Financial Performance - Total revenue for Q3 2023 was $4,182,000, a decrease of 64.7% compared to $11,862,000 in Q3 2022[11] - Net loss for the nine months ended September 30, 2023, was $53,039,000, compared to a net loss of $39,161,000 for the same period in 2022, representing a 35.4% increase in losses[13] - Operating loss for Q3 2023 was $5,103,000, compared to an operating loss of $14,748,000 in Q3 2022, showing an improvement of 65.4%[11] - The company reported a loss per common share of $0.03 for Q3 2023, compared to a loss of $0.15 in Q3 2022[11] - Total revenue for the nine months ended September 30, 2023, was $23,245,000, a decrease from $35,927,000 in the same period of 2022, representing a decline of approximately 35%[135] - Net loss from operations for the nine months ended September 30, 2023, was $53,039,000, compared to a net loss of $39,161,000 for the same period in 2022, indicating an increase in losses of about 35%[135] Cash and Assets - Cash and cash equivalents decreased to $6,897,000 as of September 30, 2023, down from $19,290,000 at the end of 2022, a decline of 64.2%[9] - Total assets decreased to $196,551,000 as of September 30, 2023, from $248,916,000 at the end of 2022, a reduction of 21.0%[9] - Total stockholders' equity decreased to $127,747,000 as of September 30, 2023, from $156,681,000 at the end of 2022, a decline of 18.5%[9] - Identifiable assets as of September 30, 2023, totaled $196,551,000[134] - Identifiable assets as of September 30, 2023, were $196,551,000, down from $264,880,000 as of September 30, 2022, a reduction of about 26%[135] Operating Activities - The company experienced a net cash used by operating activities of $21,035,000 for the nine months ended September 30, 2023, compared to $23,251,000 in the same period of 2022[13] - The company incurred operating losses and negative cash flows from operating and investing activities over the past two years, raising concerns about its ability to continue as a going concern[45] - The company intends to control operating costs and reduce spending growth rates to return to profitability, while also exploring growth opportunities across its operating segments[47] Investments and Equity - The company reported a significant loss on investments of $30,490,000 for the nine months ended September 30, 2023, compared to a loss of $10,479,000 in the same period of 2022[13] - The fair value of the company's investment in Alset International Limited was approximately $3,726,000 as of September 30, 2023, with an unrealized gain of approximately $407,000 recorded during the nine months ended September 30, 2023[88] - The company impaired 100% of its investment in Vivacitas, amounting to $4,100,000, as of December 31, 2022[97] - The company has an equity position of approximately 16% in Vivacitas following the acquisition of shares for $2,480,000, with the largest shareholder being the Chairman of the company[140] Revenue Recognition and Inventory - The Company recognizes revenue based on when the title passes to the customer or when the service is completed, excluding sales and other taxes from revenue[49] - The Company had total inventory of $3,930,000 as of September 30, 2023, down from $7,721,000 as of December 31, 2022, reflecting a decrease in finished goods and work in process[55] - The allowance for obsolescence related to inventory was approximately $57,000 for the Premier subsidiary as of September 30, 2023, compared to $742,000 for the former SHRG subsidiary as of December 31, 2022[36] Financing and Debt - The Company issued 15,389,995 shares of common stock to Mr. Heng Fai Ambrose Chan for $5,848,000 under his employment agreement[124] - The Company issued a Convertible Promissory Note of $50,000 to HWH International, convertible into 333,333 shares of Common Stock[146] - Scheduled principal payments of long-term debt after September 30, 2023, total approximately $46,952,000 for 2024[116] - The Company recorded a loan loss reserve of approximately $1,179,000 for Q3 2023 and $4,936,000 for the nine months ended September 30, 2023[81] Business Operations - DSS operates nine distinct business lines, including Product Packaging, Biotechnology, and Alternative Energy, indicating a diversified operational strategy[18] - The Biotechnology division is focused on addressing urgent medical needs and developing initiatives to curb airborne infectious diseases[19] - The Digital Transformation division aims to improve marketing and operations for mid-cap brands through custom software development[19] - The Alternative Energy group is pursuing utility-scale solar farms to support regional power grids, reflecting a commitment to sustainable energy solutions[19] Shareholder Actions - Shareholders approved the issuance of up to 21,366,177 shares to Alset International to purchase a Convertible Promissory Note with a principal amount of $8,350,000[125] - The acquisition of 62,122,908 shares of True Partners Capital Holdings was completed in exchange for 17,570,948 shares of DSS stock valued at approximately $0.41 per share[126]

