What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-11-14 compared with 2023-08-14 · 223 added, 218 removed, 320 unchanged (58% of the section changed)

130 unchanged sentences

On January 24, 2022, the Company exercised 50,000,000 warrants received as part of a consulting

agreement with SHRG at the exercise price of $0.0001, bring its ownership percentage of voting shares to approximately 65%.

fourth quarter of 2022, SHRG purchased back a significant number of its outstanding voting shares, increasing the Company’s ownership

percentage of voting shares to approximately 73% at December 31, 2022.

During the first quarter of 2023, DSS converted both interest

due from SHRG on notes receivable and warrants in SHRG shares into newly issued common stock of SHRG totaling 84,619,047 shares, increasing

DSS ownership of voting shares to approximately 80% at March 31, 2023.

On May 4, 2023, the Company distributed approximately 280 million

shares of SHRG beneficially held by DSS and Decentralized Sharing Systems in the form of a dividend to the shareholders of DSS common

agreement with SHRG at the exercise price of $0.0001, bringing its ownership percentage of voting shares to approximately 65%.

the fourth quarter of 2022, SHRG purchased back a significant number of its outstanding voting shares, increasing the Company’s

ownership percentage of voting shares to approximately 73% at December 31, 2022.

During the first quarter of 2023, DSS converted both

interest due from SHRG on notes receivable and warrants in SHRG shares into newly issued common stock of SHRG totaling 84,619,047 shares,

increasing DSS ownership of voting shares to approximately 80% at March 31, 2023.

On May 4, 2023, the Company distributed approximately

280 million shares of SHRG beneficially held by DSS and Decentralized Sharing Systems in the form of a dividend to the shareholders of

DSS common stock.

Upon completion of this distribution, DSS will retain an ownership interest in SHRG of approximately 7%.

The Company, via three

(3) of the Company’s existing board members, currently holds four (4) of the five (5) SHRG board of director seats.

Thatch, DSS’s Lead Independent Director and as well the CEO of SHRG is on the SHRG Board, along with Mr.

Heng Fai Ambrose Chan,

DSS’s Executive Chairman of the board of directors (joined the SHRG Board effective May 4, 2020), and Mr.

CEO of the Company (joined the SHRG Board effective September 29, 2020).

March 15, 2021, the Company, through one of its subsidiaries, DSS BioMedical International, Inc.

entered into a Stock Purchase Agreement

(the “Agreement”) with Vivacitas Oncology Inc.

(“Vivacitas”), to purchase 500,000 shares of its common stock

at the per share price of $1.00, with an option to purchase 1,500,000 additional shares at the per share price of $1.00.

under the terms of the Agreement, the Company will be allocated two seats on the board of Vivacitas.

On March 18, 2021, the Company entered

into an agreement with Alset EHome International, Inc.

(“Seller”) to acquire the Seller’s wholly owned subsidiary Impact

Oncology PTE Ltd for the purchase price of $2,480,000 to effectively purchase ownership of 2,480,000 shares of common stock of Vivacitas.

This agreement includes an option to purchase an additional 250,000 shares of common stock.

As a result of these two transactions, which

were closed on March 21, 2021, and March 29, 2021, respectively, the Company owns an approximate 15.7% equity position in Vivacitas.

via three (3) of the Company’s existing board members, currently holds four (4) of the five (5) SHRG board of director seats.

John “JT” Thatch, DSS’s Lead Independent Director and as well the CEO of SHRG is on the SHRG Board, along with Mr.

Heng Fai Ambrose Chan, DSS’s Executive Chairman of the board of directors (joined the SHRG Board effective May 4, 2020), and Mr.

Heuszel, the CEO of the Company (joined the SHRG Board effective September 29, 2020).

On March 15, 2021, the Company, through one of its subsidiaries, DSS BioMedical

International, Inc.

entered into a Stock Purchase Agreement (the “Agreement”) with Vivacitas Oncology Inc.

(“Vivacitas”),

to purchase 500,000 shares of its common stock at the per share price of $1.00, with an option to purchase 1,500,000 additional shares

at the per share price of $1.00.

