What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2021-03-31 compared with 2020-03-31 · 290 added, 370 removed, 171 unchanged (79% of the section changed)

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of March 16, 2021, we had 252 record holders of our common stock.

This number does not include the number of persons whose

shares are in nominee or in “street name”

This number does not include the number of persons whose shares

are in nominee or in “street name”

accounts through brokers.

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arrangements, if any, legal restrictions on the payment of dividends and other factors that our board of directors deems relevant.

the Company has announced its decision to issue shares of Impact BioMedical, Inc.

to its shareholders of record at a to be

determined record date that will correspond with the registration of Impact BioMedical’s common stock.

announced that it intended to issue four (4) shares of Impact BioMedical stock for each share of DSS common stock held by DSS

shareholders (with the exception of shares beneficially held by Alset International Ltd).

Authorized for Issuance Under Equity Compensation Plans

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average exercise price of outstanding options, warrants and rights

of securities remaining available for future issuance (under equity compensation Plans (excluding securities reflected in

column (a & b))

Plan Category

Equity compensation plans

approved by security holders 2013 Employee, Director and Consultant Equity Incentive Plan - options

2013 Employee, Director

and Consultant Equity Incentive Plan - warrants

of securities

available for

issuance (under

compensation plans approved by security holders

Employee, Director and Consultant Equity Incentive Plan - options

Employee, Director and Consultant Equity Incentive Plan - warrants

Employee, Director and Consultant Equity Incentive Plan

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the restrictions on the transferability and the sale of the securities.

December 17, 2018, the Company sold 612,245 shares of its common stock to an accredited investor, at a price of $0.98 per share.

October 29, 2019 and subsequently October 30, 2019, the Audit Committee and the Board approved the issuance of common stock, not

to exceed 6,000,000 shares, via private placement with a related party.

Pursuant to a Subscription Agreement, the Company issued

6,000,000 shares of Common Stock to LiquidValue Development Pte LTD, a company owned and controlled by Mr.

Heng Fai Ambrose

Chan, Chairman of the Board of Directors for DSS, for an above market purchase price equal to $0.30 per share for gross proceeds

to the Company of $1,822,200 (before deductions for placement agent fees and other expenses).

This transaction was executed on

November 1, 2019.

Repurchased by the Registrant

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statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements.

should consult all of the information set forth in this Annual Report and the other information set forth from time to time in

our reports filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, including our reports

should consult all the information set forth in this Annual Report and the other information set forth from time to time in our

reports filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, including our reports

on Forms 10-Q and 8-K.

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and product technologies.

We specialize in creating dynamic solutions that protect against fraud and ensure the well-being of

consumers worldwide.

Our mission is to make and deliver world-class authentication, counterfeit prevention and consumer engagement

technology attainable and integrated into every product we offer.

The Company holds numerous patents for optical deterrent and

authentication technologies that provide protection of printed information from unauthorized alterations, scanning and copying.

We operate two production facilities, consisting of a combined security printing and packaging facility and a plastic card facility,

where we produce secure and non-secure products for our customers.

We also license our anti-counterfeiting technologies to printers

and brand-owners.

In addition, through our digital division, we provide cloud computing services for our customers, including

disaster recovery, back-up and data security services.

At the time, we specialize in creating dynamic solutions that protect against fraud and ensure

the well-being of consumers worldwide.

Our mission was to make and deliver world-class authentication, counterfeit prevention

and consumer engagement technology attainable and integrated into every product we offerred.

The Company holds numerous

patents for optical deterrent and authentication technologies that provide protection of printed information from unauthorized

alterations, scanning and copying.

We also license our anti-counterfeiting technologies to printers and brand-owners.

through our digital division, we provide cloud computing services for our customers, including disaster recovery, back-up and

data security services.

to 2006, our primary revenue source in our document security division was derived from the licensing of our technology.

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(referred to herein as the “DSS Plastics Group”).

In 2008, we acquired DPI of Rochester, LLC, a privately held commercial

printer located in Rochester, New York.

In 2010, we acquired Premier Packaging Corporation, a privately held packaging company

located in Victor, New York (referred to herein as the “DSS Packaging and Printing Group”).

In May 2011, we acquired

ExtraDev, Inc., a privately held information technology and cloud computing company located in Rochester, New York.

In 2016, ExtraDev,

This was sold in August 2020.

In 2008, we acquired DPI of Rochester,

LLC, a privately held commercial printer located in Rochester, New York.

In 2010, we acquired Premier Packaging Corporation, a

privately held packaging company located in Victor, New York (referred to herein as the “DSS Packaging and Printing Group”).

In May 2011, we acquired ExtraDev, Inc., a privately held information technology and cloud computing company located in Rochester,

In 2016, ExtraDev, Inc.

changed its name to DSS Digital Inc.

DSS Digital Inc.

is also referred to herein as the “DSS Digital Group.”

is also referred to herein as the “DSS

Digital Group.”

July 2013, the Company expanded its business focus by acquiring Lexington Technology Group, Inc.

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efforts on our other existing businesses as well as explore potential new business lines

January 2018, we commenced international operations for our DSS Digital Group with our wholly owned subsidiary, DSS Asia Limited,

January 2018, we commenced international operations for our Digital Group with its wholly owned subsidiary, DSS Asia Limited,

in our office in Hong Kong.

