What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-03-27 compared with 2023-03-31 · 338 added, 451 removed, 66 unchanged (92% of the section changed)

1 unchanged sentence

FORWARD-LOOKING

statements contained herein this report constitute “forward-looking statements” within the meaning of the Private Securities

Litigation Reform Act of 1995 (the “1995 Reform Act”).

Except for the historical information contained herein, this report

contains forward-looking statements (identified by words such as “estimate”, “project”, “anticipate”,

“plan”, “expect”, “intend”, “believe”, “hope”, “strategy” and

similar expressions), which are based on our current expectations and speak only as of the date made.

These forward-looking statements

are subject to various risks, uncertainties, and factors, that could cause actual results to differ materially from the results anticipated

in the forward-looking statements.

Company, incorporated in the state of New York in May 1984 has conducted business in the name of Document Security Systems, Inc.

16, 2021, the board of directors approved an agreement and plan of merger with a wholly owned subsidiary, DSS, Inc.

(a New York corporation,

incorporated in August 2020), for the sole purpose of effecting a name change from Document Security Systems, Inc.

change became effective on September 30, 2021.

maintained the same trading symbol “DSS” and updated its CUSIP number

to 26253C 102.

(together with its consolidated subsidiaries, referred to herein as “DSS,” “we,” “us,” “our”

or the “Company”) currently operates nine (9) distinct business lines with operations and locations around the globe.

business lines are:

(1) Product Packaging, (2) Biotechnology, (3) Direct Marketing, (4) Commercial Lending, (5) Securities and Investment

Management, (6) Alternative Trading (7) Digital Transformation, (8) Secure Living, and (9) Alternative Energy.

Each of these business

lines are in different stages of development, growth, and income generation.

divisions, their business lines, subsidiaries, and operating territories:

(1) Our Product Packaging line is led by Premier Packaging

Certain statements

contained herein this report constitute “forward-looking statements” within the meaning of the Private Securities Litigation

Reform Act of 1995 (the “1995 Reform Act”).

Except for the historical information contained herein, this report contains

forward-looking statements (identified by words such as “estimate”, “project”, “anticipate”, “plan”,

“expect”, “intend”, “believe”, “hope”, “strategy” and similar expressions),

which are based on our current expectations and speak only as of the date made.

These forward-looking statements are subject to various

risks, uncertainties, and factors, that could cause actual results to differ materially from the results anticipated in the forward-looking

which was incorporated in the state of New York in May 1984, previously conducted its business under the name of Document Security Systems,

Inc On September 16, 2021, our board of

directors approved an agreement and plan of merger with a wholly owned subsidiary, DSS, Inc.

subsidiary, incorporated in August 2020, was created for the sole purpose of facilitating a transformational name change from

Document Security Systems, Inc.

This significant shift in our identity became official on September 30, 2021.

name change, DSS, Inc.

retained its trading symbol, “DSS,” and is currently trading under its CUSIP number to 26253C 201.

This change reflects not only our evolution as a company but also our commitment to adapting and growing in an ever-changing

business landscape.

(referred to herein as “DSS,” “we,” “us,” or “our”)

now operates across five distinct business lines, each with its own unique scope and presence on a global scale.

These business

lines encompass a wide range of industries and sectors, including:

Product Packaging:

Our involvement in product packaging represents our dedication to delivering innovative and sustainable packaging solutions that meet

the evolving needs of various markets.

Biotechnology:

the field of biotechnology, we are focused on pioneering scientific advancements and technologies that have the potential to transform

human healthcare and wellness.

Direct Marketing:

Our direct marketing endeavors involve strategic efforts to engage with customers and clients, providing tailored solutions and services

that enhance their experiences.

Commercial Lending:

We are actively engaged in commercial lending, offering a suite of financial services that cater to the unique needs of businesses, ranging

from commercial lines of credit to land development financing.

Securities and Investment Management:

In the world of securities and investment management, we aim to provide expertise and guidance to help our clients navigate the complexities

of the financial markets and achieve their investment goals.

Each of these business lines is at a

different stage of development, growth, and income generation, reflecting the diversity of our operations.

This multi-faceted approach

allows us to adapt to changing market conditions and explore new opportunities for expansion and success.

We are committed to our continued

evolution and to delivering value to our stakeholders across these diverse business lines.

The Company, initially incorporated in

the state of New York in May 1984, had historically conducted its business under the name Document Security Systems, Inc.

September 16, 2021, our board of directors approved an agreement and plan of merger with a

wholly owned subsidiary, DSS, Inc.

(incorporated in August 2020).

The primary purpose of this merger was to affect a name change from

Document Security Systems, Inc.

to DSS, Inc., which officially took effect on September 30, 2021.

This change did not affect

our trading symbol, which remained as “DSS,” and is currently trading under its CUSIP number to 26253C 201.

Business Lines and Global Presence:

Under the banner of DSS, Inc., we have

diversified our operations into nine distinct business lines, each with its own unique scope and geographical footprint.

These business

lines include:

Product Packaging:

Led by Premier Packaging

Corporation, Inc.

(“Premier”), a New York corporation.