In addition, under the terms of the Agreement, the Company will be allocated two seats on the board of

On March 18, 2021, the Company entered into an agreement with Alset EHome International, Inc.

(“Seller”) to acquire

the Seller’s wholly owned subsidiary Impact Oncology PTE Ltd for the purchase price of $2,480,000 to effectively purchase ownership

of 2,480,000 shares of common stock of Vivacitas.

This agreement includes an option to purchase an additional 250,000 shares of common

As a result of these two transactions, which were closed on March 21, 2021, and March 29, 2021, respectively, the Company owns

an approximate 15.7% equity position in Vivacitas.

The Seller’s largest shareholder is Mr.

Heng Fai Ambrose Chan, the Chairman of the Company’s board of directors and its largest

On July 22, 2021, the Company exercised 1,000,000 of the available options under the Vivacitas Agreement #1.

The Company’s

current equity position in Vivacitas approximates 16%.

April 21, 2021, the Company announced its wholly owned subsidiary, Premier Packaging Corporation’s intentions to relocate from

its current 48,000 square-foot manufacturing facility from Victor, NY to a new 105,000 square-foot facility in the Town of Henrietta,

NY approximately 15 miles from its Victor location by the end of 2021.

In connection with this relocation, Premier Packaging has entered

into an agreement to sell its current Victor location and closed on the transaction in March 2022.

May 13, 2021, Sentinel Brokers, LLC., a subsidiary of the Company entered into a stock purchase agreement (“Sentinel Agreement”)

to acquire a 24.9% equity position of Sentinel Brokers Company, Inc.

(“Sentinel”), a company registered in the state of New

York, for the purchase price of $300,000.

Under the terms of this agreement, the Company has the option to purchase an additional 50.1%

of the outstanding Class A Common Shares.

Upon the exercising of this option, but no earlier than one year following the effective date of

the Sentinel Agreement, Sentinel has the option to sell the remaining 25% to the Company.

In consideration of purchase price investment

in Sentinel, the Company is entitled to an additional 50.1% of the net profits of Sentinel.

In December 2022, the Company exercised its

option to obtain the additional 50.1% of Sentinel’s common stock and began consolidating its results affective December 1, 2022.

May 19, 2021, the Company announced that its wholly owned subsidiary, DSS PureAir, Inc., a Texas corporation (“DSS PureAir”),

closed on a Securities Purchase Agreement with Puradigm LLC, a Nevada limited liability corporation (“Puradigm”).

to the terms of the Securities Purchase Agreement, DSS PureAir agreed to provide Puradigm a secured convertible promissory note in the

maximum principal amount of $5,000,000.00 (the “Puradigm Note”).

The Puradigm Note has a two-year term with interest at 6.65%

payable quarterly.

All, or part of the Puradigm Note principal balance can be converted at the sole discretion of DSS PureAir for up

to an 18% membership interest in Puradigm LLC.

The Puradigm Note is secured by all the assets of Puradigm under a security agreement

with Puradigm.

Heng Fai Ambrose Chan, the Chairman of

the Company’s board of directors and its largest shareholder.

On July 22, 2021, the Company exercised 1,000,000 of the available

options under the Vivacitas Agreement #1.

The Company’s current equity position in Vivacitas approximates 16%.

On April 21, 2021, the Company

announced its wholly owned subsidiary, Premier Packaging Corporation’s intentions to relocate from its current 48,000 square-foot

manufacturing facility from Victor, NY to a new 105,000 square-foot facility in the Town of Henrietta, NY approximately 15 miles from

its Victor location by the end of 2021.

In connection with this relocation, Premier Packaging has entered into an agreement to sell its

current Victor location and closed the transaction in March 2022.

On May 13, 2021, Sentinel Brokers,

LLC., a subsidiary of the Company entered into a stock purchase agreement (“Sentinel Agreement”) to acquire a 24.9% equity

position of Sentinel Brokers Company, Inc.