In December 2018, this division acquired Guangzhou Hotapps Technology Ltd, a Chinese company with

a valuable license enabling us to do business in China

do business in four operating segments:

packaging and printing;

and technology management, which includes our

IP monetization business.

In December 2018, this division acquired a license from Guangzhou Hotapps Technology Ltd, a

Chinese company enabling us to do business in China.

2019, the Company’s Board of Directors decided to restructure and reorganize the Company.

At that time, the Company operated

four (4) business lines:

IP Technology, Premier Packaging, DSS Plastics, and Digital.

But due in part to the declining revenue

and historic business losses of the Company, the Board set forth a new vision for the Company and instructed management to develop

new business models and business lines that would create long term shareholder value through asset growth and revenue growth.

The Board was no longer content to wait for results of IP monetization litigation to determine the financial fate of the Company;

it sought immediate change.

It mandated that a new business model be designed for the Company in which the Company could directly

control and manage its outcome daily.

The Board insisted upon a three-year business plan to turn to Company profitable.

that vision and goal, the Board selected and appointed a new management team, and the management team set about restructuring

the Company’s businesses, business models and defining long-term business goals.

November 2019, the new executive management announced that the Company’s 2019-2020 strategic business plan to carry out

the Board’s directive.

The business plan provided five (5) fundamental building blocks to revitalize the company by (i) strengthening

the organization by exiting unprofitable business lines, (ii) investing in and reviving the Company’s core businesses, (iii)

improving top line revenues and net margins, (iv) controlling costs and (v) creating or acquiring new long-term scalable, recurring

revenue streams.

As part of the implementation of that plan, management discontinue operations of unprofitable business lines

and reducing capital and cash burn.

But in addition, the Company identified six (6) new business lines that it wanted to advance.

In addition to the existing Premier Packaging group, Digital Group and IP Technology, the Company created the following new business

Marketing/Online Sales Group,

and Fintech Group,

a result of this 2019 Board directive, the Company was reborn in 2020.

The Company now has nine (9) active divisions, and it has

actively taken steps to acquire assets and resources for each of these divisions in 2020 (and as reported for the 1 st

quarter of 2021).

Over the past 12 months, the Company has performed a substantial business turnaround.

Significant and material

assets have been acquired or developed for almost every new division.

For the other divisions and the existing divisions, the

Company is engaged in obtaining significant additions or acquisitions for these divisions over the coming 2021 year.

Each of these

new business lines are intended to eventually generate top line reoccurring scalable income.

Each of the divisions are on a different

growth path with some designed to start generating revenue in 2021, while others are programmed to deliver revenue and growth

in 2022, and 2023.

success of the ongoing turnaround of the Company is reflected in its 2020 financials as set forth herein.

For 2020, Company assets

grew from $20,146,000 for the period ending 12/31/2019 to $91,919,000 for the period ending 12/31/2020.

Stockholder’s Equity

rose from the period ending 12/31/2019 of $12,303,000 to $76,545,000 for the period ending 12/31/2020.

Net Income attributable

to stockholders for the 12-month period ending 12/31/2020 was $1,899,000 compared to a $2,889,000 loss for the 12-month period

ended 12/31/2019.

of COVID-19 Outbreak

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The Company’s manufacturing

facilities in both California and New York support business have been deemed essential by their respective state governments

facilities in both California and New York support business that have been deemed essential by their respective state governments

and remain operational.

We have taken every precaution possible to ensure the safety of our employees.

Additionally,

it is reasonably possible that estimates made in the financial statements have been, or will be, materially and adversely impacted

is reasonably possible that estimates made in the financial statements have been, or will be, materially and adversely impacted

in the near term as a result of these conditions, including losses on inventory;

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long-lived assets and current obligations.

Additionally,

management had determined that one of its business lines, DSS Plastics, has been more severely impacted by the pandemic than our

other divisions and we do not believe this is a short-term phenomenon.

As a result, management has decided to fully impair its

goodwill related to DSS Plastics.

The impact to DSS’s first quarter earnings of this impairment was approximately $685,000.

OF OPERATIONS FOR THE FISCAL YEARS ENDED DECEMBER 31, 2020 AND 2019

December 31, 2019

December 31, 2018

Technology sales,

services and licensing

- For the year ended December 31, 2019, revenue increased 5% to approximately $19.4 million as compared to revenues

of $18.5 million for the year ended December 31, 2018.

Printed products sales, which include sales of packaging, printing and

plastic products, increased 1% in 2019 as compared to 2019, driven by an increase in the sales of printing and packaging products

of 4% offset by a decrease in sales of plastic card products of 8% .

The Company’s technology sales, services

and licensing revenues increased 36% in 2019, as compared to 2018, due primarily to increases in sales of our AuthentiGuard

product, which increased approximately $642,000 year-over-year.