Financial Performance - Total revenue for Q2 2023 was $7.233 million, a decrease of 38.5% compared to $11.771 million in Q2 2022[15]. - Net loss for Q2 2023 was $37.923 million, compared to a net loss of $4.652 million in Q2 2022, representing an increase in loss of 715.5%[15]. - The company reported a basic loss per share of $0.27 for Q2 2023, compared to a loss of $0.05 per share in Q2 2022[15]. - The company’s total costs and expenses for Q2 2023 were $13.683 million, a decrease of 40.4% from $22.953 million in Q2 2022[15]. - The net loss from continuing operations for the first half of 2023 was $46.36 million, compared to a net loss of $14.36 million in the same period of 2022, indicating a significant increase in losses[17]. - Direct Marketing Internet Sales decreased significantly to $1,572,000 in Q2 2023 from $6,070,000 in Q2 2022, reflecting a decline of about 74%[134]. - Net loss from continuing operations for the six months ended June 30, 2023, was $46,357,000, compared to a loss of $14,361,000 for the same period in 2022, indicating a deterioration of approximately 224%[133]. Assets and Liabilities - Total current assets decreased to $29.793 million as of June 30, 2023, down 37.9% from $47.994 million as of December 31, 2022[10]. - Total liabilities decreased to $70.898 million as of June 30, 2023, down 25.5% from $95.870 million as of December 31, 2022[11]. - Cash and cash equivalents decreased to $10.033 million as of June 30, 2023, down 48.0% from $19.290 million as of December 31, 2022[10]. - The company’s accumulated deficit increased to $221.529 million as of June 30, 2023, compared to $194.343 million as of December 31, 2022[12]. - The total stockholders' equity decreased to $134.429 million as of June 30, 2023, down 14.2% from $156.681 million as of December 31, 2022[12]. - Cash and cash equivalents at the end of the period were $10.03 million, down from $43.95 million at the end of the previous year, indicating a decrease in liquidity[17]. - Identifiable assets as of June 30, 2023, were $202,744,000, a decrease from $282,948,000 as of June 30, 2022, representing a decline of approximately 28%[133]. Cash Flow and Investments - Cash flows used in operating activities totaled $19.72 million for the first half of 2023, up from $13.95 million in the same period of 2022, reflecting increased operational challenges[17]. - The company reported a net cash provided by investing activities of $13.38 million in the first half of 2023, contrasting with a net cash used of $6.41 million in the same period of 2022, highlighting a positive shift in investment activities[17]. - The company recorded an unrealized loss on its investment in Alset International Limited of approximately $1,945,000 for the six months ended June 30, 2023[136]. - The investment in Alset International Limited was valued at approximately $1,501,000 as of June 30, 2023, down from $3,319,000 as of December 31, 2022, reflecting an unrealized loss of approximately $1,945,000 during the six months ended June 30, 2023[89]. Debt and Financing - The company incurred $5.52 million in payments of long-term debt during the first half of 2023, compared to only $169,000 in the same period of 2022, showing a significant increase in debt repayment[17]. - The Company is negotiating with Pinnacle Bank to extend a note payable of approximately $40.2 million, which is currently in default[48]. - The outstanding principal and interest for Note 2 as of June 30, 2023, approximated $5,544,000, with a reserve of $2,884,000 against the principal and interest outstanding[60]. - The Company has a current portion of long-term debt approximating $83,000 classified under Note 17, with a total outstanding principal and interest of $127,000[77]. - Scheduled principal payments of long-term debt after June 30, 2023, total approximately $47,206,000 for 2023 and $3,801,000 for 2024[117]. Operational Strategy - The company operates nine distinct business lines, including Product Packaging and Biotechnology, indicating a diversified operational strategy[22]. - The company is focused on expanding its presence in the clean energy sector through its Alternative Energy group, which aims to develop utility-scale solar farms[23]. - The Company operates in five segments, including Product Packaging and Biotechnology, focusing on diverse markets such as drug discovery and packaging solutions[131]. - The Company relies on intersegment cooperation, and the results reported may not reflect independent operations of the segments[132]. Reserves and Provisions - As of June 30, 2023, the Company established a reserve for doubtful accounts of approximately $3,390,000, an increase from $29,000 as of December 31, 2022[32]. - The company recorded a loan loss reserve of approximately $3,757,000 for the three and six months ended June 30, 2023, indicating a proactive approach to managing credit risk[82]. - Specific loan reserves included a full reserve of $884,000 for Borrow 4 and an additional reserve of approximately $2,884,000 for borrower 2 as of June 30, 2023[85]. - The total inventory allowance for obsolescence decreased from $742,000 as of December 31, 2022, to $57,000 as of June 30, 2023[58]. Acquisitions and Investments - The acquisition of Impact Oncology PTE Ltd. was completed for a purchase price of $2,480,000, classified as an asset acquisition[138]. - The company completed the acquisition of 62,122,908 shares of True Partners Capital Holdings in exchange for 17,570,948 shares of DSS stock, valued at $0.34 per share[144]. - SHRG invested $1.4 million in Stemtech Corporation, receiving a Convertible Promissory Note and a detachable Warrant to purchase shares of GNTW common stock[98]. - The company sold its subsidiary HWH World, Inc. for gross proceeds of $711,000 on July 1, 2023, which included total assets of $2,004,000 and total liabilities of $1,188,000 as of June 30, 2023[87][88]. Future Outlook - The Company intends to continue as a going concern by controlling operating costs and reducing spending growth rates to return to profitability[49]. - The Company has recognized revenue based on when the title passes to the customer or when the service is completed and accepted, excluding sales and other taxes[51]. - The Company had no unsatisfied performance obligations for contracts with an original expected duration of greater than one year as of June 30, 2023[52]. - No subsequent events requiring financial statement recognition or disclosure were noted through August 14, 2023[146].

