND EXCHANGE COMMISSION </B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Washington, D.C. 20549 </B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 14pt"><B>FORM 8-K</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 12pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 14pt"><B>CURRENT REPORT</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Date of Report (Date of earliest event reported):
February 20, 2012</P>

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<P STYLE="font: 24pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 18pt"><B>DOCUMENT SECURITY
SYSTEMS, INC.</B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>(Exact name of registrant as specified in
its charter) </B></P>

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    <TD STYLE="width: 32%">&nbsp;</TD></TR>
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    <TD STYLE="font-weight: bold; text-align: center">New York</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">001-32146</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">16-1229730</TD></TR>
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    <TD NOWRAP STYLE="font-weight: bold; text-align: center">(State or other jurisdiction of incorporation)</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center">(Commission File Number)</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center">(IRS Employer Identification No.)</TD></TR>
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        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>First Federal Plaza, Suite 1525</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>28 East Main Street</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Rochester, NY </B></P></TD>
    <TD STYLE="width: 32%; vertical-align: top">&nbsp;</TD>
    <TD STYLE="width: 34%; vertical-align: bottom; font-weight: bold; text-align: center">14614</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold; text-align: center">(Address of principal executive offices)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">(Zip Code)</TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Registrant&rsquo;s telephone number, including
area code: <B>(585) 325-3610</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>(Former name or former address, if changed
since last report.) </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;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):</P>

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    <TD STYLE="width: 4%; font-family: Wingdings">&uml;</TD>
    <TD STYLE="width: 96%">Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</TD></TR>
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    <TD STYLE="font-family: Wingdings">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-family: Wingdings">&uml;</TD>
    <TD>Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</TD></TR>
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    <TD STYLE="font-family: Wingdings">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-family: Wingdings">&uml;</TD>
    <TD>Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-family: Wingdings">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-family: Wingdings">&uml;</TD>
    <TD>Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Item 1.01 Entry into a Material Definitive Agreement.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On February 20, 2012, Document
Security Systems, Inc. (the &ldquo;Company&rdquo;) and ipCapital Group, Inc. (&ldquo;ipCapital&rdquo;) entered into an engagement
letter (the &ldquo;ipCapital Engagement Letter&rdquo;) for the provision of certain IP strategic consulting services by ipCapital
for the 2012 calendar year (the &ldquo;Services&rdquo;). Pursuant to the terms of the ipCapital Engagement Letter, Services to
the Company include, but are not limited to (i) facilitation of eight full-day invention sessions with the Company&rsquo;s senior
management team to create a strategic invention inventory on the front end of new patent application development, and (ii) the
provision of as-needed engineering and management support to ensure that strategic action items are executed in a cost-effective
manner leveraging ipCapital&rsquo;s expertise and best-practices.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Fees under the ipCapital
Enagement Letter will range from $240,000 to $365,000 for the 2012 calendar year (the &ldquo;Cash Fees&rdquo;). In addition to
Cash Fees, the Company issued ipCapital a five-year warrant (the &ldquo;Warrant&rdquo;) on February 20, 2012 (the &ldquo;Issuance
Date&rdquo;) to purchase up to 100,000 shares of the Company&rsquo;s common stock (the &ldquo;Warrant Stock&rdquo;) at an exercise
price of $4.62 per share (the &ldquo;Warrant Price&rdquo;). The Warrant vests and becomes exercisable to the extent of 33 1/3 percent
of the Warrant Stock upon each of the first, second and third anniversary dates, respectively, of the Issuance Date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The forgoing description
is a summary only, does not purport to set forth the complete terms of the ipCapital Engagement Letterand the Warrant, and is qualified
in its entirety by reference to the ipCapital Engagement Letter and Warrant, which are filed as Exhibits 10.1 and 4.1, respectively,
to this Current Report on Form 8-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On February 20, 2012, the
Company entered into a consulting arrangement with ipCapital (the &ldquo;ipCapital Consulting Agreement&rdquo;). Pursuant to the
terms of the ipCapital Consulting Agreement, ipCapital will provide strategic advice to the Company&rsquo;s senior management team
on the development of the Company&rsquo;s Digital Group infrastructure and cloud computing business strategy. The ipCapital Consulting
Agreement has a three year term. As ipCapital&rsquo;s sole source of compensation under the ipCapital Consulting Agreement, the