December 31, 2019

December 31, 2018

Costs and expenses

of goods sold, exclusive of depreciation and amortization

Sales, general and

administrative compensation

Depreciation and

Professional fees

Stock based compensation

Sales and marketing

Rent and utilities

Other operating

ended December 31, 2020

ended December 31, 2019

sales, services and licensing

- For the year ended December 31, 2020, revenue increased

12% to approximately $17.4 million as compared to revenues of $15.6 million for the year ended December 31, 2019.

Printed products sales, which include sales of packaging and printing products, decreased 2% in 2020 as compared to 2019.

Company’s technology sales, services and licensing revenues decreased 3% in 2020, as compared to 2019.

Both decreases in

sales were due primarily to the impact of the COVID-19 pandemic as key customers saw a decline in business.

A significant

part of this decline however was offset by onboarding several new customers throughout the year.

The Company’s direct

marketing revenues increased 1252% in 2020 as compared to 2019.

This is primarily due to the division starting during the

fourth quarter 2019.

ended December 31, 2020

ended December 31, 2019

of revenue, exclusive of depreciation and amortization

general and administrative compensation

and amortization

based compensation

and marketing

and utilities

and development

operating expenses

costs and expenses

of revenue sold, exclusive of depreciation and amortization includes all direct cost of the Company’s printed products,

including its packaging, printing and plastic ID card sales, materials, direct labor, transportation and manufacturing facility

In addition, this category includes all direct costs associated with the Company’s technology sales, services and

licensing including hardware and software that are resold, third-party fees, and fees paid to inventors or others as a result

of technology licenses or settlements, if any.

Costs of revenue increased 6% in 2019 as compared to 2018, primarily due to an

increase in paperboard costs and outside service costs at our packaging division.

general and administrative compensation costs, decreased 3% in 2019 as compared to 2018, primarily due to the impact

cost control activities taken during the year within the Digital and Corporate segments.

The cost controlling resulting in

a decrease $1.1 million in annualized payroll and payroll related costs.

These measures were offset with additions of key personnel

to support the Company’s strategic plan.

of revenue, exclusive of depreciation and amortization includes

all direct costs of the Company’s printed products, including its packaging and printing sales and its direct marketing

sales, materials, direct labor, transportation, and manufacturing facility costs.

In addition, this category includes all direct

costs associated with the Company’s technology sales, services and licensing including hardware and software that are resold,

third-party fees, and fees paid to inventors or others as a result of technology licenses or settlements, if any.

Costs of revenue

increased 8% in 2020 as compared to 2019, primarily due the increase price of paper as well as cost associated with direct

marketing product manufacturing and procurement.

general and administrative compensation costs, increased 128% in 2020 as compared to 2019, primarily due a bonus of approximately

$4.3 million accrued for Mr.

Heng Fai Ambrose Chan, an executive of the Company’s DSS Cyber Security Pte.

Ltd subsidiary

in accordance with the terms of his employment contract as compared to $62,000 accrued in 2019.

and amortization include the depreciation of machinery and equipment used for production, depreciation of office equipment

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Depreciation and amortization

expense increased by 10% during 2019, as compared to 2018, primarily due to twelve months of expense associated with the non-compete

agreement with a former executive, as well as capital additions throughout 2019.

fees increased 85% in 2019 as compared to 2018, primarily due to an increase in legal fees associated with the Company’s

intellectual property litigation matters , outsourcing

corporate legal matters, as well as cost of approximately $0.5 million associated with the diversification of the Company’s

revenue portfolio .

expense decreased by 6% during 2020, as compared to 2019, primarily due the expiration of the non-compete agreement with a former

executive, as well as a large 10-year asset becoming fully depreciated.

fees increased 69% in 2020 as compared to 2019, primarily due to an increase in legal fees associated with the direct

marketing division, due diligence fees, as well as costs associated with acquisitions.

based compensation includes expense charges for all stock-based awards to employees, directors, and consultants.

include option grants, warrant grants, and restricted stock awards.

Stock-based compensation costs increased 220% in 2019 as compared

to 2018 due to a stock based compensation totaling approximately $114,500 accrued for the CEO of a subsidiary of the Company.

Also, in July 2019, by unanimous written consent, the Board of Directors authorized the Company to issue individual stock grants

of the Company’s common stock, pursuant to the Company’s 2013 Employee, Director and Consultant Equity Incentive Plan,

to certain officers and directors in the amount of 458,719 shares, at $0.42 per share which were immediately vested and issued

on September 6, 2019.

Stock-based compensation costs decreased 55% in 2020

as compared to 2019 due to one-time stock grants that took place in 2019 to directors and certain officers with no similar offerings

or grants in 2020.

and marketing costs, which includes internet and trade publication advertising, travel and entertainment costs, sales-broker

commissions, and trade show participation expenses, increased 10% during 2019 as compared to 2018, primarily due to increase

in travel due to on boarding new customers associated with our AuthentiGuard product.

and utilities increased 30% during 2019 as compared to 2018 due to increases in rental costs for warehousing space at the

Company’s packaging division as well as cost at the Company’s plastic division.

operating expenses consist primarily of equipment maintenance and repairs, office supplies, IT support, bad debt expense,

insurance costs , and corporate travel.