Financial Performance - Total revenue for Q1 2023 was $11.926 million, a decrease of 3% from $12.304 million in Q1 2022[14] - Operating loss for Q1 2023 was $5.580 million, improved from a loss of $7.319 million in Q1 2022[14] - Net loss attributable to common stockholders for Q1 2023 was $8.035 million, compared to a net loss of $8.048 million in Q1 2022[14] - The company reported a basic loss per common share of $0.06 for Q1 2023, an improvement from a loss of $0.10 in Q1 2022[14] - The company reported a net loss of $8,048,000 for the quarter ending March 31, 2022, compared to a net loss of $8,951,000 for the same period in 2023, indicating a slight improvement in performance year-over-year[18] - Net income from continuing operations for Q1 2023 was a loss of $8,633,000 compared to a loss of $8,951,000 in Q1 2022, showing a slight improvement[131] Cash and Assets - Cash and cash equivalents decreased to $13.732 million as of March 31, 2023, down from $19.290 million at the end of 2022[9] - Total assets decreased to $226.750 million as of March 31, 2023, from $248.916 million at the end of 2022[9] - Total stockholders' equity decreased to $148.048 million as of March 31, 2023, from $156.681 million at the end of 2022[11] - Cash used in operating activities for Q1 2023 was $14.199 million, compared to $6.070 million in Q1 2022[16] - Cash provided by investing activities was $11.537 million in Q1 2023, contrasting with cash used of $5.359 million in Q1 2022[16] - The Company has approximately $13.7 million in cash and anticipates receipts of principal and interest on its notes receivable of approximately $12 million through March 31, 2024[54] - The Company has marketable securities valued at $13,391,000 as of March 31, 2023, down from $27,307,000 as of December 31, 2022, representing a decrease of approximately 50.8%[78] Investments and Acquisitions - The company made a significant investment of $40,000,200 in American Pacific Bancorp, acquiring 6,666,700 shares at $6.00 per share, resulting in majority ownership[23] - DSS increased its ownership in Sharing Services Global Corporation from approximately 47% to 58% after purchasing 50,000,000 shares at $0.06 per share[25] - The company finalized a transaction to acquire 62,122,908 shares of True Partners Capital Holdings Limited in exchange for 17,570,948 shares of DSS stock, valued at $0.34 per share[30] - The Company acquired a 30.75% equity interest in MojiLife, LLC for $1,537,000, which was fully impaired in March 2022 due to non-recoverability[101] - The Company increased its equity position in Sentinel Brokers Company, Inc. to 75% after investing a total of $1,050,000, with the acquisition meeting the definition of a business under Topic 805[102] Business Segments - DSS, Inc. operates nine distinct business lines, including Product Packaging, Biotechnology, and Digital Transformation, each at different stages of development and growth[21] - The Biotechnology division is focused on investing in companies addressing urgent medical needs, including drug discovery and treatment of various diseases[22] - The Digital Transformation division aims to enhance marketing and operational processes for mid-cap brands through custom software development[22] - The Securities segment aims to establish digital asset exchanges for securities and cryptocurrencies using blockchain technology[130] Liabilities and Debt - The company’s current liabilities decreased to $64.606 million as of March 31, 2023, from $73.689 million at the end of 2022[10] - The Company intends to negotiate with Pinnacle Bank to extend its note payable of approximately $40.2 million through November 2024[54] - The outstanding principal on the Bank of America loan was $3,290,000 as of March 31, 2023, down from $3,406,000 as of December 31, 2022, with an interest rate of 4.63%[109] - The outstanding principal and interest of the LifeCare agreement was approximately $40,486,000 as of March 31, 2023[114] Revenue Recognition and Accounting - The Company recognizes revenue based on when the title passes to the customer or when the service is completed and accepted[58] - The Company has no unsatisfied performance obligations for contracts with an original expected duration of greater than one year as of March 31, 2023[59] - The Company recorded stock-based compensation expense of approximately $4,000 for the three months ended March 31, 2022[127] Inventory and Allowances - Inventory as of March 31, 2023, totaled $7,319,000, a decrease from $8,463,000 as of December 31, 2022, with an allowance for obsolescence of $57,000[64] - The Company recorded an allowance for obsolescence of approximately $742,000 associated with inventory at its SHRG subsidiary as of December 31, 2022[43] - As of March 31, 2023, the Company established a reserve for doubtful accounts of approximately $29,000, unchanged from December 31, 2022[36] Future Outlook - The Company plans to continue growth among its operating segments while tightly controlling operating costs to return to profitability[55] - Future minimum lease payments total $10,616,000, with a present value of remaining lease payments at $8,573,000 as of March 31, 2023[120]

Business Segments and Operations - DSS operates nine distinct business lines, currently reporting on five segments: Product Packaging, Biotechnology, Direct Marketing, Commercial Lending, and Securities and Investment Management[21]. - The company has a diverse portfolio of financial services, including commercial business lines of credit and investment banking through its subsidiaries[75]. - The company operates approximately 40 subsidiaries across nine market business lines, with five generating significant revenue[92]. - The company has expanded its Board of Directors with the appointment of two independent directors to enhance governance and oversight[31]. Financial Performance - Total revenue for the year ended December 31, 2022, increased by 133% to approximately $47.3 million compared to $20.3 million in 2021[161]. - Direct marketing revenues surged by 575% in 2022, primarily due to the inclusion of Sharing Services Global Corporation (SHRG) financial results starting January 1, 2022[161]. - Rental income rose significantly by 423% to $6,287,000 in 2022 from $1,203,000 in 2021[161]. - Total costs and expenses increased by 108% to $90,994,000 in 2022, driven by the inclusion of SHRG financial results and rising costs of labor and materials[163]. - Interest expense skyrocketed by 1385% in 2022, attributed to increased debt balances, particularly