Premier operates in the paper board and fiber based folding carton,

consumer product packaging, and document security printing markets.

It markets, manufactures, and sells sophisticated custom folding

cartons, mailers, photo sleeves and complex 3-dimensional direct mail solutions.

Premier is currently located in its new facility in

Rochester, NY, and primarily serves the US market.

(2) The Biotechnology business line was created to invest in or acquire companies

in the BioHealth and BioMedical fields, including businesses focused on the advancement of drug discovery and prevention, inhibition,

and treatment of neurological, oncological, and immune related diseases.

This division is also targeting unmet, urgent medical needs,

and is developing open-air defense initiatives, which curb transmission of air-borne infectious diseases, such as tuberculosis and influenza.

(3) Direct Marketing, led by the holding corporation, Decentralized Sharing Systems, Inc.

(“Decentralized”) provides services

to assist companies in the emerging growth “Gig” business model of peer-to-peer decentralized sharing marketplaces.

specializes in marketing and distributing its products and services through its subsidiary and partner network, using the popular gig

economic marketing strategy as a form of direct marketing.

Direct Marketing’s products include, among other things, nutritional

and personal care products sold throughout North America, Asia Pacific, Middle East, and Eastern Europe.

(4) Our Commercial Lending business

division, driven by American Pacific Bancorp (“APB”), is organized for the purposes of being a financial network holding

company, focused on acquiring equity positions in (i) undervalued commercial bank(s), bank holding companies and nonbanking licensed

financial companies operating in the United States, South East Asia, Taiwan, Japan and South Korea, and (ii) companies engaged in—nonbanking

activities closely related to banking, including loan syndication services, mortgage banking, trust and escrow services, banking technology,

loan servicing, equipment leasing, problem asset management, SPAC (special purpose acquisition company) consulting services, and advisory

capital raising services.

(5) Securities and Investment Management was established to develop and/or acquire assets in the securities

trading or management arena, and to pursue, among other product and service lines, broker dealers, and mutual funds management.

in this segment is the Company’s real estate investment trust (“REIT”), organized for the purposes of acquiring hospitals

and other acute or post-acute care centers from leading clinical operators with dominant market share in secondary and tertiary markets,

and leasing each property to a single operator under a triple-net lease.

the REIT was formed to originate, acquire, and lease a credit-centric

portfolio of licensed medical real estate.

(6) Alternative Trading was established to develop and/or acquire assets and investments in

the securities trading and/or funds management arena.

Trading, in partnership with recognized global leaders in alternative trading

systems, intends to own and operate in the US a single or multiple vertical digital asset exchanges for securities, tokenized assets,

utility tokens, and cryptocurrency via an alternative trading platform using blockchain technology.

The scope of services within this

section is planned to include asset issuance and allocation (securities and cryptocurrency), FPO, IPO, ITO, PPO, and UTO listings on

a primary market(s), asset digitization/tokenization (securities, currency, and cryptocurrency), and the listing and trading of digital

assets (securities and cryptocurrency) on a secondary market(s).

(7) Digital Transformation was established to be a Preferred Technology

Partner and Application Development Solution for mid cap brands in various industries including the direct selling and affiliate marketing

Digital improves marketing, communications and operations processes with custom software development and implementation.

The Secure Living division has developed a plan for fully sustainable, secure, connected, and healthy living communities with homes incorporating

advanced technology, energy efficiency, and quality of life living environments both for new construction and renovations for single

and multi-family residential housing.

(9) The Alternative Energy group was established to help lead the Company’s future in the

clean energy business that focuses on environmentally responsible and sustainable measures.

Alset Energy, Inc, the holding company for

this group, and its wholly owned subsidiary, Alset Solar, Inc., pursue utility-scale solar farms to serve US regional power grids and

to provide underutilized properties with small microgrids for independent energy.

February 8, 2021, DSS Securities announced that it entered into a joint venture (“JV”) with Coinstreet Partners (“Coinstreet”),

a global decentralized digital investment banking group and digital asset financial service firm, and GSX Group (“GSX”),

a global digital exchange ecosystem for the issuance, trading, and settlement of tokenized securities, using its proprietary blockchain

The JV intends to obtain a broker-dealer license and launch an Alternative Trading

System (“ATS”).

The ATS focusing on financial market inefficiencies, will utilize a blockchain based financial market infrastructure

(‘FMI’) that will trade digital asset securities exempt from registration, or ‘private securities’.

FMI will allow for T+0 settlement, which USX believes can be used to attract liquidity.

Th platform will generate trading liquidity for

the ‘middle’ market – companies that are seeking to raise under $150M USD, can pursue private placements, which have

lower compliance costs that public offerings.

This JV is currently in the planning stages.

February 25, 2021, DSS Securities announced its acquisition of an equity interest in WestPark Capital, Inc.(“WestPark”) and

an investment in BMI Capital International LLC (“BMIC”).

DSS Securities executed two separate transactions that were designed

to grow the securities division by signing a binding note and stock exchange letter of intent to own 7.5% of the issued and outstanding

shares of WestPark and acquiring 24.9% of BMIC through a purchase agreement.