Other operating expenses increased 48%

in 2019 compared to 2018 which primarily reflected increases in office, equipment rental and maintenance , as well as travel

associated with corporate activities costs in 2019.

commissions, and trade show participation expenses, increased 410% during 2020 as compared to 2019, primarily due to direct

marketing distributor commissions.

and utilities decreased 27% during 2020 as compared to 2019 due to the relocation of DSS Digital to smaller office

space, and the inclusion of our Plastic groups 2019 rent and utilities expense of approximately $325,000 now included in Loss

from discontinued operations.

and development costs consist primarily of third-party research costs and consulting costs.

During the year ended December

31, 2019, Research and development costs decreased 108% as compared to the same period in 2018 primarily

due to development costs related to the development of proprietary blockchain solutions for the

Company’s AuthentiGuard product line recognized in 2018, as well as receipt of an anticipated $33,000 refund on development

costs for the development of proprietary block chain solutions for DSS International.

31, 2020, Research and development costs increased 1850% as compared to the same period in 2019 primarily

due to acquisition of Impact Biomedical Inc and their related research costs .

operating expenses consist primarily of equipment maintenance and repairs, office supplies, IT support, bad debt expense,

insurance costs, and corporate travel.

Other operating expenses increased 607% in 2020 compared to 2019 which is primarily due

to a software setup expense for MLM division and D&O insurance increase year over year, as well as amortizing on a pro-rata

basis over the expected remaining life of the monetization period of the LED Patent Portfolio through November 30, 2019 of approximately

$86,000 per month.

Income and Expense

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ended December 31, 2019

Other income and

Interest expense

Amortization of

deferred financing costs and debt discount

Impairment of investment

on extinguishment of liabilities, net

other income and expense

income increased 178%, during the year ended December 31, 2019, as compared to the same period in 2018, due revenue recognized

on the Company’s money market account and notes receivable.

expense increased 8%, during the year ended December 31, 2019, as compared to the same period in 2018, due to the interest

expense incurred with the settlement of the swap agreement associated with the consolidation of the two Promissory Notes.

debt discount decreased 96% during the year ended December 31, 2019, as compared to the same period in 2018, due to a decrease

in the total debt carried by the Company in 2019 as compared to 2018.

of investment During the 4 th quarter of 2018, the Company determined that its investment in Singapore eDevelopment

(“SED”) was impaired due to the decline in the share price of SED, especially since November of 2018, which the Company

believes was influenced by a general decline in equity markets in Asia caused by the tariff dispute between the United States

The Company has carried its investment in SED at costs in accordance with ASU No.

2016-01, “Recognition and Measurement

of Financial Assets and Financial Liabilities”

as the Company determined that these trading value of the SED share did not

represent a readily determinable fair value due to a potential lack of liquidity of the SED shares due to a low average trading

volume of the SED shares and the effect of the time restriction on the ability of the Company to sell the shares until September

As such, in response to the decline in the trading value of the SED shares in the fourth quarter of 2018, the Company

performed an impairment test and determined an impairment of approximately $160,000 was warranted.

on extinguishment of liabilities, net On June 26, 2018, the Company reached an agreement with one of its third-party IP monetization

co-investors that, among other things, discharged the amounts recorded as liabilities by the Company under an agreement executed

As a result this agreement, the Company recorded a gain of extinguishment of liabilities of $3,714,129 to reflect the

discharge of the notes, a write down of other current labilities of $114,000 to reflect the elimination of the contingent equity

interests of $459,000 offset by the repayment of the $345,000 restricted cash, and the Company wrote-off the value of the underlying

patents which had a net book value of $295,470, all of which resulted in the a net gain on the extinguishment of liabilities of

$3,532,659 recorded in the period ended June 30, 2018.

Income (Loss) Per Share

Ended December 31, 2019

Ended December 31, 2018

income (loss)

$ (2,889,000 )

Income (loss) per common share:

Shares used in computing income (loss)

per common share:

2019, the Company had net loss of $2.9 million as compared to a net income of $1.5 million in 2018, representing a 468%

Income (Expense)

from equity method investment

on extinguishment of debt

of deferred financing costs and debt discount

income increased 176%, during the year ended December 31, 2020, as compared to the same period in 2019, due to interest

recognized on the Company’s money market account and notes receivable.

expense increased 48%, during the year ended December 31, 2020, as compared to the same period in 2019, due to the

interest expense incurred on notes payable, in particular, twelve months of interest associated with the utilization of

Premier Packaging equipment line of credit in 2020 versus three months in 2019.

debt discount increased 167% during the year ended December 31, 2020, as compared to the same period in 2019, due to a balance

of debt issue costs expensed in 2020.

gains is recognized on the change in fair market value on our common stock investment in Sharing Services Global Corp $7.1

million and related warrants, Alset International Limited.

$3.4 million and other marketable securities $0.1

million for the year 2020.

from equity method investment represents the Company’s prorated portion of Sharing Services Global Corp’s earnings

for the three-months ended October 31, 2020.

on extinguishment of debt in April and May 2020 respectively, the Packaging and Digital divisions of the Company received

funds from the SBA Paycheck Protection Program of $619,000 and $344,000.

As of August 4, 2020, pursuant to the terms of

the SBA PPP program, the Company submitted applications for Premier Packaging and DSS Digital for a requested 100% loan forgiveness.