within the REIT business line[171]. - The company recorded a loss on investments of $10,697,000 in 2022, a decrease of 11% compared to $12,035,000 in 2021[170]. Strategic Initiatives and Acquisitions - The company has entered into multiple stock purchase agreements, including acquiring shares from Alset EHome International Inc. for a total of 59,979,582 newly issued shares[25]. - The company acquired a 24.9% equity position in Sentinel Brokers Company, Inc. for $300,000, with an option to purchase an additional 50.1%[148]. - The company completed the acquisition of 62,122,908 shares of True Partners Capital Holdings Limited in exchange for 17,570,948 shares of DSS stock[159]. - The company increased its ownership in SHRG to approximately 65% following the exercise of 50,000,000 warrants[156]. Biotechnology and Product Development - The Biotechnology division has made significant advancements, including key patent awards and positive study results, with ongoing global licensing discussions[21]. - Impact Biomedical, a subsidiary of DSS, received a positive report on the international patentability of its proprietary compound Equivir, aimed at treating viral infections[28]. - Impact holds 5 key patents related to its products, including Laetose and 3F, which are crucial for product development and licensing[70]. - The biotechnology sector is focused on specialty biopharmaceuticals and consumer healthcare products, competing with established companies like Ipsen Pharmaceuticals and Mylan Consumer Healthcare[76]. Market and Growth Opportunities - The company is actively pursuing opportunities in clean energy through its Alternative Energy division, focusing on utility-scale solar farms and microgrids[26]. - The company anticipates potential liquidity events in 2023, including two or three IPOs[38][45]. - The company plans to incur significant marketing and development costs for bio-health products acquired through Impact Biomedical, Inc[103]. - The company is preparing USX Holdings to launch a marketplace for trading digital assets, targeting the US secondary market for securities tokens[50][51]. Risks and Challenges - The company anticipates continued price pressure and supply chain issues into 2023, implementing risk mitigation strategies to avoid significant impacts on profit and loss[84]. - The company faces risks related to intellectual property claims that could adversely affect its operations and financial condition[101]. - Future growth may strain the company's management and financial resources, necessitating improved operational controls[109]. - The company has identified weaknesses in its internal control over financial reporting, which may lead to errors in financial statements and affect investor confidence[112]. Corporate Governance and Structure - As of March 13, 2023, directors, executive officers, and principal stockholders beneficially own approximately 59% of the outstanding shares, potentially controlling significant corporate decisions[125]. - The company does not intend to declare or pay cash dividends on its common stock in the foreseeable future, opting to retain earnings for business investment[113]. - The company has outstanding indebtedness totaling significant amounts, including $40.2 million under the LifeCare Agreement, which matures on November 2, 2023[99]. Real Estate and Asset Management - The American Medical REIT formed by DSS Securities aims to fulfill community needs for quality healthcare facilities, providing investment opportunities in managed medical real estate[69]. - The company owns real estate properties with a net book value of approximately $55,029,000[209]. - The assessment of impairment of real estate properties involves a high degree of subjective auditor judgment due to the complexity of valuation models and sensitivity of key assumptions[210]. Cash Flow and Financing - As of December 31, 2022, the company had approximately $19.3 million in cash, sufficient to meet cash requirements for at least the next 12 months[176]. - Net cash used by operating activities increased to approximately $27.0 million for the year ended December 31, 2022, compared to approximately $9.0 million for the year ended December 31, 2021, driven by a net loss increase of approximately $69.7 million[177]. - The company anticipates raising $30 - $50 million through an IPO of its subsidiary Impact BioMedical, expected to close in early Q3 2023[181].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______to_______ . 001-32146 Commission file number DSS, INC. (Exact name of registrant as specified in its charter) | --- | --- | --- | |------------------------------- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______to_______ . 001-32146 Commission file number DSS, INC. | --- | --- | --- | |-----------------------------------------|------------------------------------------------- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______to_______ . 001-32146 Commission file number | --- | --- | |--------------------------------------------------------------------------------|-----------------------| ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to __________ Commission file number 001-32146 | --- | --- | |------------------------------------------------------------------------------------------|----------- ...

PART I - FINANCIAL INFORMATION This section presents unaudited consolidated financial statements and management's analysis of financial condition [Item 1 - Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201%20-%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements, including the balance sheets, statements of operations, cash flows, and changes in stockholders' equity, along with detailed notes explaining the company's accounting policies, significant transactions, and financial position [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This section presents the company's assets, liabilities, and equity at specific reporting dates Consolidated Balance Sheet Highlights (September 30, 2021 vs. December 31, 2020) | Metric | Sep 30, 2021 | Dec 31, 2020 | | :-------------------------------- | :----------- | :----------- | | Cash and Cash Equivalents | $69,137,000 | $5,183,000 | | Total Current Assets | $96,981,000 | $12,450,000 | | Total Assets | $219,076,000 | $91,919,000 | | Total Current Liabilities | $12,538,000 | $8,872,000 | | Long-term Debt, net | $6,664,000 | $1,976,000 | | Total Stockholders' Equity | $199,292,000 | $76,545,000 | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net income or loss over