(“Sentinel”), a company registered in the state of New York, for the purchase price

Under the terms of this agreement, the Company has the option to purchase an additional 50.1% of the outstanding Class A

Common Shares.

Upon the exercising of this option, but no earlier than one year following the effective date of the Sentinel Agreement,

Sentinel has the option to sell the remaining 25% to the Company.

In consideration of purchase price investment in Sentinel, the Company

is entitled to an additional 50.1% of the net profits of Sentinel.

In December 2022, the Company exercised its option to obtain the additional

50.1% of Sentinel’s common stock and began consolidating its results affective December 1, 2022.

On May 19, 2021, the Company announced that its wholly owned subsidiary,

DSS PureAir, Inc., a Texas corporation (“DSS PureAir”), closed on a Securities Purchase Agreement with Puradigm LLC, a Nevada

limited liability corporation (“Puradigm”).

Pursuant to the terms of the Securities Purchase Agreement, DSS PureAir agreed

to provide Puradigm a secured convertible promissory note in the maximum principal amount of $5,000,000.00 (the “Puradigm Note”).

The Puradigm Note has a two-year term with interest at 6.65% payable quarterly.

All, or part of the Puradigm Note principal balance can

be converted at the sole discretion of DSS PureAir for up to an 18% membership interest in Puradigm LLC.

The Puradigm Note is secured

by all the assets of Puradigm under a security agreement with Puradigm.

June 18, 2021, AMRE Shelton, LLC., (“AMRE Shelton”) a subsidiary of AMRE financed the purchase of a 40,000 square foot, 2.0

story, Class A+ multi-tenant medical office building located on a 13.62-acre site in Shelton, Connecticut (See Note 7).

accordance with Topic 805, the acquisition of the medical acquired has been determined to be an acquisition of assets as

substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of

similar identifiable assets.

This property was appraised at approximately $7,150,000, of which $6,027,000 and $815,000 were allocated

to the facility and land respectively.

Also included in the value of the property is $308,000 of intangible assets with an estimated

useful life of 11 years.

Contained within the sale-purchase agreement for this facility, is a $1,500,000 earnout due to the seller

if certain criteria are met.

As of June 30, 2023, no liability has been recorded for this earnout as management determined it is

currently remote.

In accordance

with Topic 805, the acquisition of the medical acquired has been determined to be an acquisition of assets as substantially all of the

fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets.

property was appraised at approximately $7,150,000, of which $6,027,000 and $815,000 were allocated to the facility and land, respectively.

Also included in the value of the property is $308,000 of intangible assets with an estimated useful life of 11 years.

Contained within

the sale-purchase agreement for this facility, is a $1,500,000 earnout due to the seller if certain criteria are met.

As of September

30, 2023, no liability has been recorded for this earnout as management determined it is currently remote.

September 9, 2021, the Company finalized a stock purchase agreement (the “SPA”) with American Pacific Bancorp (“APB”),

26 unchanged sentences

their portfolios, and meet their individual investing goals.

April 7, 2021, the Company entered into a transfer and assignment agreement (“RIA Agreement”) between DSS Securities, Inc.

(“DSSS”) and AmericaFirst Capital Management, LLC (“Advisor”), a California limited liability company and the

registered investment advisor (“RIA”) to all the funds within the AmericaFirst Quantitative Funds Trust (“Trust”).

In September of 2021, with the approval of the Trust’s Board of Trustees and its shareholders, and with the consideration of $600,000

paid, DSSS became the new registered investment advisor to the Trust.

Upon the completion of the transfer, the Trust was renamed to the

DSS AmericaFirst Quantitative Trust.

The DSS AmericaFirst Quantitative Trust is a Delaware business trust established in 2012.

currently consists of 4 mutual funds managed by DSS Wealth Management, Inc.:

The DSS AmericaFirst Income Trends Fund, DSS AmericaFirst

Defensive Growth Fund, DSS AmericaFirst Risk-On Risk-Off Fund, and DSS AmericaFirst Large Cap Buyback Fund.

The funds seek to outperform

their respective benchmark indices by applying a quantitative rules-based approach to security selection.