During the fourth quarter 2020, both these notes were forgiven in full.

2020, the Company had net income of $1.4 million as compared to a net loss of $2.9 million in 2019, representing

a 149% increase.

This achievement of net income in 2020 is primarily due to the impact of a one-time net gain from extinguishment

of liabilities of approximately $3.5 million which occurred during the second quarter of 2018, offset by the operating loss incurred

of debt of approximately $1 million, which occurred during the fourth quarter of 2020 and unrealized gains

and Capital Resources

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Cash Flow - During 2020, the Company expended approximately $5.7 million for operations, which generally reflected

by decreases in accrued expenses and other liabilities, and an increase in accounts receivable, offset by a decrease in inventory

and an increase in accounts payable balances, respectively.

Cash Flow - During 2019, the Company expended approximately $989,000 on equipment for its packaging and plastic card

operations for various machinery, equipment, and software including a folder-gluer machine for packaging and laminating plates

for plastic card operations.

In addition, the Company expended approximately $370,000 on intangible assets, and $1.8 million

on the purchase of investments

Cash Flows - During 2019, the Company made aggregate principal payments on long-term debt of approximately $274,000

In addition, the Company also received proceeds of approximately $1.1 million in borrowings from the lines of

credit for its printing divisions, and approximately $6.7 million from the sale of the Company’s common stock.

Operations and Going Concern –

The accompanying consolidated financial statements have been prepared assuming that

we will continue as a going concern.

This basis of accounting contemplates the recovery of our assets and the satisfaction of

liabilities in the normal course of business.

These consolidated financial statements do not include any adjustments to the specific

amounts and classifications of assets and liabilities, which might be necessary should we be unable to continue as a going concern.

While the Company has approximately $1.1 million in cash, and a positive working capital position of approximately $3.2

million as of December 31, 2019, the Company has incurred negative cash flows from operating and investing activities over the

past two years and has incurred negative cash flows from operations in 2019.

To continue as a going concern, on June 5, 2019,

the Company entered into an underwriting agreement with Aegis Capital Corp., acting as representative of the several underwriters,

which provided for the issuance and sale by the Company in an underwritten public offering (the “Offering”) of 11,200,000

shares of the Company’s common stock.

The Company also granted the Underwriters a 45-day option to purchase up to 1,680,000

additional shares of the Company’s common stock on the same terms and conditions for the purpose of covering any over-allotments

in connection with the Offering (519,186 shares were exercised on July 18, 2019.) The net offering proceeds to the Company was

approximately $5.0 million, inclusive of the July 18, 2019 transaction and after deducting underwriting discounts, commissions

and other offering expenses.

On February 25, 2020, the Company entered into another underwriting agreement with Aegis Capital

Corp., acting as representative of the several underwriters, which provided for the issuance and sale by the Company in an underwritten

public offering (the “Offering”) of 25,555,556 shares (inclusive of 3,333,333 over-allotment that was exercised immediately)

of the Company’s common stock.

The net offering proceeds to the Company approximated $4.0 million.

expected use of cash for operations in 2020 will be primarily for funding operating losses, working capital, legal expenses associated

with its intellectual property related litigation, and the costs associated with the global roll-out of the Company’s AuthentiGuard

product line.

The Company will also use these funds to make capital improvements at its two manufacturing facilities to increase

production capacity and create efficiencies, as well as to diversify its revenue streams and take advantage of profit opportunities.

by fluctuations in accounts receivable, inventory, and prepaid and other current assets, accrued expenses and other liabilities.

Cash Flow - During 2020, the Company expended approximately $10.7 million in investing activities.

This includes $0.3

million on equipment for its packaging and direct marketing operations for various pieces of machinery, equipment, and software.

In addition, the Company expended approximately $9.8 million on purchases of investments.

Cash Flows - During 2020, the Company generated $20.7 million from financing activities, which includes $20.2

million from new issuances of common stock and $1.3 million from the borrowings of long-term debt.

This is offset by principal

payments on long-term debt of approximately $0.3 million, and payments on its revolving line of credit of $0.5 million.

Operations and Going Concern

accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

This basis of accounting contemplates the recovery of our assets and the satisfaction of liabilities in the normal course of business.

These consolidated financial statements do not include any adjustments to the specific amounts and classifications of assets and

liabilities, which might be necessary should we be unable to continue as a going concern.

While the Company has approximately

$5.2 million in cash, and a positive working capital position of approximately $3.6 million as of December 31, 2020, the

Company has incurred operating losses as well as negative cash flows from operating and investing activities over the past two

continue as a going concern, during the twelve months ended December 31, 2020, the Company through multiple underwriting agreements

with Aegis Capital Corp.

(“Aegis”), acting as representative of the several underwriters, provided the issuance and

sale by the Company in an underwritten public offering shares of the Company’s common stock.

The net offering proceeds to

the Company approximated $20.2 million.

Also, through two separate public offerings underwritten by Aegis during the first

quarter of 2021, the Company received net proceeds of approximately $61.0 million.

Company’s management intends to take actions necessary to continue as a going concern.