specific periods Consolidated Statements of Operations Highlights | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | % Change | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | % Change | | :------------------------------------------------ | :-------------------------- | :-------------------------- | :------- | :-------------------------- | :-------------------------- | :------- | | Total Revenue | $4,566,000 | $3,686,000 | 24% | $13,218,000 | $10,202,000 | 30% | | Operating Loss | $(5,545,000) | $(2,573,000) | 116% | $(15,991,000) | $(4,806,000) | 233% | | Net (Loss) Income Attributable to Common Stockholders | $(6,598,000) | $5,068,000 | -230% | $(18,997,000) | $2,376,000 | -900% | - The significant increase in **net loss** for both the three and nine months ended September 30, 2021, was primarily driven by increased **operating losses** and a shift from **investment gains to losses**[17](index=17&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section outlines cash flows from operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights (9 Months Ended Sep 30) | Metric | 2021 | 2020 | | :------------------------------------ | :----------- | :----------- | | Net Cash Used by Operating Activities | $(12,448,000) | $(2,846,000) | | Net Cash Used by Investing Activities | $(53,215,000) | $(7,243,000) | | Net Cash Provided by Financing Activities | $126,760,000 | $20,777,000 | | Net Increase in Cash | $64,304,000 | $10,549,000 | - The substantial **net increase in cash** for the nine months ended September 30, 2021, was primarily due to significant cash provided by **financing activities**, largely from **issuances of common stock**[22](index=22&type=chunk) [Consolidated Statement of Changes in Stockholders' Equity](index=10&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Stockholders'%20Equity) This section tracks changes in the company's equity accounts over a specified period Changes in Stockholders' Equity (December 31, 2020 to September 30, 2021) | Metric | Dec 31, 2020 | Sep 30, 2021 | | :-------------------------- | :----------- | :----------- | | Common Stock Shares | 5,836,000 | 79,746,000 | | Common Stock Amount | $116,000 | $1,594,000 | | Additional Paid-in Capital | $174,380,000 | $294,682,000 | | Noncontrolling Interest in Subsidiary | $3,430,000 | $23,395,000 | | Accumulated Deficit | $(101,382,000) | $(120,379,000) | | Total Stockholders' Equity | $76,545,000 | $199,292,000 | - The significant increase in **total stockholders' equity** was primarily driven by the **issuance of common stock** and the **acquisition of American Pacific Bancorp**, despite an increase in **accumulated deficit** due to **net losses**[25](index=25&type=chunk) [Notes to Interim Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Interim%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the interim financial statements [Note 1. Basis of Presentation and Significant Accounting Policies](index=11&type=section&id=Note%201.%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) This note outlines foundational principles and key accounting methods used in financial statements - The company changed its name from Document Security Systems, Inc. to **DSS, Inc.** effective **September 30, 2021**, maintaining the same trading symbol 'DSS'[26](index=26&type=chunk) - DSS operates **nine distinct business lines**: Premier Packaging, IP Monetization, Direct Marketing/Online Sales Group, Blockchain Technology, Securities and Fintech Group, BioHealth Group, Secure Living, Energy Group, and Investment Banking[27](index=27&type=chunk) - The company completed the acquisition of **Impact BioMedical, Inc.** on **August 21, 2020**, and became the majority owner of **American Pacific Bancorp, Inc. (APB)** on **September 9, 2021**[31](index=31&type=chunk)[34](index=34&type=chunk) - The operations of **Plastic Printing Professionals, Inc.** (August 2020) and **DSS Digital Inc.** (May 2021) have been discontinued, reflecting significant strategic shifts[55](index=55&type=chunk)[56](index=56&type=chunk) [Note 2. Revenue](index=18&type=section&id=Note%202.%20Revenue) This note details revenue recognition policies and significant customer concentrations - Revenue is recognized when title passes to the customer or service is completed and accepted. Rental income is recognized on a straight-line basis over the lease term[64](index=64&type=chunk) - Two customers accounted for **43% of consolidated revenue** and **73% of consolidated trade accounts receivable** as of September 30, 2021, indicating a concentration of credit risk[59](index=59&type=chunk) [Note 3. Notes Receivable](index=19&type=section&id=Note%203.%20Notes%20Receivable) This note provides information on outstanding notes receivable, including terms and valuations - The company holds several notes receivable, including a **$500,000 convertible promissory note** with Century TBD Holdings, LLC, an **$800,000 convertible promissory note** with GSX Group Limited, and a **$30,000,000 convertible promissory note** with Sharing Services Global Corporation (SHRG)[71](index=71&type=chunk)[73](index=73&type=chunk)[76](index=76&type=chunk) - The SHRG Note included a **$3,000,000 loan origination fee** and **150,000,000 warrants**, with the note valued at approximately **$16,830,000** as of September 30, 2021[76](index=76&type=chunk) [Note 4. Financial Instruments](index=21&type=section&id=Note%204.%20Financial%20Instruments) This note describes the company's financial instruments and their fair value measurements Financial Instruments Fair Value (September 30, 2021) | Category | Adjusted Cost | Unrealized Gain/(Loss) | Fair Value | | :---------------------- | :------------ | :--------------------- | :----------- | | Cash and Cash Equivalents | $51,438,000 | $0 | $51,438,000 | | Restricted Cash | $350,000 | $0 | $350,000 | | Money Market Funds | $17,699,000 | $0 | $17,699,000 | | Marketable Securities | $6,608,000 | $2,599,000 | $9,207,000 | | Warrants | $15,657,000 | $(9,121,000) | $6,536,000 | | Total | $91,752,000 | $(6,522,000) | $85,230,000 | - The company's investment policy prioritizes **highly rated, investment-grade securities** to minimize principal loss risk[84](index=84&type=chunk) [Note 5. Acquisitions](index=22&type=section&id=Note%205.