The DSS AmericaFirst Quantitative

Funds is a suite of mutual funds managed by DSS Wealth Management, Inc.

that will expand into numerous investment platforms including

additional mutual funds, exchange-traded funds, unit investment trusts and closed-end funds.

We see substantial growth opportunities

in each of these platforms as we are committed to building and expanding upon an experienced distribution infrastructure.

For DSSS services

rendered in its role as RIA, the Trust shall pay a fee for each fund calculated as a percentage of the average daily net assets.

$600,000 consideration given is recorded as an Other intangible asset, net on the Consolidated Balance Sheet at March 31, 2022.

RIA Agreement has no defined period, this asset has been deemed an infinite life asset and no amortization has been taken.

December 23, 2021, DSS purchased 50,000,000 shares at $0.06 per share of Sharing Services Global Corporation (“SHRG”) via

a private placement.

On April 7, 2021, the Company entered into a transfer and assignment agreement

(“RIA Agreement”) between DSS Securities, Inc.

(“DSSS”) and AmericaFirst Capital Management, LLC (“Advisor”),

a California limited liability company and the registered investment advisor (“RIA”) to all the funds within the AmericaFirst

Quantitative Funds Trust (“Trust”).

In September of 2021, with the approval of the Trust’s Board of Trustees and its

shareholders, and with the consideration of $600,000 paid, DSSS became the new registered investment advisor to the Trust.

Upon the completion

of the transfer, the Trust was renamed to the DSS AmericaFirst Quantitative Trust.

The DSS AmericaFirst Quantitative Trust is a Delaware

business trust established in 2012.

The Trust currently consists of 4 mutual funds managed by DSS Wealth Management, Inc.:

The DSS AmericaFirst

Income Trends Fund, DSS AmericaFirst Defensive Growth Fund, DSS AmericaFirst Risk-On Risk-Off Fund, and DSS AmericaFirst Large Cap Buyback

The funds seek to outperform their respective benchmark indices by applying a quantitative rules-based approach to security selection.

The DSS AmericaFirst Quantitative Funds is a suite of mutual funds managed by DSS Wealth Management, Inc.

that will expand into numerous

investment platforms including additional mutual funds, exchange-traded funds, unit investment trusts and closed-end funds.

We see substantial

growth opportunities in each of these platforms as we are committed to building and expanding upon an experienced distribution infrastructure.

For DSSS services rendered in its role as RIA, the Trust shall pay a fee for each fund calculated as a percentage of the average daily

The $600,000 consideration given is recorded as an Other intangible asset, net on the Consolidated Balance Sheet at March

As the RIA Agreement has no defined period, this asset has been deemed an infinite life asset and no amortization has been taken.

On December 23, 2021,

DSS purchased 50,000,000 shares at $0.06 per share of Sharing Services Global Corporation (“SHRG”) via a private placement.

With this purchase, DSS increased its ownership of voting shares from approximately 47% of SHRG to approximately 58%.

On January 24, 2022, the Company exercised 50,000,000 warrants received as part of a consulting agreement with SHRG at the exercise

price of $0.0001, bring its ownership percentage of voting shares to approximately 65%.

SHRG aims to build shareholder value by developing

or acquiring businesses that increase the Company’s product and services portfolio, business competencies and geographic reach.

Currently, the Company, through its subsidiaries, markets and distributes its health and wellness and other products primarily in the

United States, Canada, and the Asia Pacific region using a direct selling business model.

The Company markets its products and services

through its independent sales force, using its proprietary websites, including:

On January 24,

2022, the Company exercised 50,000,000 warrants received as part of a consulting agreement with SHRG at the exercise price of $0.0001,

bring its ownership percentage of voting shares to approximately 65%.

SHRG aims to build shareholder value by developing or acquiring

businesses that increase the Company’s product and services portfolio, business competencies and geographic reach.

Currently, the

Company, through its subsidiaries, markets and distributes its health and wellness and other products primarily in the United States,

Canada, and the Asia Pacific region using a direct selling business model.