WestPark is a full-service investment banking and securities

brokerage firm which serves the needs of both private and public companies worldwide, as well as individual and institutional investors.

BMIC is a private investment bank specializing in corporate finance advising, raising equity, and venture services, providing a global

“one-stop” corporate consultancy to listed companies.

From corporate finance to professional valuation, corporate communications

to event management, BMIC services companies in the US, Hong Kong, Singapore, Taiwan, Japan, Canada, and Australia.

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

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.

Sentinel LLC purchased this additional 50.1% in December 2022 and as of December 31, 2022 owns 75% of Sentinel Co.

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 8).

This property

was appraised at approximately $7,150,000, of which $4,965,000 and $1,600,000 was allocated to the facility and land respectively.

include in the value of the property is $585,000 of intangible assets with an estimated useful life of approximately 4 years.

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 December

31, 2021, no liability has been recorded for this earnout as management determined it is currently remote.

On November 4, 2021, AMRE

LifeCare Portfolio, LLC.

(“AMRE LifeCare”), a subsidiary of AMRE, acquired three medical facilities located in Fort Worth,

Texas, Plano, Texas, and Pittsburgh, Pennsylvania for a purchase price of $62,000,000.

These facilities are tenanted and operated by

LifeCare Hospitals, a specialty hospital operator with a focus on long-term acute and critical care.

The medical facilities acquired

by AMRE are currently under an 18-year lease with eleven years remaining and an option to renew for an additional five years.

These facilities

have a total capacity of 195 hospital beds spanning a gross floor area of approximately 320,000 square feet.

This property was appraised

at approximately $61,601,000, of which $33,600,000 and $12,100,000 was allocated to the facility and land respectively.

in the value of the property is $15,901,000 of intangible assets with estimated useful lives ranging from 1 to 11 years.

21, 2021, AMRE Winter Haven, LLC.

(“AMRE Winter Haven”), a subsidiary of AMRE, acquired a medical facility located in Winter

Haven, Florida for a purchase price of $4,500,000.

The purchase price has been allocated as $3,200,000, $1,000,000, and $222,000 for

the facility, land and site and tenant improvements respectively.

Also include in the value of the property is $29,000 of intangible

assets with an estimated useful life of approximating 5 years.

All assets were allocated on a relative fair value basis.

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

which provided for an investment of $40,000,200 by the Company into APB for an aggregate of 6,666,700 shares of the APB’s Class

A Common Stock, par value $0.01 per share.

Subject to the terms and conditions contained in the SPA, the shares issued at a purchase

price of $6.00 per share.

As a result of this transaction, DSS became the majority owner of APB.

APB is organized for the purposes of

being a financial network holding company, focused providing commercial loans and on acquiring equity positions in (i) undervalued commercial

bank(s), bank holding companies and nonbanking licensed financial companies operating in the United States, South East Asia, Taiwan,

Japan and South Korea, and (ii) companies engaged in—nonbanking activities closely related to banking, including loan syndication

services, mortgage banking, trust and escrow services, banking technology, loan servicing, equipment leasing, problem asset management,

SPAC (special purpose acquisition company) consulting, and advisory capital raising services.

From this financial platform, the Company

shall provide an integrated suite of financial services for businesses that shall include commercial business lines of credit, land development

financing, inventory financing, third party loan servicing, and services that address the financial needs of the world Gig Economy.

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 December 31, 2021.

the 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.

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

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

The Company markets its products and services through its independent sales force, using its proprietary websites, including:

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

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.

May 13, 2021, Sentinel Brokers, LLC.

(“Sentinel LLC”), 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 Co.”),

a company registered in the state of New York, and in December 2022, Sentinel LLC exercised this option to increase its equity position

Sentinel is a broker-dealer operating primarily as a fiduciary intermediary, facilitating intuitional trading of municipal and

corporate bonds as well as preferred stock, and is registered with the Securities and Exchange Commission, is a member of the Financial

Industry Regulatory Authority, Inc.

(“FINRA”), and is a member of the Securities Investor Protection Corporation (“SIPC”).

On January 24, 2022, DSS entered into a business consulting agreement with Sharing Services Global Corporation (“SHRG”).

As part of this agreement, 50,000,000 warrants were exercised increasing DSS equity position in SHRG to approximately 65%.

February 28, 2022, DSS entered into an Amendment to Stock Purchase Agreement (the “Amendment”) with its shareholder Alset

EHome International Inc.

(“AEI”), pursuant to which the Company and AEI have agreed to amend certain terms of the Stock Purchase

Agreement dated January 25, 2022 (the “SPA”).

Pursuant to the SPA, AEI had agreed to purchase up to 44,619,423 shares of

the Company’s common stock for a purchase price of $0.3810 per share, for an aggregate purchase price of $17,000,000.

to the Amendment, the number of shares of the common stock of the Company that the AEI will purchase has been reduced to 3,986,877 shares

for an aggregate purchase price of $1,519,000.

This transaction was completed on March 9, 2022.

In addition, the Company’s Executive

Chairman and a significant stockholder, Heng Fai Ambrose Chan, is the Chairman, Chief Executive Officer and largest shareholder of AEI.