%20Acquisitions) This note details significant business acquisitions and their impact on operations and financial position - DSS acquired a **52.5% controlling interest** in AMRE Asset Management Inc. (AAMI) in March 2020, which holds a **93% equity interest** in American Medical REIT Inc. (AMRE), a REIT focused on medical real estate[85](index=85&type=chunk)[87](index=87&type=chunk) - On June 18, 2021, AMRE Shelton, LLC, a subsidiary of AMRE, financed the purchase of a **40,000 sq ft medical office building** in Shelton, Connecticut for **$7,150,000**[88](index=88&type=chunk) - The acquisition of **Impact BioMedical, Inc.** on **August 21, 2020**, for **$50 million** (total consideration) added assets and products to the BioHealth line of business[91](index=91&type=chunk) - On **September 9, 2021**, DSS became the majority owner of **American Pacific Bancorp (APB)** with a **$40 million investment** for **53% ownership**, establishing the Investment Banking segment[92](index=92&type=chunk) [Note 6. Investments](index=24&type=section&id=Note%206.%20Investments) This note provides information on the company's various equity and other investments - DSS owns approximately **7% of Alset International Limited**, classified as a marketable security with a fair value of approximately **$5,990,000** as of September 30, 2021[94](index=94&type=chunk)[95](index=95&type=chunk) - The company holds a **46.8% ownership interest** in Sharing Services Global Corp. (SHRG) as of September 30, 2021, accounted for using the equity method, and recognized a **loss of approximately $1,645,000** from this investment for the three months ended September 30, 2021[96](index=96&type=chunk)[99](index=99&type=chunk) - DSS increased its ownership in **BMI Capital International LLC (BMIC)** to **24.9%** in January 2021, accounting for it under the equity method[101](index=101&type=chunk) - The company's equity position in **Vivacitas Oncology Inc.** increased to approximately **19%** as of September 30, 2021, through multiple stock purchase agreements[108](index=108&type=chunk)[110](index=110&type=chunk) [Note 7. Short-Term and Long-Term Debt](index=29&type=section&id=Note%207.%20Short-Term%20and%20Long-Term%20Debt) This note outlines the company's debt obligations, including credit lines and loan agreements - Premier Packaging's revolving credit line with Citizens Bank matured on **May 31, 2021**, and was not renewed. A Term Note for equipment acquisition was paid in full in **July 2021**[115](index=115&type=chunk)[116](index=116&type=chunk) - Premier Packaging repaid its **$1,100,000 consolidated promissory note** for its Victor, New York plant in **July 2021**[118](index=118&type=chunk) - American Medical REIT, Inc. received **$110,000** under the Paycheck Protection Program (PPP) in **March 2021**[123](index=123&type=chunk) - Premier Packaging entered into a master loan and security agreement with Bank of America for up to **$3,200,000** to purchase a new printing press, with an outstanding principal of **$1,855,000** as of September 30, 2021[124](index=124&type=chunk) - AMRE Shelton, LLC entered into a loan agreement with Patriot Bank for up to **$6,155,000** to finance a medical office building purchase, with approximately **$5,105,000 financed**[125](index=125&type=chunk) [Note 8. Lease Liability](index=30&type=section&id=Note%208.%20Lease%20Liability) This note details the company's operating lease commitments and future minimum lease payments - The company has operating leases for facilities with remaining terms ranging from less than one to five years[126](index=126&type=chunk) Future Minimum Lease Payments (as of September 30, 2021) | Year | Amount | | :--- | :------- | | 2021 | $59,000 | | 2022 | $88,000 | | 2023 | $50,000 | | 2024 | $4,000 | | 2025 | $4,000 | | 2026 | $2,000 | | Total Lease Payments | $207,000 | | Less: Imputed Interest | $(10,000) | | Present Value of Remaining Lease Payments | $197,000 | | Current Portion | $122,000 | | Noncurrent Portion | $75,000 | | Weighted-average remaining lease term | 0.85 years | | Weighted-average discount rate | 5.4% | [Note 9. Commitments and Contingencies](index=32&type=section&id=Note%209.%20Commitments%20and%20Contingencies) This note discloses the company's legal proceedings and other potential future obligations - The Apple Litigation, a patent infringement suit, was deemed closed after the U.S. Court of Appeals for the Federal Circuit affirmed the District Court's judgment against DSSTM on **April 30, 2021**[129](index=129&type=chunk) - The Ronaldi Litigation involves claims by the former CEO, Jeffrey Ronaldi, for alleged unpaid wages, bonuses, and a performance bonus, with discovery ongoing and a motion for advancement of legal fees granted to Mr. Ronaldi[130](index=130&type=chunk)[132](index=132&type=chunk) - The Maiden Biosciences Litigation asserts claims against DSS and its subsidiaries for unjust enrichment, fraudulent transfer, and RICO violations related to promissory notes and asset conveyances, with a motion to dismiss the amended complaint pending[133](index=133&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) [Note 10. Stockholders' Equity](index=34&type=section&id=Note%2010.%20Stockholders'%20Equity) This note provides details on changes in stockholders' equity, including stock issuances and compensation - The company issued **46,868 shares of Series A Convertible Preferred Stock** in August 2020 as part of the Impact BioMedical acquisition, with a liquidation preference of **$1,000 per share** and convertibility into common stock[138](index=138&type=chunk)[139](index=139&type=chunk) - Completed three underwritten public offerings in January, February, and May 2021, raising approximately **$24.9 million**, **$36.14 million**, and **$45.75 million** in net proceeds, respectively, through the issuance of common stock[140](index=140&type=chunk)[141](index=141&type=chunk) - On **September 3, 2021**, DSS entered into a subscription agreement with Alset EHome International, Inc. (AEI) for an investment of up to **$15,000,000** in exchange for **12,156,000 shares of common stock**[142](index=142&type=chunk) - Stock-based compensation expense for the three and nine months ended September 30, 2021, approximated **$13,000** and **$42,000**, respectively[143](index=143&type=chunk) [Note 11. Discontinued Operations](index=36&type=section&id=Note%2011.%20Discontinued%20Operations) This note reports financial results and impact of business segments that have been discontinued - The company discontinued the operations of **Plastic Printing Professionals, Inc.** in August 2020, recognizing a **net loss of $111,000** in Q3 2020 from asset disposal[146](index=146&type=chunk)[147](index=147&type=chunk) - On **May 7, 2021**, DSS completed the sale of **DSS Digital Inc.