The Company markets its products and services through its

independent sales force, using its proprietary websites, including:

www.elevacity.com and www.thehappyco.com.

headquartered in Plano, Texas, was incorporated in the State of Nevada on April 24, 2015, and is an emerging growth company.

The Company’s

Common Stock is traded, under the symbol “SHRG,” in the OTCQB Market, an over-the-counter trading platforms market operated

by OTC Markets Group Inc.

The Company, headquartered

in Plano, Texas, was incorporated in the State of Nevada on April 24, 2015, and is an emerging growth company.

The Company’s Common

Stock is traded, under the symbol “SHRG,” in the OTCQB Market, an over-the-counter trading platforms market operated by OTC

Markets Group Inc.

five reporting segments are as follows:

79 unchanged sentences

(“Direct”) Through its holding company, Decentralized Sharing Systems, Inc.

and its subsidiaries and partners,

including Sharing Services Global Corporation provide an array of products and services, through an independent contractor network.

example, DSS’s wholly owned subsidiary, HWH World, Inc.

promotes products and services that fulfill its corporate position of health,

wealth, and happiness.

The HWH Marketplace through its brands desires to help its customers become the healthiest, happiest versions

of themselves.

For the health component , the company offers herbal alternatives of nutraceutical, consumables and topicals, dietary

supplements, beauty and skin care products, personal care, gut health products, aloe vera based supplements, and other wellness products.

As to the wealth component , the company is developing educational tools to its users to better manage individual finances and

savings programs to help its consumers find each consumer’s individual financial goal.

As to the happiness component , the

company is working with other partners to either acquire or partner in products and/or services to allow its consumers to enjoy healthy

living, including a global travel membership network.

Sharing Services, through its subsidiary Elevacity, markets and distributes health and wellness products under the “Elevate”

brand, primarily in the United States and Canada.

Sharing Services markets its products and services through its independent contractor

distribution system and using its proprietary website:

www.elevacity.com.

In February 2021, the Company launched its new business brand,

“The Happy Co.,” at its Elevacity division.

Elevacity has several well-known and signature products, including its top product

lines of “Happy Coffees” and “Nootropic Beverages”.

Elevacity also sells a “healthy shake”, a “Keto

Coffee Booster”, “Energy Caps”, “XanthoMax© Happy Caps”, “Wellness Vitamin Patches”, various

beauty and skin care products, and other wellness products.

of operations for the six and three months ended June 30, 2023, as compared to the six and three months ended June 30, 2022.

and its subsidiaries and

partners, including Sharing Services Global Corporation provide an array of products and services, through licensing agreements.

of operations for the three and nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022.

discussion should be read in conjunction with the financial statements and footnotes contained in this Quarterly Report and in our Annual

1 unchanged sentence

Three months ended

September 30,

Three months ended

Six months ended

June 30, 2023

Six months ended

September 30,

Nine months ended

September 30,

Nine months ended

September 30,

Printed products

Rental income

Management fee income

Net investment income

2 unchanged sentences

Total Revenue

the three and six months ended June 30, 2023, total revenue decreased 39% and 21% respectively, as compared to the three and six

months ended June 30, 2022.

Revenues from the sale of Printed products decreased 10% during three months but increased 28% during six

months ended June 30, 2023, as compared to the same period in 2022 due primarily to orders expected to ship during the 4 th quarter

2022 being pushed to the 1 st quarter 2023.

Rental income, and Net investment income of $1,543,000, and

$197,000 respectively, for the three months ended June 30, 2023 and $1,508,000, and $145,000, respectively for the six months ended

June 30, 2022, represent new revenue streams for the Company and are associated with our Securities and Commercial Lending business

The Company’s Direct Marketing revenues decreased 74% and 57% for the three and six months ended June 30, 2023 as

compared to 2022 due primarily to the Deconsolidation of SHRG as described in Note 1.

Three months ended June 30, 2023

Three months ended June 30, 2022

Six months ended June 30, 2023

Six months ended June 30,2022

For the three and nine months ended September 30, 2023, total revenue

decreased 65% and 35% respectively, as compared to the three and nine months ended September 30, 2022.