Company issued ipCapital a five-year warrant (the &ldquo;Consulting Warrant&rdquo;) on February 20, 2012 (the &ldquo;Consulting
Warrant Issuance Date&rdquo;) to purchase up to 200,000 shares of the Company&rsquo;s common Stock (the &ldquo;Consulting Warrant
Stock&rdquo;) at an exercise price of $4.50 per share (the &ldquo;Consulting Warrant Price&rdquo;). The Consulting Warrant vests
and becomes exercisable to the extent of 33 1/3 percent of the Consulting Warrant Stock upon each of the first, second and third
anniversary dates, respectively, of the Consulting Warrant Issuance Date. Either party may terminate the Consulting Agreement upon
a material breach by the other party which is not cured within 15 days of notice thereof or by the Company immediately upon a breach
by ipCapital of its confidentiality obligations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The foregoing description
is a summary only, does not purport to set forth the complete terms of the ip Capital Consulting Agreement and Consulting Warrant,
and is qualified in its entirety by reference to the ipCapital Consulting Agreement and Consulting Warrant, which are filed as
Exhibits 10.2 and 4.2, respectively, to this Current Report on Form 8-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On February 20, 2012, the
Company entered into consulting arrangement (the &ldquo;Century Media Consulting Agreement&rdquo;) with Century Media Group (&ldquo;Century
Media&rdquo;) for the provision of investor relations services to the Company (the &ldquo;IR Services&rdquo;). The IR Services
include, but are not limited to (i) assisting in the implementation and maintenance of an ongoing program to increase the investment
community&rsquo;s awareness of the Company&rsquo;s activities and to stimulate the investment community&rsquo;s interest in the
Company, (ii) assisting the Company with press release production and editing, and (iii) management of shareholder inquiries to
the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The term of the Century
Media Consulting Agreement is one year. As compensation for the IR Services, Century Media will receive a fee of $10,000 per month
for the one year term (the &ldquo;Cash Consulting Fees&rdquo;). In addition to the Cash Consulting Fees, the Company issued Century
Media a 14-month warrant (the &ldquo;Century Media Warrant&rdquo;) on February 20, 2012 to purchase up to 250,000 shares of the
Company&rsquo;s common stock (the &ldquo;Century Media Warrant Stock&rdquo;), at exercise prices of $4.50, $4.75, $5.00, $5.25
and $6.00 for each 50,000 shares subject to the Century Media Warrant. The Century Media Warrant vested in full on the date of
issuance, February 20, 2012. Either party may terminate the Century Media Consulting Agreement upon 30 days prior written notice
after the first 30 days of the term of the Century Media Consulting Agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The foregoing description
is a summary only, does not purport to set forth the complete terms of the Century Media Consulting Agreement and the Century Media
Warrant, and is qualified in its entirety by reference to the Century Media Consulting Agreement and the Century Media Warrant,
which are filed as Exhibits 10.3 and 4.3, respectively, to this Current Report on Form 8-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company has received
NYSE Amex additional listing approval for the Warrant Stock, the Consulting Warrant Stock and the Century Media Warrant Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Item 5.02 Departure of Directors and Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On February 20, 2012, the
Board of Directors (the &ldquo;Board&rdquo;) unanimously appointed John Cronin as a director of the Company, to fill a vacancy
on the Board created pursuant to amended by-laws of the Company adopted on January 16, 2012 whereby the number of Board seats was
increased from seven members to eight members. The appointment will be effective on February 21, 2012, and Mr. Cronin will serve
as a director of the Company until the next annual meeting of shareholders. Mr. Cronin is Chairman, Managing Director and a 42%
owner of ipCapital which, on February 20, 2012, entered the ipCapital Engagement Letter and the ipCapital Consulting Agreement
with the Company, as described in Item 1.01 above of this Current Report on Form 8-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The disclosure set forth
above in Item 1.01of this Current Report on Form 8-K is hereby incorporated by reference into this Item 5.02.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Item 8.01</B> <B>Other Events.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On February 21, 2012, the
Company issued a press release announcing the appointment of John Cronin to the Board. A copy of the press release is attached
as Exhibit 99.1 to this Current Report on Form 8-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The information furnished
pursuant to this Item 8.01 and Exhibit 99.1 to this Current Report on Form 8-K shall not be deemed &ldquo;filed&rdquo; for purposes
of Section 18 of the Securities Exchange Act of 1934, as amended (the &ldquo;Exchange Act&rdquo;), and shall not be deemed to be
incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as shall be expressly
set forth by specific reference in such filing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Item 9.01 Financial Statements and Exhibits.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 7%; font-weight: bold; text-align: justify">(d)</TD>
    <TD STYLE="width: 93%; font-weight: bold; text-align: justify">Exhibits</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold; text-align: justify">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">4.1</TD>
    <TD STYLE="text-align: justify">Warrant issued to ipCapital Group, Inc., dated February 20, 2012.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">4.2</TD>