** for **$5,000,000**, resulting in a **net gain of $2,226,000** from discontinued operations[148](index=148&type=chunk)[149](index=149&type=chunk) Discontinued Operations Revenue (9 Months Ended Sep 30) | Segment | 2021 | 2020 | | :-------------------------------- | :--------- | :--------- | | DSS Digital, Inc. (Technology sales, services and licensing) | $535,000 | $1,315,000 | | Plastic Printing Professionals, Inc. (Printed products) | N/A | $1,626,000 | [Note 12. Income Taxes](index=38&type=section&id=Note%2012.%20Income%20Taxes) This note details income tax provisions, effective tax rates, and net operating loss carryforwards - The effective tax rate for continuing operations for the nine months ended September 30, 2021, was **17.3%**[154](index=154&type=chunk) - As of December 31, 2020, the company had domestic net operating loss (NOL) carryforwards of approximately **$56.7 million**, with **$2.1 million** available for use after valuation allowance[155](index=155&type=chunk) [Note 13. Supplemental Cash Flow Information](index=38&type=section&id=Note%2013.%20Supplemental%20Cash%20Flow%20Information) This note provides additional non-cash and other supplemental details related to cash flow activities Supplemental Cash Flow Information (9 Months Ended Sep 30) | Item | 2021 | 2020 | | :------------------------------------------------ | :----------- | :----------- | | Cash paid for interest | $139,000 | $73,000 | | Termination of right of use lease asset | $(744,000) | $0 | | Termination of right of use lease liability | $744,000 | $0 | | Shares received for loan origination fee | $(3,000,000) | $0 | | Shares received for prepaid loan interest | $(2,440,000) | $0 | | Series A Preferred Shares issued for Impact BioMedical | $0 | $35,187,000 | | Common Shares issued for Impact BioMedical | $0 | $3,132,000 | | Acquisition of APB net assets | $38,765,000 | $0 | | Shares issued for marketing services | $0 | $210,000 | [Note 14. Segment Information](index=40&type=section&id=Note%2014.%20Segment%20Information) This note presents financial data broken down by the company's various operating segments - The company's five operating segments are **Packaging and Printing**, **Investment Banking**, **BioHealth Group**, **Securities and Fintech Group**, and **Direct Marketing/Online Sales Group**[162](index=162&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk) Revenue by Segment (3 Months Ended Sep 30, 2021) | Segment | Revenue | | :---------------------- | :---------- | | Printing | $3,416,000 | | Direct Marketing | $966,000 | | Securities | $184,000 | | Investment Banking | $0 | | Biohealth Group | $0 | | Corporate | $0 | | Total | $4,566,000 | Revenue by Segment (9 Months Ended Sep 30, 2021) | Segment | Revenue | | :---------------------- | :----------- | | Printing | $10,652,000 | | Direct Marketing | $2,382,000 | | Securities | $184,000 | | Investment Banking | $0 | | Biohealth Group | $0 | | Corporate | $0 | | Total | $13,218,000 | [Note 15. Subsequent Events](index=43&type=section&id=Note%2015.%20Subsequent%20Events) This note discloses significant events occurring after the balance sheet date but before financial statements were issued - On **October 13, 2021**, DFMI entered into a loan agreement to lend LVAM a principal sum not to exceed **$3,000,000**[169](index=169&type=chunk) - On **November 4, 2021**, AMRE acquired three medical facilities in Fort Worth, Plano (Texas), and Pittsburgh (Pennsylvania) for **$62,000,000**, funded through multiple borrowing facilities including a **$13,940,000 convertible promissory note** from APB[170](index=170&type=chunk) [Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%202%20-%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition, detailing revenue and expense trends, liquidity, and capital resources. It highlights the company's diverse business lines and the impact of strategic acquisitions and investments on its financial results [Overview](index=44&type=section&id=Overview) This section summarizes the company's diverse business lines, strategic activities, and key investments - DSS operates **nine distinct business lines**: Premier Packaging, Direct Marketing/Online Sales Group, IP Monetization, BioHealth Group, Securities and Fintech Group, Energy Group, Secure Living, Blockchain Technology, and Investment Banking, all in various stages of development[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) - Key strategic activities include the acquisition of a **93% equity interest** in American Medical REIT Inc. (AMRE), the acquisition of **Impact BioMedical, Inc.**, and becoming the majority owner of **American Pacific Bancorp (APB)** to establish the Investment Banking segment[178](index=178&type=chunk)[179](index=179&type=chunk)[193](index=193&type=chunk) - The company increased its investment in **Sharing Services Global Corporation (SHRG)** through a **$30 million convertible promissory note**, resulting in a **46.8% ownership interest** as of September 30, 2021[187](index=187&type=chunk) - **DSS Securities, Inc.** became the new registered investment advisor to the **DSS AmericaFirst Quantitative Trust** in September 2021, expanding into mutual funds and other investment platforms[195](index=195&type=chunk)[196](index=196&type=chunk) [Results of Operations](index=50&type=section&id=Results%20of%20Operations) This section analyzes revenue, cost, and expense trends, explaining drivers of financial performance Revenue Performance (3 & 9 Months Ended Sep 30) | Revenue Category | 3 Months 2021 | 3 Months 2020 | % Change | 9 Months 2021 | 9 Months 2020 | % Change | | :----------------- | :------------ | :------------ | :------- | :------------ | :------------ | :------- | | Printed products | $3,416,000 | $2,971,000 | 15% | $10,652,000 | $8,409,000 | 27% | | Rental income | $184,000 | $0 | N/A | $184,000 | $0 | N/A | | Direct marketing | $966,000 | $715,000 | 35% | $2,382,000 | $1,793,000 | 33% | | Total Revenue | $4,566,000 | $3,686,000 | 24% | $13,218,000 | $10,202,000 | 30% | - Costs of revenue increased by **24%** and **38%** for the three and nine months ended September 30, 2021, respectively, driven by higher manufacturing costs in Direct Marketing and Packaging and Printing segments[206](index=206&type=chunk)[208](index=208&type=chunk) - Sales, general and administrative compensation costs surged by **379%** and **451%** for the three and nine months, respectively, due to increased headcount and performance bonus accruals of approximately **$6.2 million**[206](index=206&type=chunk)[209](index=209&type=chunk) - Research and development