May 17, 2022, the shareholders of the Company approved the issuance of up to 21,366,177 Shares of our Common Stock to Alset International,

a related party, to purchase the Convertible Promissory Note issued by American Medical REIT, Inc.

with a principal amount of $8,350,000

and accrued but unpaid interest of $367,000 through May 15, 2022.

This transaction was finalized in July 2022.

May 17, 2022, the shareholders of the Company approved the acquisition of 62,122,908 shares of True Partners Capital Holdings Limited

(“True Partners”), a company publicly traded on the Hong Kong stock exchange in exchange for 17,570,948 shares of DSS stock.

The True Partner shares were acquired from Alset EHome International, Inc.

(“Alset EHome”), a related party.

Ambrose Chan, our director and Executive Chairman, is also Chairman of the Board, Chief Executive Officer, and the largest beneficial

owner of the outstanding shares of Alset EHome.

This transaction was completed with the transfer of DSS share to Alset EHome on July

1, 2022 with the issuance of DSS shares, which were valued at $0.34 per share, to Alset EHome.

OF OPERATIONS FOR THE FISCAL YEARS ENDED DECEMBER 31, 2022 AND 2021

(“Premier”), a New York corporation, this segment specializes in paperboard and fiber-based folding carton

manufacturing, consumer product packaging, and document security printing.

Premier is headquartered in its newly established facility

in Rochester, NY, primarily serving the US market.

Biotechnology:

This business line is

dedicated to investing in or acquiring companies in the BioHealth and BioMedical fields, focusing on drug discovery, prevention, treatment

of various diseases, and open-air defense initiatives against infectious diseases.

Direct Marketing:

Operating under the

umbrella of Decentralized Sharing Systems, Inc.

(“Decentralized”), this division provides services to companies in the emerging

growth “Gig” business model of peer-to-peer decentralized sharing marketplaces.

It specializes in marketing and distributing

products and services across North America, Asia Pacific, Middle East, and Eastern Europe.

Commercial Lending:

American Pacific

Bancorp, Inc.

(“APB”) represents our banking and financing business line.

During 2023, APB issued more than $14 million in

new loans, and over $4 million in renewal loan to customers with strong credit quality across a diverse portfolio of businesses.

ahead, to better meet the needs of the current financial market, the company is looking to transition away form certain industries like

direct marketing and focus more on growing its inventory / equipment loan portfolio as well as engaging in more specialized areas of

lending like broker/dealer loans.

We will continue to monitor our managed loan portfolio of more than $6 million, which earns 1.25%

annually in service charges, and explore future opportunities.

Importantly, the equity portfolio as a bank holding company is anticipated

to remain relatively stable, regardless of stock market fluctuations.

Securities and Investment Management:

This division focuses on acquiring assets in the securities trading and management arena, including broker-dealers and mutual funds management.

It also oversees a real estate investment trust (REIT) that acquires hospitals and care centers.

Alternative Trading:

Established to acquire

assets and investments in the securities trading and funds management arena, this segment, in partnership with recognized global leaders,

intends to operate a blockchain-based Alternative Trading System (“ATS”) for digital asset securities, exempt from registration.

The ATS aims to provide T+0 settlement and foster liquidity for middle-market companies.

Digital Transformation:

This division

serves as a Preferred Technology Partner and Application Development Solution for mid-cap brands, enhancing marketing, communications,

and operational processes through custom software development.

Digital Transformation was headquartered in Hong Kong until its discontinuation

Secure Living:

Focused on creating fully

sustainable, secure, connected, and healthy living communities, this division designs advanced technology-infused, energy-efficient homes

for new construction and renovations, catering to single and multi-family residential housing.

Secure Living was headquartered in Houston, Texas, until it was wound down

Alset Energy, Inc., our holding company for this group, and its subsidiary Alset Solar, Inc., pursue utility-scale solar

farms to serve regional power grids and provide microgrids for independent energy.

The group is dedicated to environmentally

responsible and sustainable energy solutions.

Alset Energy was headquarters in Houston, Texas until its discontinuation

OF OPERATIONS FOR THE FISCAL YEARS ENDED DECEMBER 31,

December 31, 2023

7 unchanged sentences

Total Revenue

Revenue - For the

year ended December 31, 2022, revenue increased 133% to approximately $47.3 million as compared to revenues of approximately $20.3 million

for the year ended December 31, 2021.

Printed products sales, which include sales of packaging and printing products, increased 16% in

2022 as compared to 2021.

The increases in sales were due primarily to the addition of several new customers during 202 1 due to the impact

of the COVID-19 pandemic on our competition as well as key customers returned to pre-pandemic numbers.

Net investment income, Rental income

and Management fee income, $630,000, $6,287,000 and $134,000 respectively, represent new revenue streams for the Company in 2021 and are

associated with our Securities and Commercial Lending business segments.

The Company’s Direct Marketing revenues increased 575%

in 2022 as compared to 2021 due primarily to due to the inclusion of SHRG financial results beginning on January 1, 2022.