    <TD STYLE="text-align: justify">Warrant issued to ipCapital Group, Inc., dated February 20, 2012.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">4.3</TD>
    <TD STYLE="text-align: justify">Warrant issued to Century Media Group, dated February 20, 2012.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.1</TD>
    <TD STYLE="text-align: justify">Engagement Letter between Document Security Systems, Inc. and ipCapital Group, Inc., dated February 20, 2012.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.2</TD>
    <TD STYLE="text-align: justify">Consulting Agreement between Document Security Systems, Inc. and ipCapital Group, Inc., dated February 20, 2012.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.3</TD>
    <TD STYLE="text-align: justify">Consulting Agreement between Document Security Systems, Inc. and Century Media Group, dated February 20, 2012.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">99.1</TD>
    <TD STYLE="text-align: justify">Press release issued February 21, 2012.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">SIGNATURE</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="3" STYLE="font-weight: bold">DOCUMENT SECURITY SYSTEMS, INC.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 45%; padding-left: 12pt; text-indent: -12pt">Dated: February 21, 2012</TD>
    <TD STYLE="width: 5%">&nbsp;</TD>
    <TD STYLE="width: 7%; padding-left: 12pt; text-indent: -12pt">By:</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 42%; border-bottom: windowtext 1pt solid; text-align: center">/s/ Patrick A. White</TD></TR>
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">Patrick A. White</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font-style: italic; font-weight: bold; text-align: center">Chief Executive Officer</TD></TR>
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{"company-data": {"conformed-name": "DOCUMENT SECURITY SYSTEMS INC", "cik": "0000771999", "assigned-sic": "7373", "irs-number": "161229730", "state-of-incorporation": "NY", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-32146", "film-number": "12627502"}, "business-address": {"street1": "36 WEST MAIN ST", "street2": "SUITE 710", "city": "ROCHESTER", "state": "NY", "zip": "14614", "phone": "585 232 1500"}, "mail-address": {"street1": "36 W MAIN ST", "street2": "SUITE 710", "city": "ROCHESTER", "state": "NY", "zip": "14614"}, "former-company": [{"former-conformed-name": "NEW SKY COMMUNICATIONS INC", "date-changed": "19920703"}, {"former-conformed-name": "THOROUGHBREDS USA INC", "date-changed": "19861118"}]}
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):
February 20, 2012
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.)
First Federal Plaza, Suite 1525
28 East Main Street
Rochester, NY
14614
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including
area code:
(585) 325-3610
(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))
Item 1.01 Entry into a Material Definitive Agreement.
On February 20, 2012, Document
Security Systems, Inc. (the "Company") and ipCapital Group, Inc. ("ipCapital") entered into an engagement
letter (the "ipCapital Engagement Letter") for the provision of certain IP strategic consulting services by ipCapital
for the 2012 calendar year (the "Services"). Pursuant to the terms of the ipCapital Engagement Letter, Services to
the Company include, but are not limited to (i) facilitation of eight full-day invention sessions with the Company's senior
management team to create a strategic invention inventory on the front end of new patent application development, and (ii) the
provision of as-needed engineering and management support to ensure that strategic action items are executed in a cost-effective
manner leveraging ipCapital's expertise and best-practices.
Fees under the ipCapital
Enagement Letter will range from $240,000 to $365,000 for the 2012 calendar year (the "Cash Fees"). In addition to
Cash Fees, the Company issued ipCapital a five-year warrant (the "Warrant") on February 20, 2012 (the "Issuance
Date") to purchase up to 100,000 shares of the Company's common stock (the "Warrant Stock") at an exercise
price of $4.62 per share (the "Warrant Price"). The Warrant vests and becomes exercisable to the extent of 33 1/3 percent
of the Warrant Stock upon each of the first, second and third anniversary dates, respectively, of the Issuance Date.
The forgoing description
is a summary only, does not purport to set forth the complete terms of the ipCapital Engagement Letterand the Warrant, and is qualified
in its entirety by reference to the ipCapital Engagement Letter and Warrant, which are filed as Exhibits 10.1 and 4.1, respectively,
to this Current Report on Form 8-K.
On February 20, 2012, the
Company entered into a consulting arrangement with ipCapital (the "ipCapital Consulting Agreement"). Pursuant to the
terms of the ipCapital Consulting Agreement, ipCapital will provide strategic advice to the Company's senior management team
on the development of the Company's Digital Group infrastructure and cloud computing business strategy. The ipCapital Consulting
Agreement has a three year term. As ipCapital's sole source of compensation under the ipCapital Consulting Agreement, the
Company issued ipCapital a five-year warrant (the "Consulting Warrant") on February 20, 2012 (the "Consulting
Warrant Issuance Date") to purchase up to 200,000 shares of the Company's common Stock (the "Consulting Warrant
Stock") at an exercise price of $4.50 per share (the "Consulting Warrant Price"). The Consulting Warrant vests
and becomes exercisable to the extent of 33 1/3 percent of the Consulting Warrant Stock upon each of the first, second and third
anniversary dates, respectively, of the Consulting Warrant Issuance Date. Either party may terminate the Consulting Agreement upon
a material breach by the other party which is not cured within 15 days of notice thereof or by the Company immediately upon a breach
by ipCapital of its confidentiality obligations.