Management’s plans concerning

these matters includes, among other things, continued growth among our operating segments including international expansion of

our AuthentiGuard product, and tightly controlling operating costs and reducing spending growth rates wherever possible to return

to profitability.

believe that our $1.1 million in aggregate cash and equivalents as of December 31, 2019, as well as the $4.0 million raised

on February 25, 2020 will allow us to fund our four operating segments and planned operations through March 2021.

on this, as well as the additional funding raised in February 2020, we have concluded that substantial doubt of our ability to

continue as a going concern has been alleviated.

these matters includes, among other things, continued growth among our operating segments, and tightly controlling operating costs

and reducing spending growth rates wherever possible to return to profitability.

In addition, the Company has taken steps, and

will continue to take measures, to materially reduce the expenses and cash burn at all corporate and business line levels.

the twelve months ended December 31, 2020, steps were taken to materially reduce or eliminate cash burns in the IP Monetization

program, the DSS Digital Group and the DSS Plastics group.

the Company’s current operating levels and capital usage, we believe that without any further acquisition or investments,

our $5.2 million in aggregate cash, cash equivalents, as of December 31, 2020, along with the $61.0 million raised during the

first quarter of 2021, would allow us to fund our nine business lines current and planned operations through March 2022.

on this, the Company has concluded that substantial doubt of its ability to continue as a going concern has been alleviated

Sheet Arrangements

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financial statements.

of Estimates - The preparation of consolidated financial statements in conformity with accounting principles generally

accepted in the United States requires the Company to make estimates and assumptions that affect the amounts reported and disclosed

in the financial statements and the accompanying notes.

Actual results could differ materially from these estimates.

On an ongoing

basis, the Company evaluates its estimates, including those related to the accounts receivable, fair values of intangible assets

and goodwill, useful lives of intangible assets and property and equipment, fair values of options and warrants to purchase the

Company’s common stock, deferred revenue and income taxes, among others.

The Company bases its estimates on historical experience

and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments

about the carrying values of assets and liabilities.

- In accordance with ASC 325-20, the Company records its investment in common stock of Singapore eDevelopment Limited

at cost, less impairment as the fair market value of the investment is not readily determinable.

The Company evaluates investment

for indications of impairment at least annually.

Value of Financial Instruments - Fair value is defined as the price that would be received to sell an asset or paid to

transfer a liability in an orderly transaction between market participants at the measurement date.

Value of Financial Instruments - Fair value is defined as the price that would be received to sell an asset or

paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Fair Value Measurement

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These tiers include:

Level 1, defined

as observable inputs such as quoted prices for identical instruments in active markets;

Level 2, defined

as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices

for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;

Level 3, defined

as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,

such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers

are unobservable.

Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets.

Level 2, defined as inputs other than quoted prices in active markets that are either directly or

indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar

instruments in markets that are not active;

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring

an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant

inputs or significant value drivers are unobservable.

carrying amounts reported in the balance sheet of cash and cash equivalents, accounts receivable, prepaids, accounts payable and

accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments.

value of notes receivable approximates their carrying value as the stated or discounted rates of the notes do not reflect recent

market conditions.

The fair value of revolving credit lines notes payable and long-term debt approximates their carrying value

as the stated or discounted rates of the debt reflect recent market conditions.

Derivative instruments, as discussed below, are

recorded as assets and liabilities at estimated fair value based on available market information.

The fair value of investments

carried at cost less impairment;

however, the fair value is not considered readily determinable based on the lack of liquidity

for the shares owned.

Impairment of Long-Lived Assets - The Company monitors the carrying value of long-lived assets for potential

impairment and tests the recoverability of such assets whenever events or changes in circumstances indicate that the carrying

amounts may not be recoverable.

If a change in circumstance occurs, the Company performs a test of recoverability by comparing

the carrying value of the asset or asset group to its undiscounted expected future cash flows.

If cash flows cannot be separately

and independently identified for a single asset, the Company will determine whether impairment has occurred for the group of assets

for which the Company can identify the projected cash flows.

If the carrying values are in excess of undiscounted expected future

cash flows, the Company measures any impairment by comparing the fair value of the asset or asset group to its carrying value.

Recognition - The Company sells printed products including packaging printing and fabrication, commercial and

security printing and plastic cards and badges, including cards and badges integrated with technology such as RFID and smart

The Company also provides information technology services and digital authentication products and services to its

The Company recognizes its products and services revenue based on when the title passes to the customer or when

the service is completed and accepted by the customer.

Revenue is measured as the amount of consideration the Company expects

to receive in exchange for shipped product or service provided.

Sales and other taxes billed and collected from customers are

excluded from revenue.

Customers, including distributors, do not have a general right of return.

The Company also derives

revenue from royalties from third parties which are typically based on licensees’

net sales of products that utilize

the Company’s technology, or on a per item usage of the technology on the customers’

securities classify as a Level 1 fair value financial instrument.

The fair value of notes receivable approximates their carrying

value as the stated or discounted rates of the notes do not reflect recent market conditions.

The fair value of revolving credit

lines notes payable and long-term debt approximates their carrying value as the stated or discounted rates of the debt reflect

recent market conditions.

The fair value of investments carried at cost less impairment;

however, the fair value is not considered

readily determinable based on the lack of liquidity for the shares owned.