Commission revenue,

associated with our Securities and Investment Management business line, and in particular our subsidiary Sentinel Co., is a new addition

to our revenue stream this year with $294,000.

- For the year ended December 31, 2023, revenue decreased 36% to approximately $30.3 million as compared to revenues

of approximately $47.3 million for the year ended December 31, 2022.

Printed products sales, which include sales of packaging and

printing products, increased 3% in 2023 as compared to 2022.

The increases in sales were due primarily to the addition of several

new customers during 2023 as well as key customers returned to pre-Covid 19 pandemic numbers.

Net investment income of $385,000 as

of December 31, 2023 decreased 39% from $630,000 as of December 31, 2022 due to a number of notes receivable deemed uncollectible

and impaired during 2023.

Rental income decreased 42% due a tenant at our AMRE LifeCare subsidiary not making rent payments.

Company’s Direct Marketing revenues decreased 72% in 2023 as compared to 2022 primarily to due to the deconsolidation of SHRG

financial in April 2023.

Commission revenue, associated with Sentinel Brokers Company subsidiary, increase 458% due to consolidating

a full year of result in 2023 versus 1 month in 2022.

December 31, 2023

2 unchanged sentences

Cost of revenue - securities

Cost of revenue – Biotechnology

Cost of revenue – commercial lending

Cost of revenue – directing marketing

Cost of revenue – Direct Marketing

Cost of revenue – other

7 unchanged sentences

Total costs and expenses

of revenue 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 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 increased 123% in 2022 as compared to 2021, primarily

due to the inclusion of SHRG financial results beginning on January 1, 2022, as well as the increase price of labor, paper and other

raw materials associated with our printing and packaging division as well as cost associated with direct marketing product

manufacturing and procurement.

Also, the Company recorded $1,041,000 of loan loss reserves associated with its notes receivable.

general and administrative compensation costs, increased 110% in 2022 as compared to 2021, primarily due to the inclusion of SHRG financial results beginning on January 1, 2022.

fees increased 59% in 2022 as compared to 2021, primarily due to an increase in legal fees associated with the direct marketing

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

of revenue 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 because of technology licenses or settlements,

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 34% in 2023 as compared to 2022, primarily due to the deconsolidation of SHRG financial results beginning in April

2023, offset by the increase price of labor, paper and other raw materials associated with our printing and packaging

division as well as cost associated with direct marketing product manufacturing and procurement.

general and administrative compensation costs, decreased 68% in 2023 as compared to 2022, primarily due to the deconsolidation

of SHRG financial results beginning in April 2023.

fees decreased 60% in 2023 as compared to 2022, primarily due to a decrease in legal fees associated with the direct marketing

segment, accounting fees, and due diligence fees related to potential acquisitions.

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

Such awards include

option grants, warrant grants, and restricted stock awards.

Stock-based compensation costs decreased 91% in 2022 as compared to 2021

due to the expiration of several warrants and options during 2022.

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

and trade show participation expenses, increased 215% during 2022 as compared to 2021, primarily due to increased direct marketing distributor

commissions due to the inclusion of SHRG financial results beginning on January 1,

2022, as well as increased commissions incurred at our printing and packing division.

and utilities increased 306% during 2022 as compared to 2021 due to a new lease in West Henrietta, NY.

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

There was no stock based compensation during the year ended

December 31, 2023.

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

sales-broker commissions, and trade show participation expenses, decreased 64% during 2023 as compared to 2022, primarily due to

decreased direct marketing distributor commissions due to the deconsolidation of SHRG financial results beginning in April 2023 as

well as the sale of our HWH World Holdings subsidiary in June 2023.

and utilities decreased 19% during the year ended December 31, 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 as well as the deconsolidation of SHRG.

The Company 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 consist primarily of third-party research costs and consulting costs.

During the year ended December 31, 2023,

Research and development costs increased 16% as compared to the same period in 2021 primarily

due to increases in such activities at our Impact Biomedical, Inc.

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 16% in 2022 as compared to 2021 primarily due to increased software costs

associated with enhancements to the Company’s ERP system as well as new software implement as part of the Company’s Direct

Marketing segment and increased D&O insurance costs.

Research and development costs decreased 9% as compared to the same period in 2022 primarily due to 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 year ended December 31, 2023, other operating expenses increased 65% as compared to the same period in 2022, due primarily

to the reserves put against rent receivables at our AMRE subsidiary approximating $2.4 million.

Income and Expense

1 unchanged sentence

December 31, 2022

Other Income (Expense)

Interest income

4 unchanged sentences

(10,697,000 )

Gain (loss) from equity method investment

Impairment of fixed asset

Loss from equity method investment

Impairment of fixed assets

Impairment of real estate investments

Impairment of investment

Litigation loss

Impairment of goodwill

(30,978,000 )

Provision for loan losses

Gain on extinguishment of debt

Gain On disposal of operations, net of taxes

Total other income

Loss on sale of assets

Total other expense

$ (76,038,000 )

$ (23,019,000 )

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

expense increased 1385% during the year ended December 31, 2022, as compared to the same period in 2021, due to increases in debt

balances, in particular within our REIT business line.

income (expense) is driven by origination fees , and tax benefits at SHRG.