costs increased significantly (**414%** for 3 months, **1,643%** for 9 months) due to the acquisition of Impact BioMedical and related R&D for product formulations and new technologies[207](index=207&type=chunk)[215](index=215&type=chunk) Net (Loss) Income from Continuing Operations (3 & 9 Months Ended Sep 30) | Metric | 3 Months 2021 | 3 Months 2020 | % Change | 9 Months 2021 | 9 Months 2020 | % Change | | :------------------------------------------------ | :------------ | :------------ | :------- | :------------ | :------------ | :------- | | Net (Loss) Income from Continuing Operations | $(6,675,000) | $5,182,000 | 229% | $(21,462,000) | $3,511,000 | 711% | | Net (Loss) Income | $(6,675,000) | $4,942,000 | 235% | $(19,333,000) | $2,069,000 | 1,034% | - The increased net loss was primarily due to **unrealized losses on marketable securities and warrants**, increased costs associated with new business lines, and higher **performance-based compensation**[222](index=222&type=chunk) [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to meet financial obligations and funding sources - As of September 30, 2021, the company had approximately **$69.1 million in cash** and believes it has sufficient liquidity for at least the next 12 months[225](index=225&type=chunk) - The company historically meets its liquidity and capital requirements through the **sale of equity securities** and **debt financings**[225](index=225&type=chunk) [Off-Balance Sheet Arrangements](index=55&type=section&id=Off-Balance%20Sheet%20Arrangements) This section discloses any material off-balance sheet transactions or obligations - The company does not have any material off-balance sheet arrangements that would significantly affect its financial condition or results[226](index=226&type=chunk) [Critical Accounting Policies and Estimates](index=55&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section highlights accounting policies and estimates requiring significant management judgment - There have been no material changes to the critical accounting policies and methods since the Annual Report on Form 10-K for the year ended December 31, 2020[227](index=227&type=chunk) [Item 4 - Controls and Procedures](index=55&type=section&id=Item%204%20-%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were not effective as of September 30, 2021, due to material weaknesses, and a remediation plan is underway [Disclosure Controls and Procedures](index=55&type=section&id=Disclosure%20Controls%20and%20Procedures) This section assesses the effectiveness of controls over financial reporting and disclosure - Management concluded that the company's disclosure controls and procedures were **not effective** as of September 30, 2021[228](index=228&type=chunk) - The ineffectiveness is attributed to **material weaknesses** previously disclosed in the Annual Report on Form 10-K for December 31, 2020, which remained as of September 30, 2021[228](index=228&type=chunk) [Plan for Remediation of Material Weaknesses](index=55&type=section&id=Plan%20for%20Remediation%20of%20Material%20Weaknesses) This section outlines the company's strategy to address identified material weaknesses in internal controls - The company is implementing a remediation plan to strengthen its internal control environment, but full integration and confirmation of effectiveness will take time[230](index=230&type=chunk) [Changes in Internal Control over Financial Reporting](index=55&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports any changes in internal control over financial reporting during the period - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2021, that have materially affected or are reasonably likely to materially affect the company's internal control over financial reporting, beyond the initial implementation of remediation steps[231](index=231&type=chunk) PART II - OTHER INFORMATION This section provides additional disclosures including legal, risk, and equity matters [Item 1 - Legal Proceedings](index=56&type=section&id=Item%201%20-%20Legal%20Proceedings) This section refers to Note 9 for detailed information regarding the company's legal proceedings and commitments - Legal proceedings are discussed in detail in **Note 9, 'Commitments and Contingencies'**[234](index=234&type=chunk) [Item 1A - Risk Factors](index=56&type=section&id=Item%201A%20-%20Risk%20Factors) The company states that there have been no material changes to the risk factors previously disclosed in its most recent Annual Report on Form 10-K - No material changes to the discussion of risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2020[235](index=235&type=chunk) [Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds](index=56&type=section&id=Item%202%20-%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the unregistered sale of common stock to Alset EHome International, Inc. in September 2021 - On **September 3, 2021**, the company issued **12,155,591 shares of common stock** to Alset EHome International, Inc. at **$1.234 per share**, for aggregate proceeds of up to **$15,000,000**[236](index=236&type=chunk) - The sale was exempt from registration requirements of the Securities Act pursuant to **Section 4(a)(2)** and **Regulation D or S**[236](index=236&type=chunk) [Item 3 - Defaults upon Senior Securities](index=56&type=section&id=Item%203%20-%20Defaults%20upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[237](index=237&type=chunk) [Item 4 - Mine Safety Disclosures](index=56&type=section&id=Item%204%20-%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Mine Safety Disclosures are not applicable to the registrant[238](index=238&type=chunk) [Item 5 - Other Information](index=56&type=section&id=Item%205%20-%20Other%20Information) The company reported no other information to disclose under this item - No other information is reported under this item[239](index=239&type=chunk) [Item 6 - Exhibits](index=56&type=section&id=Item%206%20-%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including various agreements, certifications, and XBRL documents - Exhibits include **Securities Purchase Agreements**, **Convertible Promissory Notes**, **Underwriting Agreements**, **Subscription Agreements**, and various certifications (Rule 13a-14(a)/15d-14(a) and 18 U.S.C. 1350) and XBRL documents[240](index=240&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______to_______ . 001-32146 Commission file number DOCUMENT SECURITY SYSTEMS, INC. (Exact name of registrant as specified in its charter) New York 16-1229730 (State or other ...