Revenues from the sale of Printed

products decreased 34% during three months but increased 3% during nine months ended September 30, 2023, as compared to the same period

in 2022 due primarily to orders expected to ship during the 3 rd quarter 2023 being pushed to the 4 th quarter 2023.

The decreases in Rental income, $236,000, and $3,464,000 respectively, for the three months ended September 30, 2023 and $1,485,000, and

$4,656,000, respectively for the three and nine months ended September 30, 2022, is driven by the tenants at AMRE LifeCare being unable

to make full rental payments on a monthly basis.

The decreases in Net investment income of $108,000 for three months ended September 30,

2023 and $422,000 for nine months ended September 30, 2023 as compared to $370,000 and $644,000 for the three and nine months ended September

30, 2022 is due to a number of loans made going on non-accrual as borrowers have struggled to make expect payments.

The Company’s

Direct Marketing revenues decreased 89% and 66% for the three and nine months ended September 30, 2023 as compared to 2022 due primarily

to the Deconsolidation of SHRG as described in Note 1.

Three months ended

September 30,

Three months ended

September 30,

Nine months ended

September 30,

Nine months ended

September 30,

Cost of revenue

Printed products

Biotechnology

Direct marketing

7 unchanged sentences

Total costs and expenses

of revenue include 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 because of technology licenses or settlements, if any.

Cost of revenue

for our REIT line of business includes all direct cost associated with the maintenance and upkeep of the related facilities, depreciation,

amortization, and the costs to acquire the facilities.

Our Commercial Lending operating segment has costs of revenue associated with

the impairment of notes receivable for those amounts at risk of collection.

Total costs of revenue decreased 37 %

for three-months ended June 2023 as compared to 2022

and decreased 18% for six-months ended June 2023 as compared to June 2022 primarily related to the Deconsolidation of SHRG as described

general and administrative compensation costs, excluding stock-based compensation, decreased 86% and 51% for the three and six

months ended June 30, 2023 as compared to the same periods in 2022 due primarily to the Deconsolidation of SHRG as described in Note 1.

fees decreased 32% and 40%, during the three and six months ended June 30, 2023, as compared to the same periods in 2022 respectively,

of revenue include 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 because of technology licenses or settlements,

Cost of revenue for our Securities operating segments is comprised mainly of our REIT line of business and includes all direct

cost associated with the maintenance and upkeep of the related facilities, depreciation, amortization, and the costs to acquire the facilities.

Our Commercial Lending operating segment has costs of revenue associated with the impairment of notes receivable for those amounts at

risk of collection.

Total costs of revenue decreased 49% for three-months ended September 2023 as compared to 2022 and decreased 34% for

nine-months ended September 2023 as compared to September 2022 primarily related to the Deconsolidation of SHRG as described in Note 1.

general and administrative compensation costs, excluding stock-based compensation, decreased 84% and 63% for the three and nine months

ended September 30, 2023 as compared to the same periods in 2022 due primarily to the Deconsolidation of SHRG as described in Note 1.

fees decreased 61% and 49%, during the three and nine months ended September 30, 2023, as compared to the same periods in 2022 respectively,

primarily due to a decrease in legal fees associated with the direct marketing segment, accounting fees, and due diligence fees related

3 unchanged sentences

option grants, warrant grants, and restricted stock awards.

There was no stock based compensation during the six months ended June 30, 2023.

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

commissions, and trade show participation expenses.

Sales and marketing decreased 58% and 55% during the three and six months

ended June 30, 2023 as compared to the same periods in 2022 respectively, due primarily to the Deconsolidation of SHRG as described in Note 1.

and utilities increased 40% and 48% during the three and six months ended June 30, 2023, as compared to the same period in 2022

respectively, primarily due to an additional space rented at our facility leased in Houston, Texas started during the 2022 as well as Premier Packaging’s

There was no stock based compensation during the nine months ended September

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

and trade show participation expenses.