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.

Also included are net unrealized losses on marketable securities which are recognized

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

of investments is driven by the Company impairment of its investment in Vivacitas

approximately $4,100,000 as of December 31, 2022.

Gain (loss) from equity method investment represents the Company’s prorated portion of earnings for its investments accounted for

under the equity method for the year ended December 31, 2022, and 2021.

Impairment of fixed

asset is associated with the write down of fair value of SHRG’s Lindon, Utah property.

Litigation loss represents

the Company’s cost to settle its litigation with Maiden Biosciences litigation, which was settled and the Court’s December

20, 2022 judgment was vacated, and the case was dismissed with prejudice (see Note 16).

on extinguishment of debt is associated funds received by AAMI in 2020 and 2021 from the SBA Paycheck Protection Program of $110,000

and $116,000, respectively.

These notes were forgiven in full during 2022 and 2021 repetitively.

Gain 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.

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

expense increased 339% year-over-year primarily due to the increase in debt at Premier Packaging during 2023 as well an increase

in interest rate associated with the debt at LVAM.

Dividend income

for the years ended December 31, 2023 and 2022 represent

dividends received on certain marketable securities owned by the Company.

income decreased 85% during the year 2023 as compared to 2022 and is driven by origination fees, and tax benefits

at SHRG associated with 2022.

on investments consists of net realized and unrealized 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 2).

of investments is driven by the Company impairment of its investment in Vivacitas approximately $4,100,000 as of December

(loss) from equity method investment represents the Company’s prorated portion of earnings for its investments accounted

for under the equity method for the year ended December 31, 2023, and 2022.

Impairment of fixed assets

as of December 31, 2022 is associated with the write down of fair value of SHRG’s Lindon, Utah property.

of investments in real estate At

December 31, 2023, the Company performed an assessment of the fair value of its AMRE LifeCare and AMRE Winter Haven properties and

determined an impairment was necessary.

loss represents the Company’s cost to settle its litigation with Maiden Biosciences litigation, which was settled, and

the Court’s December 20, 2022 judgment was vacated, and the case was dismissed with prejudice (see Note 17).

of goodwill during the 4 th quarter of 2023, the Company performed qualitative and quantitative assessments of the

goodwill value associated with its APB and Sentinel subsidiaries and determined that as of December 31, 2023 both assets required

At December 31, 2023, the Company fully impaired the value of APB and Sentinel goodwill of approximately $29,744,000 and

$1,234,000, respectively.

for loan losses during the year ended December 31, 2023, the Company reviewed the entire loan portfolio and determined specific loans

required an allowance for credit losses.

on extinguishment of debt During the three months ended June 30, 2022, AAMI $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.

and Capital Resources

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

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

and debt financing.

As of December 31, 2023, the Company had cash of approximately $6.6 million.

As of December 31, 2022, 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.

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

As of December 31, 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

In addition, the Company believes that it will have access to sources of capital from the sale of its equity securities and debt

Flow from Operating Activities

Net cash used by operating

activities was approximately $27.0 million for the year ended December 31, 2022 as compared to approximately $9.0 million for the year

ended December 31, 2021.

This increase is driven by an increase in net loss of continuing operations of approximately $69.7 million,

as well as an increase in accounts receivable of $1.9 million offset by an increase in accounts payable of $4.0 million year over year.

Flow from Investing Activities

cash used in investing activities was approximated $18.0 million for year ended December 31, 2022 as compared to approximately

cash used by operating activities was approximately $19.2 million for the year ended December 31, 2023 as compared to approximately

$27.0 million for the year ended December 31, 2022.

During the year ended December 31, 2022, we purchased $2.3 million in property,

plant, and equipment, $14.9 million of marketable securities, and issued $3.6 million in new notes receivable.

In comparison, the Company purchased $71.1 million in property, plant,

equipment and real estate for the twelve months ended December 31, 2021.

This decrease is driven by a decrease in net loss from operations with

adjustments to reconcile net loss from operations to net

cash used by operating activities of approximately $30.8 million year over year, offset by increase in payments of accrued

expenses of approximately $20.1 million and accounts payable of $1.8 million year over year.

Flow from Investing Activities

cash provided by investing activities was approximately $8.9 million for year ended December 31, 2023 as compared to net cash used

approximately $18.0 million for the year ended December 31, 2022.

During the year ended December 31, 2022, we purchased $2.3 million

in property, plant, and equipment, $14.9 million of marketable securities, and issued $3.6 million in new notes receivable.

comparison, the Company sold $9.5 million in marketable securities and issued $1.0 million in new notes receivable for the year

ended December 31, 2023.

Flow from Financing Activities

Net cash provided from financing

activities was approximated $7.6 million for the year ended December 31, 2022 as compared to $179.2 million for the year ended December

During the year ended December 31, 2022, we borrowed $9.6 million of long-term debt as compared to $60.9 million during the

year ended December 31, 2021.

Also, the Company raised $122 million through new issuance of common stock during the year ended December

cash used by financing activities was approximately $2.4 million for the year ended December 31, 2023 as compared to net cash provided $7.6 million

for the year ended December 31, 2022.