Investments in equity securities with a readily determinable fair value, not accounted for under the equity method,

are recorded at that value with unrealized gains and losses included in earnings.

For equity securities without a readily determinable

fair value, the investment is recorded at cost, less any impairment, plus or minus adjustments related to observable transactions

for the same or similar securities, with unrealized gains and losses included in earnings.

equity method investments, the Company regularly reviews its investments to determine whether there is a decline in fair value

below book value.

If there is a decline that is other-than-temporary, the investment is written down to fair value.

for further discussion on investments.

Party Liabilities - The Company’s HWH World, Inc subsidiary has a service agreement pending with HWH Korea, a subsidiary

of Alset International Limited (formally Singapore eDevelopment Limited), and thus a related party.

This service agreement will

allow HWH Korea to utilize the Company’s merchant account in connection with their direct marketing network with periodic

remittance of the cash collected to them.

As of December 31, 2020, the Company has collected approximately $1,100,000 on behalf

of HWH Korea did remit amounts during the first quarter of 2021.

The related party liability is included in

“Other current liabilities”

on the accompanying consolidated balance sheets.

- The Company recognizes its products and services revenue based on when the title passes to the customer or when the

service is completed and accepted by the customer.

Revenue is measured as the amount of consideration the Company expects to receive

in exchange for shipped product or service provided.

Sales and other taxes billed and collected from customers are excluded from

The Company also derives revenue from royalties from third parties which are typically based on licensees’

sales of products that utilize the Company’s technology, or on a per item usage of the technology on the customers’

printed products.

Company recognizes license revenue at the time it is reported by the licensee.

From time to time, the Company generates

license revenues through litigation settlements.

The Company recognizes license revenue at the time it is reported by the licensee.

From time to time, the Company

generates license revenues through litigation settlements.

For these, the Company recognizes revenue upon the execution of the

1 unchanged sentence

and when all other revenue recognition criteria have been met.

The Company generates revenue from its direct marketing line of

business primarily through internet sales and recognizes revenue as items are shipped.

of December 31, 2020, the Company had no unsatisfied performance obligations for contracts with an original expected duration

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the deferral and future expected timing of revenue recognition for transaction price allocated to remaining performance obligations.

- Goodwill is the excess of cost of an acquired entity over the fair value of amounts assigned

to assets acquired and liabilities assumed in a business combination.

Goodwill is subject to impairment testing at least annually

and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying

amount may be impaired.

FASB ASC Topic 350 provides an entity with the option to first assess qualitative factors to determine

whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value

of a reporting unit is less than its carrying amount.

If, after assessing the totality of events or circumstances, an entity determines

it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step

impairment test is unnecessary.

If the two-step impairment test is necessary, a fair-value-based test is applied at the reporting

unit level, which is generally one level below the operating segment level.

The test compares the fair value of an entity’s

reporting units to the carrying value of those reporting units.

This test requires various judgments and estimates.

estimates the fair value of the reporting unit using a market approach in combination with a discounted operating cash flow approach.

Impairment of goodwill is measured as the excess of the carrying amount of goodwill over the fair values of recognized and unrecognized

assets and liabilities of the reporting unit.

An adjustment to goodwill will be recorded for any goodwill that is determined to

The Company tests goodwill for impairment at least annually in conjunction with preparation of its annual business

plan, or more frequently if events or circumstances indicate it might be impaired.

Intangible Assets and Patent Application Costs - Other intangible assets consists of costs associated with the application

for patents, acquisition of patents and contractual rights to patents and trade secrets associated with the Company’s technologies.

The Company’s patents and trade secrets are generally for document anti-counterfeiting and anti-scanning technologies and

processes that form the basis of the Company’s document security business.

Patent application costs are capitalized and

amortized over the estimated useful life of the patent, which generally approximates its legal life.

In addition, intangible assets

include customer lists and non-compete agreements obtained as a result of acquisitions.

Intangible asset amortization expense

is classified as an operating expense.

The Company believes that the decision to incur patent costs is discretionary as the associated

products or services can be sold prior to or during the application process.

The Company accounts for other intangible amortization

as an operating expense, unless the underlying asset is directly associated with the production or delivery of a product.

to acquisition of patents and trade secrets, legal and associated costs incurred in prosecuting alleged infringements of the patents

will be recognized as expense when incurred.

Costs incurred to renew or extend the term of recognized intangible assets, including

patent annuities and fees, and patent defense costs are expensed as incurred.

To date, the amount of related amortization expense

for other intangible assets directly attributable to revenue recognized is not material.

Impairment of

Long-Lived Assets - The Company monitors the carrying value of long-lived assets for potential impairment and tests the

recoverability of such assets whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable.

If a change in circumstance occurs, the Company performs a test of recoverability by comparing the carrying value of the asset

or asset group to its undiscounted expected future cash flows.

If cash flows cannot be separately and independently identified

for a single asset, the Company will determine whether impairment has occurred for the group of assets for which the Company can

identify the projected cash flows.

If the carrying values are in excess of undiscounted expected future cash flows, the Company

measures any impairment by comparing the fair value of the asset or asset group to its carrying value.

