What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-13 compared with 2024-05-14 · 108 added, 75 removed, 225 unchanged (45% of the section changed)

94 unchanged sentences

by OTC Markets Group Inc.

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%.

Immediately prior to this distribution, DSS owned approximately 81% of the issued and

outstanding common shares of SHRG.

A s a result, SHRG, whose operations represented a significant

portion of our Direct Marketing segment, was deconsolidated from our consolidated financial statements effective as of May 1, 2023 (the

“Deconsolidation”).

The consolidated statement of operations for the fiscal quarter ended September 30, 2023, therefore includes

one month of activity related to SHRG prior to the Deconsolidation.

Subsequent to April 30, 2023 the assets and liabilities of SHRG are

no longer included within our consolidated balance sheets.

Any discussions related to results, operations, and accounting policies associated

with SHRG refer to the periods prior to the Deconsolidation.

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%.

Immediately prior to this distribution, DSS owned approximately 81%

of the issued and outstanding common shares of SHRG.

As a result, SHRG, whose operations represented a significant portion of our Direct

Marketing segment, was deconsolidated from our consolidated financial statements effective as of May 1, 2023 (the “Deconsolidation”).

The consolidated statement of operations for the fiscal quarter ended September 30, 2023, therefore includes one month of activity related

to SHRG prior to the Deconsolidation.

Subsequent to April 30, 2023 the assets and liabilities of SHRG are no longer included within our

consolidated balance sheets.

Any discussions related to results, operations, and accounting policies associated with SHRG refer to the

periods prior to the Deconsolidation.

five reporting segments are as follows:

24 unchanged sentences

for the prevention, inhibition, and treatment of neurological, oncology and immuno-related diseases.

Other technologies include

a breakthrough alternative sugar aimed to combat diabetes and functional fragrance formulations aimed at the industrial and medical industry.

Other technologies include a breakthrough

alternative sugar aimed to combat diabetes and functional fragrance formulations aimed at the industrial and medical industry.

business model of BioHealth and Impact BioMedical revolves around two methodologies – Licensing and Sales Distribution.

16 unchanged sentences

Brokers Company, Inc.:

Sentinel primarily operates as a financial intermediary, facilitating institutional trading of municipal and corporate bonds

as well as preferred stock, and accelerates the trajectory of the DSS digital securities business.

Sentinel primarily operates as a financial intermediary, facilitating institutional trading of municipal

and corporate bonds as well as preferred stock, and accelerates the trajectory of the DSS digital securities business.

AmericaFirst:

6 unchanged sentences

and its subsidiaries and partners,

provide an array of products and services which include, among other things, nutritional and personal care products sold throughout North America, Asia Pacific

and Eastern Europe, through licensing agreements.

of operations for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.

provide an array of products and services which include, among other things, nutritional and personal care products sold throughout North

America, Asia Pacific and Eastern Europe, through licensing agreements.

of operations for the three and six months ended June 30, 2024, as compared to the three and six months ended June 30, 2023.

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

Report on Form 10-K for the year ended December 31, 2023.

Three months ended

June 30, 2024

Three months ended

June 30, 2023

Six months ended

June 30, 2024

Six months ended

June 30, 2023

Printed products

4 unchanged sentences

Total Revenue

the three months ended March 31, 2024, total revenue decreased 68% as compared to the three months ended March 31, 2023.

Revenues from

the sale of Printed products decreased 50% during three months ended March 31, 2024, as compared to the same period in 2023 due primarily

to orders expected to ship during the 4 th quarter 2022 being pushed to the 1st quarter 2023.

The decreases in Rental income

of 76% for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 is driven by the tenants at AMRE

LifeCare being unable to make rental payments in 2024.

The decreases in Net investment income approximating 19% for the three months

ended March 31, 2024 as compared to the three months ended March 31, 2023 is due to a number of loans made going on non-accrual as borrowers

the three months ended June 30, 2024, total revenue decreased 42% as compared to the three months ended June 30, 2023.