During the year ended December 31, 2022, we borrowed $9.6 million of long-term debt as compared

to $1.8 million during the year ended December 31, 2023.

Operations and Going Concern

6 unchanged sentences

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

from its $19.3 million in cash as of December 31, 2022, the Company believes it can continue as a going concern, during the twelve

months ended December 31, 2021, due to its ability to generate operating cash through the sale of its $27.3 million of Marketable

Securities, and the anticipated receipts of principal and interest on its Notes receivable of approximately $11.2 million through

March 31, 2024.

Also, our subsidiary Impact BioMedical is in the process of and IPO in which DSS will maintain a minimum of 55%

Initial conversations with underwriters are providing an estimate of $30 - $50 million potential capital raise.

expected to close early 3rd quarter 2023.

Our subsidiary SHRG is in the process of up listing to NASDQ and conversations with the

underwriter involved illustrate an approximate raise of $15 million dollars.

Additionally, we are in negotiations with Pinnacle Bank

to extend our note payable, approximating $40.2 million through November 2024.

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, 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 Company’s current operating levels and capital usage, we believe that without any further acquisition or investments, our $19.3

million in aggregate cash, as of December 31, 2022, along with the $27.3 million of Marketable Securities, and the anticipated receipts

of principal and interest on its Notes receivable of approximately $11.2 million through March 2024, would allow us to fund our nine

business lines current and planned operations through March 2024.

Based on this, the Company has concluded that substantial doubt of

its ability to continue as a going concern has been alleviated

from its $6.6 million in cash as of December 31, 2023, the Company believes it can continue as a going concern, due to its ability

to generate operating cash through the sale of its $10.0 million of Marketable Securities, and the anticipated receipts of principal

and interest on its Notes receivable of approximately $8.8 million through December 31, 2024.

The Company has also taken steps to

sell its real estate holdings in Utah, Texas, Pennsylvania, and Florida.

These properties approximate $51.6 million in assets and

are identified on the accompanying balance sheet as Held for sale.

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.

Although there are no

assurances, we believe the above would allow us to fund our nine business lines current and planned operations for the twelve months

from the filing date of this Annual Report.

Based on this, the Company has concluded that substantial doubt of its ability to

continue as a going concern has been alleviated.

Sheet Arrangements

do not have any off-balance sheet arrangements that have, or are reasonably likely to have, an effect on our financial condition, financial

statements, revenues or expenses.

our operations are influenced by general economic conditions, we do not believe that inflation had a material effect on our results of

operations during 2022 or 2021 as we are generally able to pass the increase in our material and labor costs to our customers or absorb

them as we improve the efficiency of our operations.

We do not have any

off-balance sheet arrangements that have, or are reasonably likely to have, an effect on our financial condition, financial statements,

revenues or expenses.

Although our operations

are influenced by general economic conditions, we do not believe that inflation had a material effect on our results of operations during

2023 or 2022 as we are generally able to pass the increase in our material and labor costs to our customers or absorb them as we improve

the efficiency of our operations.

Accounting Policies

preparation of financial statements and related disclosures in conformity with U.S.

GAAP requires management to make judgments, assumptions

and estimates that affect the amounts reported in our financial statements and accompanying notes.

The preparation of

financial statements and related disclosures in conformity with U.S.

GAAP requires management to make judgments, assumptions and estimates

that affect the amounts reported in our financial statements and accompanying notes.

The financial statements as of December 31, 2023,

describe the significant accounting policies and methods used in the preparation of the financial statements.

There have been

no material changes to such critical accounting policies as of the Annual Report on Form 10-K for the year ended December 31, 2022.

There have been no material

changes to such critical accounting policies as of the Annual Report on Form 10-K for the year ended December 31, 2022.

For Loans and Lease Losses

On January 1, 2022, the Company

adopted amended accounting guidance “ ASU No.2016-13 – Credit Losses” which requires an allowance for credit losses

to be deducted from the amortized cost basis of financial assets to present the net carrying value at the amount that is expected to be

collected over the contractual term of the asset considering relevant information about past events, current conditions, and reasonable

and supportable forecasts that affect the collectability of the reported amount.

In estimating expected losses in the loan and lease portfolio,

borrower-specific financial data and macro-economic assumptions are utilized to project losses over a reasonable and supportable forecast

Assumptions and judgment are applied to measure amounts and timing of expected future cash flows, collateral values and other

factors used to determine the borrowers’ abilities to repay obligations.

After the forecast period, the Company utilizes longer-term

historical loss experience to estimate losses over the remaining contractual life of the loans.

Prior to 2022, the allowance for credit

losses represented the amount that in management’s judgment reflected incurred credit losses inherent in the loan and lease portfolio

as of the balance sheet date.

On January 1, 2022,

the Company adopted amended accounting guidance “ ASU

No.2016-13 – Credit Losses” which requires an allowance for credit losses to be deducted from the amortized cost

basis of financial assets to present the net carrying value at the amount that is expected to be collected over the contractual term

of the asset considering relevant information about past events, current conditions, and reasonable and supportable forecasts that affect

the collectability of the reported amount.