Sales and marketing decreased 84% and 64% during the three and nine months ended September 30,

2023 as compared to the same periods in 2022 respectively, due primarily to the Deconsolidation of SHRG as described in Note 1.

and utilities decreased 47% during the three months period but increased 4% for nine months ended September 30, 2023, as

compared to the same period in 2022 respectively, primarily due to end of the lease in Tennessee for AMRE office space and California for the Company’s DSS Wealth Management subsidiary.

rented additional space at our facility leased in Houston, Texas started during the 2022 as well as Premier Packaging’s

leased facility beginning in March 2022.

and development costs increased 29% and 19% during the three and six months ended June 30, 2023, as compared to the same period

and development costs decreased 28% and 3% during the three and nine months ended September 30, 2023, as compared to the same period

in 2022 respectively, due to a decrease in such activities at our Impact Biomedical, Inc.

operating expenses consist primarily of equipment maintenance and repairs, office supplies, IT support, and insurance costs.

During the three and six months ended June 30, 2023, other operating expenses increased 470% and 290% as compared to the same period

in 2021 respectively, due primarily to the reserves put against rent receivables during the three months ended June 30, 2023 at our

AMRE subsidiary approximating $3.4 million.

the three and nine months ended September 30, 2023, other operating expenses decreased 94% but increased 123% as compared to the same

period in 2022 respectively, due primarily to the reserves put against rent receivables during the nine months ended September 30, 2023 at our AMRE subsidiary approximating

$3.4 million.

Income (Expense)

Three months ended

September 30,

Three months ended

Six months ended

September 30,

Nine months ended

September 30,

Nine months ended

September 30,

Interest Income

1 unchanged sentence

Interest Expense

Other Income (expense)

Loss on investments

1 unchanged sentence

(30,490,000 )

Loss on equity method investment

(10,479,000 )

Gain/(loss) on equity method investment

Gain/(Loss) on extinguishment of debt

Provision for loan losses

Gain on disposal of operations, net of taxes

Loss on disposal of operations, net of taxes

Total other income

1 unchanged sentence

$ (10,054,000 )

$ (35,897,000 )

$ (5,114,000 )

income is recognized on the Company’s money markets, and a portion of notes receivable, identified in Note 4.

expense for the six months ended June 30, 2022 is driven by the impairment of investments and notes receivables for SHRG

approximating $1,745,000.

expense for the nine months ended September 30, 2022 is driven by the impairment of investments and notes receivables for SHRG approximating

No similar activity occurred in 2023.

expenses increased 14% and decreased 7% during the three and six months ended June 30, 2023, as compared to the same

period in 2022, due to increasing debt balances and rise in interest rates within our REIT business line.

expenses increased 21% and 338% during the three and nine months ended September 30, 2023, as compared to the same period

in 2022, due to decreasing debt balances.

on investments consists of net realized losses on marketable securities which are recognized as the difference between the purchase

price and sale price of the common stock investment, and net unrealized losses on marketable securities which are recognized

on the change in fair market value on our common stock investment.

Also included is a loss approximating $29.2 million associated with the Deconsolidation of SHRG (see Note 1).

price and sale price of the common stock investment, and net unrealized losses on marketable securities which are recognized on the change

in fair market value on our common stock investment.

Also included is a loss approximating $29.2 million associated with the Deconsolidation

of SHRG (see Note 1).

on equity method investment is the Company’s prorated portion of earnings on its investments treated under the equity method

of account for the three and six months ended June 30, 2023.

on extinguishment of debt During the three months ended June 30, 2022, SHRG’s $110,000 SBA Paycheck

Protection Program was forgiven in full.

on sale of assets is driven by the Company’s gain on the sale of Premier’s manufacturing facility in Victor, NY, as well

as other capital assets.

of account for the three and nine months ended September 30, 2023.

on extinguishment of debt During the three months ended June 30, 2022, SHRG’s $110,000 SBA Paycheck Protection Program was

forgiven in full.

on sale of assets is driven by the Company’s loss on the sale of equity of HWH Holdings Inc and loss on sale of assets of HWH

World as identified in Note 7.