The decreases

in Rental income of 72% is driven by the tenants at AMRE LifeCare being unable to make rental payments in 2024.

The decreases in Net

investment income approximating 79% is due to a number of loans made going on non-accrual as borrowers have struggled to make expect

The Company’s Direct Marketing revenues decreased 100% is due to the Deconsolidation of SHRG as described in Note 1.

the six months ended June 30, 2024, total revenue decreased 58% as compared to the six months ended June 30, 2023.

Revenues from the

sale of Printed products decreased 32% due primarily to orders expected to ship during the 4 th quarter 2022 being pushed to

the 1st quarter 2023.

The decreases in Rental income of 74% is driven by the tenants at AMRE LifeCare being unable to make rental payments

The decreases in Net investment income approximating 57% 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 three months ended March 31, 2024 as

compared to the three months ended March 31, 2023 is due to the Deconsolidation of SHRG as described in Note 1.

The Company’s Direct Marketing revenues decreased 100% is due to the Deconsolidation of

SHRG as described in Note 1.

Three months ended

June 30, 2024

Three months ended

June 30, 2023

Six months ended

June 30, 2024

Six months ended

Cost of revenue

3 unchanged sentences

Direct marketing

Sales, general and administrative

Sales, general and administrative compensation

Professional fees

3 unchanged sentences

Other operating expenses

costs and expenses

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

8 unchanged sentences

segment has costs of revenue associated with the impairment of notes receivable for those amounts at risk of collection.

of revenue decreased 42% for three months ended March 31, 2024 as compared to 2023 is primarily related to the Deconsolidation of SHRG

as described in Note 1.

of revenue decreased 20% for six months ended June 30, 2024 as compared to 2023 is primarily related to the Deconsolidation of SHRG as

described in Note 1.

Also, cost of revenue decreased at Premier for the same time period due to the decrease in product shipped.

general and administrative compensation costs, excluding stock-based compensation, decreased 76% for three months ended March 31,

general and administrative compensation costs, excluding stock-based compensation, decreased 62% for six months ended June 30, 2024

as compared to 2023 is primarily related to the Deconsolidation of SHRG as described in Note 1.

fees increased 77% for three months ended March 31, 2024 as compared to 2023 due primarily to primarily due to increases in

accounting fees for tax return preparation as well as audit fees associated with the required SEC reporting for ImpactBio offset by

settlement of disputed legal fees of approximately $743,000 during the first quarter of 2023.

fees decreased 26% for six months ended June 30, 2024 as compared to 2023 due primarily to primarily due to efforts taken to decrease

these cost primarily at the Company’s Impact Bio subsidiary in anticipation of its IPO.

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 73% three months ended March 31, 2024 as compared to 2023 due primarily

to the Deconsolidation of SHRG as described in Note 1.

and utilities decreased 42% 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.

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.

Sales and marketing decreased 69% during the six months ended June 30, 2024 as compared to 2023

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

and utilities decreased 15% during the six months ended June 30, 2024 as compared to 2023 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.

and development costs represent costs consisting primarily of independent, third-party testing of the various properties of each

technology the Company owns possesses as well as research on new technologies.

These costs decreased 72% the three months ended March

31, 2024 as compared to March 31, 2023, due primarily to the cessation of the Company’s research and development contract with

GRDG at the end of 2023.

These costs decreased 89% the six months ended June 30,

2024 as compared to June 30, 2023, due primarily to the cessation of the Company’s research and development contract with GRDG

at the end of 2023.