In estimating expected losses in the loan and lease portfolio, borrower-specific financial

data and macro-economic assumptions are utilized to project losses over a reasonable and supportable forecast period.

Assumptions and

judgment are applied to measure amounts and timing of expected future cash flows, collateral values and other factors used to determine

the borrowers’ abilities to repay obligations.

After the forecast period, the Company utilizes longer-term historical loss experience

to estimate losses over the remaining contractual life of the loans.

Prior to 2022, the allowance for credit losses represented the amount

that in management’s judgment reflected incurred credit losses inherent in the loan and lease portfolio as of the balance sheet

Value of Financial Instruments

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 Topic of the Financial Accounting Standards Board (“FASB”)

Accounting Standards Codification (“ASC”) establishes a three-tier fair value hierarchy which prioritizes the inputs used

in measuring fair value.

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets

or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

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 Topic of the Financial Accounting Standards Board (“FASB”) Accounting

Standards Codification (“ASC”) establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities

(Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

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

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 consolidated 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.

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 where the fair value is not considered readily determinable, are carried at cost.

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

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

See Note 7 for further

discussion on investments.

Company recognizes its 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.

● 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.

The carrying amounts

reported in the consolidated 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.

Marketable 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.

fair value of investments where the fair value is not considered readily determinable, are carried at cost.

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.

For equity method

investments, the Company regularly reviews its investments to determine whether there is a decline in fair value below book value.

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

See Note 8 for further discussion on investments.

The Company recognizes

rental income associated with its REIT, net of amortization of favorable/unfavorable lease terms relative to market and includes rental

abatements and contractual fixed increases attributable to operating leases, where collection has been considered probable, on a straight-line

basis over the term of the related lease.

The Company recognizes net investment income from its investment banking line of business as

interest owed to the Company occurs.

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, 2022, the Company had no unsatisfied performance obligations for contracts with an original expected duration of greater

than one year.

Pursuant to Topic 606, the Company has applied the practical expedient with respect to disclosure of the deferral and

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

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 or less.

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.

its revenue based on when the title passes to the customer or when the service is completed and accepted by the customer.

measured as the amount of consideration the Company expects to receive in exchange for shipped product or service provided.

other taxes billed and collected from customers are excluded from revenue.

The Company recognizes rental income associated with its REIT,

net of amortization of favorable/unfavorable lease terms relative to market and includes rental abatements and contractual fixed increases

attributable to operating leases, where collection has been considered probable, on a straight-line basis over the term of the related

The Company recognizes net investment income from its investment banking line of business as interest owed to the Company occurs.

The Company generates revenue from its direct marketing line of business primarily through internet sales and recognizes revenue as items

As of December 31,

2023, the Company had no unsatisfied performance obligations for contracts with an original expected duration of greater than one year.

Pursuant to Topic 606, the Company has applied the practical expedient with respect to disclosure of the deferral and future expected

timing of revenue recognition for transaction price allocated to remaining performance obligations.

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 or less.

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

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 5 regarding the acquisitions.

of assets are recorded at their relative fair value based on total accumulated costs of the acquisition.

Direct acquisition-related

costs are expensed as incurred.

This includes all costs related to finding, analyzing and

negotiating a transaction.

The allocation of the purchase price is an area that requires judgment and significant estimates.

Tangible and intangible assets include land, building and improvements, furniture, fixtures and equipment, acquired above market and

below market leases, in-place lease value (if applicable).

Acquisition-date fair values of assets and assumed liabilities are

determined based on replacement costs, appraised values, and estimated fair values using methods like those used by independent

appraisers and that use appropriate discount and/or capitalization rates and available market information.

May 7, 2021, the Company completed the sale of 100% of the capital stock of DSS Digital Inc.

(“DSS Digital”), the Company’s

wholly owned subsidiary, which researched, developed, marketed, and sold the Company’s digital products worldwide.

magnitude of DSS Digital’s historical revenue to the Company and because the Company has exited the brand authentication services,

functional anti-counterfeiting technology and technologies to satisfy commercial and consumer product needs for branding, intelligent

packaging, and marketing, this sale represented a significant strategic shift that has a material effect on the Company’s operations

and financial results.

Accordingly, the Company has applied discontinued operations treatment for this sale as required by Accounting

Standards Codification 210-05—Discontinued Operations.

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.

Acquisition of assets are recorded

at their relative fair value based on total accumulated costs of the acquisition.

Direct acquisition-related costs are expensed as incurred.

This includes all costs related to finding, analyzing and negotiating a transaction.

The allocation of the purchase price is an area

that requires judgment and significant estimates.

Tangible and intangible assets include land, building and improvements, furniture,

fixtures and equipment, acquired above market and below market leases, in-place lease value (if applicable).

Acquisition-date fair values

of assets and assumed liabilities are determined based on replacement costs, appraised values, and estimated fair values using methods

like those used by independent appraisers and that use appropriate discount and/or capitalization rates and available market information.

7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

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 7. Management’s Discussion and Analysis