Three months ended

September 30,

Three months ended

Six months ended June

Six months ended

September 30,

Nine months ended

September 30,

Nine months ended

September 30,

Loss from continuing operations

7 unchanged sentences

$ (39,161,000 )

the three and six months ended June 30, 2023, the Company recorded net losses of $37,723,000 and $46,357,000, respectively as compared

to net losses of $5,410,000 and $14,361,000, respectively for June 30, 2022.

The increase in net loss during the three and six months

ended June 30, 2023, is driven by the Deconsolidation of SHRG as described in Note 1.

For the three and nine months ended September 30, 2023, the Company

recorded net losses of $6,681,000 and $53,039,000, respectively as compared to net losses of $24,802,000 and $39,161,000, respectively

for September 30, 2022.

The decrease in net loss during the three months ended September 30, 2023, is driven by the Deconsolidation of

SHRG as described in Note 1.

AND CAPITAL RESOURCES

Company has historically met its liquidity and capital requirements primarily through the sale of its equity securities and debt financing.

As of June 30, 2023 the Company had cash of approximately $10.0 million.

As of June 30, 2023, the Company believes that it has sufficient

cash to meet its cash requirements for at least the next 12 months from the filing date of this Annual Report.

In addition, the Company

believes that it will have access to sources of capital from the sale of its equity securities and debt financing.

The deconsolidation of SHRG and sale of HWH World, two companies with historical losses will also is expected to

improve future cash flows.

The Company has historically met its liquidity and capital requirements

primarily through the sale of its equity securities and debt financing.

As of September 30, 2023 the Company had cash of approximately

$6.9 million.

As of September 30, 2023, the Company believes that it has sufficient cash to meet its cash requirements for at least the

next 12 months from the filing date of this Annual Report.

In addition, the Company believes that it will have access to sources of capital

from the sale of its equity securities and debt financing.

The deconsolidation of SHRG and sale of HWH Holdings, Inc, two

companies with historical losses, will also is expected to improve future cash flows.

Flow from Continuing Operating Activities

cash used from continuing operating activities was $18,083,000 for the six months ended June 30, 2023 as compared to $13,947,000 for

the six months ended June 30, 2022.

This increase is driven by the payments of accrued liabilities of $16,295,000 during 2023.

cash used from continuing operating activities was $21,035,000 for the nine months ended September 30, 2023 as compared to

$23,251,000 for the nine months ended September 30, 2022.

This fluctuation is driven by increases in net loss and decrease in

inventory of $5,270,000, accounts receivable of $2,520,000 off-set by accrued expenses of $15,549,000 during 2023.

Flow from Investing Activities

cash provided by investing activities was $13,319,000 for the six months ended June 30, 2023 as compared net cash used of $6,412,000

for the six months ended June 30, 2022.

cash provided by investing activities was $11,885,000 for the nine months ended September 30, 2023 as compared to net cash used of $17,816,000

for the nine months ended September 30, 2022.

This fluctuation is driven by the sale of marketable securities approximating $11,330,000

1 unchanged sentence

Flow from Financing Activities

cash used from financing activities was $2,861,000 for the six months ended June 30, 2023 and represents payment of debt of $5,519,000

offset by borrowings of debt of $2,658,000.

During the six months ended June 30, 2022, net cash provided by financing activities was

driven by borrowings of long-term debt of $6,360,000 and issuance of common stock of $1,518,000.

Net cash used from financing activities was $3,243,000 for the nine months

ended September 30, 2023 and represents payment of debt of $4,056,000 offset by borrowings of debt of $813,000.

During the nine months

ended September 30, 2022, net cash provided by financing activities was driven by borrowings of long-term debt of $6,360,000 and issuance

of common stock of $1,518,000.

Sheet Arrangements

8 unchanged sentences

There have been

no material changes to such critical accounting policies as of the Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.

no material changes to such critical accounting policies as of the Quarterly Report on Form 10-Q for the quarter ended September 30,

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-Q

Item 2. Management’s Discussion and Analysis