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

During the three months ended March 31, 2024 as compared to March 31, 2023, the fluctuation is due primarily to the Deconsolidation

of SHRG as described in Note 1.

the six months ended June 30, 2024 as compared to June 30, 2023, the fluctuation is due primarily to the Deconsolidation of SHRG as described

Income (Expense)

Three months ended

June 30, 2024

Three months ended

June 30, 2023

Six months ended

June 30, 2024

Six months ended

Interest Income

2 unchanged sentences

Other Income (expense)

Foreign Currency Translation Adjustment

Loss on investments

Loss on equity method investment

(27,922,000 )

(30,790,000 )

Gain/(loss) on equity method investment

Provision for loan losses

other expense

Loss on disposal of operations, net of taxes

Total other expense

$ (31,273,000 )

$ (34,232,000 )

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

income (expense) for the three months ended March 31, 2024 as compared to 2023 increased 132% due primarily to cost incurred in 2023

regarding the Company’s distribution agreement with BioMed Technologies.

expenses decreased 81% during the three months ended March 31, 2024, as compared to the same period in 2023,

due to decreasing debt balances.

income for the six months ended June 30, 2024 as compared to 2023 decreased 78% due primarily to income incurred in 2023 regarding

the Company’s distribution agreement with BioMed Technologies.

expenses decreased 51% during the six months ended June 30, 2024, as compared to the same period in 2023, due to decreasing debt

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

1 unchanged sentence

in fair market value on our common stock investment.

The decrease in loss on investment for the six months ended June 30, 2024 as compared

to 2023 is driven by the deconsolidation of SHRG which resulted in a loss of approximately $29,196,000.

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 months ended March 31, 2024 as compared to 2023

of account for the six months ended June 30, 2024 as compared to 2023.

Three months ended

March 31, 2024

Three months ended March 31, 2023

Loss from operations

June 30, 2024

Three months ended

June 30, 2023

Six months ended

June 30, 2024

Six months ended

June 30, 2023

$ (4,954,000 )

$ (37,723,000 )

the three months ended March 31, 2024 the Company recorded net losses of $5,109,000 as compared to net losses of $8,633,000 for the same

$ (10,063,000 )

$ (46,357,000 )

the six months ended June 30, 2024 the Company recorded net losses of $46,357,000 as compared to net losses of $10,063,000 for the same

period in 2023.

2 unchanged sentences

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

As of March 31, 2024 the Company had cash of approximately $9.3 million.

As of March 31, 2024, the Company believes that it has sufficient

As of June 30, 2024 the Company had cash of approximately $10.7 million.

As of June 30, 2024, 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.

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Flow from Continuing Operating Activities

cash used from operating activities was $2,150,000 for the three months ended March 31, 2024 as compared to $14,199,000 for three months

ended March 31, 2023.

This fluctuation is driven by decreases in net loss approximating $3,524,000.

cash used by operating activities was $5,574,000 for the six months ended June 30, 2024 as compared to $19,715,000 for six months

ended June, 2023.

This fluctuation is driven by decreases in net loss, after reconciling items, approximating $756,000.

Company paid litigation losses during the 1 st quarter of 2023 of approximately $8,750,000.

Flow from Investing Activities

cash provided by investing activities was $5,097,000 for the three months ended March 31, 2024 as compared to net cash provided by investing

activities of $11,537,000 for the three months ended March 31, 2023.

This fluctuation is driven by the sale of marketable securities

approximating $11,330,000 during 2023 versus $1,160,000 during 2024.

cash provided by investing activities was $8,776,000 for the six months ended June 30, 2024 as compared to net cash provided by investing

activities of $13,376,000 for the six months ended June 30, 2023.

This fluctuation is driven by the sale of marketable securities approximating

$11,330,000 during 2023 versus purchases of $379,000 during 2024.

This is offset by receipts on Notes receivable of $4,044,000 in 2024

1 unchanged sentence

Flow from Financing Activities

cash used from financing activities was $310,000 for the three months ended March 31, 2024 as compared to net cash used from financing

activities of $2,896,000 for the three months ended March 31, 2023.

cash provided by financing activities was $902,000 for the six months ended June 30, 2024 as compared to net cash used by financing

activities of $2,918,000 for the six months ended June 30, 2023.

This variance is driven by payments toward long term debt of $1,269,000

10 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 March 31, 2024.

no material changes to such critical accounting policies as of the Quarterly Report on Form 10-Q for the quarter ended June 30, 2024.

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