The foregoing description
is a summary only, does not purport to set forth the complete terms of the ip Capital Consulting Agreement and Consulting Warrant,
and is qualified in its entirety by reference to the ipCapital Consulting Agreement and Consulting Warrant, which are filed as
Exhibits 10.2 and 4.2, respectively, to this Current Report on Form 8-K.
On February 20, 2012, the
Company entered into consulting arrangement (the "Century Media Consulting Agreement") with Century Media Group ("Century
Media") for the provision of investor relations services to the Company (the "IR Services"). The IR Services
include, but are not limited to (i) assisting in the implementation and maintenance of an ongoing program to increase the investment
community's awareness of the Company's activities and to stimulate the investment community's interest in the
Company, (ii) assisting the Company with press release production and editing, and (iii) management of shareholder inquiries to
the Company.
The term of the Century
Media Consulting Agreement is one year. As compensation for the IR Services, Century Media will receive a fee of $10,000 per month
for the one year term (the "Cash Consulting Fees"). In addition to the Cash Consulting Fees, the Company issued Century
Media a 14-month warrant (the "Century Media Warrant") on February 20, 2012 to purchase up to 250,000 shares of the
Company's common stock (the "Century Media Warrant Stock"), at exercise prices of $4.50, $4.75, $5.00, $5.25
and $6.00 for each 50,000 shares subject to the Century Media Warrant. The Century Media Warrant vested in full on the date of
issuance, February 20, 2012. Either party may terminate the Century Media Consulting Agreement upon 30 days prior written notice
after the first 30 days of the term of the Century Media Consulting Agreement.
The foregoing description
is a summary only, does not purport to set forth the complete terms of the Century Media Consulting Agreement and the Century Media
Warrant, and is qualified in its entirety by reference to the Century Media Consulting Agreement and the Century Media Warrant,
which are filed as Exhibits 10.3 and 4.3, respectively, to this Current Report on Form 8-K.
The Company has received
NYSE Amex additional listing approval for the Warrant Stock, the Consulting Warrant Stock and the Century Media Warrant Stock.
Item 5.02 Departure of Directors and Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On February 20, 2012, the
Board of Directors (the "Board") unanimously appointed John Cronin as a director of the Company, to fill a vacancy
on the Board created pursuant to amended by-laws of the Company adopted on January 16, 2012 whereby the number of Board seats was
increased from seven members to eight members. The appointment will be effective on February 21, 2012, and Mr. Cronin will serve
as a director of the Company until the next annual meeting of shareholders. Mr. Cronin is Chairman, Managing Director and a 42%
owner of ipCapital which, on February 20, 2012, entered the ipCapital Engagement Letter and the ipCapital Consulting Agreement
with the Company, as described in Item 1.01 above of this Current Report on Form 8-K.
The disclosure set forth
above in Item 1.01of this Current Report on Form 8-K is hereby incorporated by reference into this Item 5.02.
Item 8.01
Other Events.
On February 21, 2012, the
Company issued a press release announcing the appointment of John Cronin to the Board. A copy of the press release is attached
as Exhibit 99.1 to this Current Report on Form 8-K.
The information furnished
pursuant to this Item 8.01 and Exhibit 99.1 to this Current Report on Form 8-K shall not be deemed "filed" for purposes
of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and shall not be deemed to be
incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as shall be expressly
set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d)
Exhibits
4.1
Warrant issued to ipCapital Group, Inc., dated February 20, 2012.
4.2
Warrant issued to ipCapital Group, Inc., dated February 20, 2012.
4.3
Warrant issued to Century Media Group, dated February 20, 2012.
10.1
Engagement Letter between Document Security Systems, Inc. and ipCapital Group, Inc., dated February 20, 2012.
10.2
Consulting Agreement between Document Security Systems, Inc. and ipCapital Group, Inc., dated February 20, 2012.
10.3
Consulting Agreement between Document Security Systems, Inc. and Century Media Group, dated February 20, 2012.
99.1
Press release issued February 21, 2012.
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: February 21, 2012
By:
/s/ Patrick A. White
Patrick A. White
Chief Executive Officer