Legal Expenses - Contingent legal fees are expensed in the consolidated statements of operations in the period that the

related revenues are recognized.

In instances where there are no recoveries from potential infringers, no contingent legal fees

however, the Company may be liable for certain out of pocket legal costs incurred pursuant to the underlying legal services

agreement that will be paid out from the proceeds from settlements or licenses that arise pursuant to an enforcement action, which

will be expensed as legal fees in the period in which the payment of such fees is probable.

Any unamortized patent acquisition

costs will be expensed in the period in which a conclusion is reached in an enforcement action that does not yield future royalties

Reporting –

In accordance with ASC 280, the Company has identified its reportable segments and, for each period

for which an income statement is presented, disclose certain information, separately by reportable segment, relative to the segment

products or services, revenue, some items of expense and cash flow, profit or loss, and assets.

Operations and Going Concern –

The accompanying consolidated financial statements have been prepared assuming that

we will continue as a going concern.

This basis of accounting contemplates the recovery of our assets and the satisfaction of

liabilities in the normal course of business.

These consolidated financial statements do not include any adjustments to the specific

amounts and classifications of assets and liabilities, which might be necessary should we be unable to continue as a going concern.

Payments - We measure compensation cost for stock awards at fair value and recognize compensation expense over the service

period for which awards are expected to vest.

The Company uses the Black-Scholes-Merton option pricing model for determining the

estimated fair value for stock-based awards.

The Black-Scholes-Merton model requires the use of subjective assumptions which determine

the fair value of stock-based awards, including the option’s expected term and the price volatility of the underlying stock.

For equity instruments issued to consultants and vendors in exchange for goods and services, the Company determines the measurement

date for the fair value of the equity instruments issued at the earlier of (i) the date at which a commitment for performance

by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete.

the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the

consulting agreement.

Taxes - The Company recognizes estimated income taxes payable or refundable on income tax returns for the current year

and for the estimated future tax effect attributable to temporary differences and carry-forwards.

Measurement of deferred income

items is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available

tax benefits not expected to be realized.

We recognize penalties and accrued interest related to unrecognized tax benefits in

income tax expense.

- The Company adopted ASU No.

2016-02 and its related amendments which introduced Leases (Topic 842, or “ASC 842”),

as required, effective January 1, 2019 and elected the optional transition method that allows for a cumulative-effect adjustment

in the period of adoption, without a restatement of prior periods.

The new accounting standard requires lessees to recognize right-of-use

(“ROU”) assets and corresponding lease liabilities for all leases with lease terms of greater than 12 months.

the Company elected a short-term lease exception policy, permitting the Company to not apply the recognition requirements of this

standard to short-term leases (i.e.

leases with terms of 12 months or less).

As a result of the adoption, the Company adjusted

its balance sheet by recording an ROU asset and lease liability.

The adoption impacted the accompanying consolidated balance sheet,

but did not have an impact on the consolidated statements of operations and comprehensive income (loss).

The Company uses a discount

rate to determine the present value based on the rate implicit in the lease, if readily determinable, or its incremental borrowing

Accounting Pronouncements –See Note 2 “Summary of Significant Accounting Policies”

in the notes to our

consolidated financial statements in this Annual Report on Form 10-K for information regarding recent accounting pronouncements.

The Company elected the practical expedient allowing it to not recognize as a contract asset the commission paid to its salesforce

on the sale of its products as an incremental cost of obtaining a contract with a customer but rather recognize such commission

as expense when incurred as the amortization period of the asset that the Company would have otherwise recognized is one year

Combinations - Business combinations and non-controlling interests are recorded in accordance with FASB ASC 805 Business

Combinations.

Under the guidance, the assets and liabilities of the acquired business are recorded at their fair values at the

date of acquisition and all acquisition costs are expensed as incurred.

The excess of the purchase price over the estimated fair

values is recorded as goodwill.

If the fair value of the assets acquired exceeds the purchase price and the liabilities assumed,

then a gain on acquisition is recorded.

The application of business combination accounting requires the use of significant estimates

and assumptions.

See Note 7 regarding the acquisitions in 2020.

Operations –

On April 20, 2020, the Company executed a nonbinding letter of intent with a perspective buyer for

the sale of certain assets of its plastic printing business line, which it operated under Plastic Printing Professionals, Inc.

(“DSS Plastics”), a wholly-owned subsidiary of the Company.

That sale was consummated and closed on August 14, 2020.

The remaining assets of DSS Plastics were either sold, separately disposed, or retained by other existing DSS businesses lines.

Accordingly, the operations of DSS Plastics have been discontinued.

Based on the magnitude of DSS Plastics’

historical revenue

to the Company and because the Company has exited the production of laminated and surface printed cards, this sale represented

a significant strategic shift that has a material effect on the Company’s operations and financial results.

the Company has applied discontinued operations treatment for this sale as required by Accounting Standards Codification 210-05—Discontinued

The major classes of assets and liabilities of DSS Plastics are classified as Held For Sale –

Discontinued Operations

on the Consolidated Balance Sheets and the operating results of the discontinued operations is reflected on the Consolidated Statements

of Operations and Comprehensive Income (Loss) as Loss from Discontinued Operations.

7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity