DSS, INC. 10-K/A

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Financial Statements DSS, INC. AND SUBSIDIARIES TABLE OF CONTENTS Page Reports of Independent Registered Public Accounting Firm (PCAOB ID: 606 ) 34 Consolidated Financial Statements: Consolidated Balance Sheets 36 Consolidated Statements of Operations 37 Consolidated Statements of Cash Flows 38 Consolidated Statements of Changes in Stockholders’ Equity 39 Notes to the Consolidated Financial Statements 40 33 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of DSS, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of DSS, Inc, and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Restatement of Financial Statements As discussed in Note 2 to the consolidated financial statements, the Company’s consolidated financial statements as of and for the years ended December 31, 2023 and 2022 have been restated to correct certain misstatements. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Investments in real estate As described in Note 10 to the consolidated financial statements, the Company owns real estate properties through their subsidiaries with a net book value of approximately $6,279,000, with an additional $51,595,000 classified as held for sale. We identified the value of the real estate to be a critical audit matter. The principal consideration for our determination of management’s assessment of impairment of the real estate as a critical audit matter is the high degree of subjective auditor judgment associated with evaluating management’s determination of impairment of the real estate properties, which is primarily due to the complexity of the valuation models used and the sensitivity of the underlying significant assumptions. The key assumptions used within the valuation models included site valuations and various approaches such as cost, sales comparison, etc. The calculated fair values are sensitive to changes in these key assumptions. 34 How the Critical Audit Matter was addressed in the Audit Our audit procedures related to the determination of the fair value of the real estate properties included the following, among others: a) We obtained management’s rollforward of investments in real estate from December 31, 2022, to December 31, 2023 and tested any material additions by vouching to invoices and contracts. b) We obtained third party valuations that assess the fair value of the properties from management. c) We assessed the qualifications and competence of management and the qualifications, competence and objectivity of third-party specialist. d) We engaged a valuation firm to review the valuation reports provided by management to determine if the reports were reasonable and acceptable based on the methodologies used by management’s third-party valuation firm. We also assessed the qualifications and competence of the valuation firm. e) We compared the net book value of the real estate properties to the fair values of the properties per the third-party valuations to determine that the carrying value is less than fair value and impairment was addressed properly. During the year ended December 31, 2023, Management reclassified the land and building related to AMRE LifeCare and AMRE Winter Haven to assets held for sale. f) We assessed the sufficiency of the Company’s disclosure of its accounting for these real estate properties included in Notes 3 and 10. Evaluation of Intangible Assets and Goodwill for Impairment As described in Notes 3 and 11 to the consolidated financial statements, the Company holds Intangible Assets and Goodwill through its subsidiaries with a net book value of approximately $20,193,000 and $26,862,000, respectively. We identified the value of Intangible Assets and Goodwill to be a critical audit matter. The principal consideration for our determination of management’s assessment of impairment of the Intangible Assets and Goodwill as a critical audit matter is the high degree of subjective auditor judgment associated with evaluating management’s determination of impairment of Intangible Assets and Goodwill, which is primarily due to the complexity of the valuation models used and the sensitivity of the underlying significant assumptions. The key assumptions used within the valuation models included qualitative and quantitative assessments. The calculated fair values are sensitive to changes in these key assumptions. How the Critical Audit Matter was addressed in the Audit Our audit procedures related to the determination of the fair value of the Intangible Assets and Goodwill included the following, among others: a) We obtained management’s rollforward of Intangible Assets and Goodwill in from December 31, 2022, to December 31, 2023 and tested any material additions and disposals by vouching to agreements. b) We obtained management’s qualitative and quantitative assessments and third-party valuations that assess the fair value of the Intangible Assets and Goodwill. c) We assessed the qualifications and competence of management and the qualifications, competence and objectivity of third-party specialists. d) We reviewed the valuation reports provided by management to determine if the reports were reasonable and acceptable based on the methodologies used by management’s third-party valuation firm. e) We audited the critical inputs used in the valuation calculations and utilized the services of an independent auditor engaged specialist to ensure the methodologies and assumptions utilized by the Company’s independent specialists were reasonable and in accordance with industry standards. f) We assessed the sufficiency of the Company’s disclosure of its accounting for Intangible Assets and Goodwill included in Notes 3 and 11. /s/ Grassi & Co., CPAs, P.C. We have served as the Company’s auditor since 2022. Jericho, New York March 27, 2024, except for Notes 2, 3, 4, 7, 10, 11, 12, 19, and 21, as to which date is October 22, 2024 35 DSS, INC. AND SUBSIDIARIES Consolidated Balance Sheets As of December 31, 2023 (as restated) 2022 (as restated) ASSETS Current assets: Cash and cash equivalents $ 6,615,000 $ 16,178,000 Accounts receivable, net 3,994,000 5,773,000 Inventory 2,819,000 4,993,000 Assets held for sale 51,595,000 - Current assets - discontinued operations - 8,474,000 Current portion of notes receivable 8,772,000 11,502,000 Prepaid expenses and other current assets 839,000 1,073,000 Total current assets 74,634,000 47,993,000 Property, plant and equipment, net 6,417,000 6,761,000 Investment in real estate, net 6,279,000 55,029,000 Other investments 1,282,000 1,355,000 Investment, equity method 128,000 162,000 Marketable securities 9,979,000 23,056,000 Notes receivable 111,000 922,000 Non-current assets - discontinued operations - 13,284,000 Other assets 97,000 1,515,000 Right-of-use assets 7,210,000 7,760,000 Goodwill 26,862,000 60,919,000 Other intangible assets, net 20,193,000 30,159,000 Total assets $ 153,192,000 $ 248,915,000 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 3,654,000 $ 5,479,000 Accrued expenses and deferred revenue 2,511,000 12,530,000 Other current liabilities 983,000 477,000 Current Liabilities - discontinued operations - 7,323,000 Current portion of lease liability 686,000 718,000 Current portion of long-term debt, net 47,776,000 47,161,000 Total current liabilities 55,610,000 73,688,000 Long-term debt, net 7,451,000 10,181,000 Long term lease liability 6,917,000 7,406,000 Non-current liabilities - discontinued operations - 414,000 Other long-term liabilities - 507,000 Deferred tax liability, net - 38,000 Commitments and contingencies (Note 18) - - Stockholders’ equity Preferred stock, $ .02 par value; 47,000 shares authorized, zero shares issued and outstanding ( zero on December 31, 2022); Liquidation value $ 1,000 per share, zero aggregate. zero on December 31, 2022). - - Common stock, $ .02 par value; 200,000,000 shares authorized, 7,066,772 shares issued and outstanding ( 6,950,858 on December 31, 2022) 140,000 139,000 Additional paid-in capital 319,963,000 319,766,000 Accumulated deficit ( 256,176,000 ) ( 194,343,000 ) Total DSS stockholders’ equity 63,927,000 125,562,000 Non-controlling interest in subsidiaries 19,287,000 31,119,000 Total stockholders’ equity 83,214,000 156,681,000 Total liabilities and stockholders’ equity $ 153,192,000 $ 248,915,000 See accompanying notes. 36 DSS, INC. AND SUBSIDIARIES Consolidated Statements of Operations For the Years Ended December 31, 2023 (as restated) 2022 (as restated) Revenue: Printed products $ 18,497,000 $ 17,973,000 Rental income 3,647,000 6,287,000 Management fee income - 134,000 Net investment income 385,000 630,000 Direct marketing 1,763,000 3,065,000 Commission revenue 1,641,000 294,000 Total revenue 25,933,000 28,383,000 Costs and expenses: Cost of revenue 25,390,000 32,992,000 Selling, general and administrative (including stock based compensation) 20,343,000 25,369,000 Total costs and expenses 45,733,000 58,361,000 Operating loss ( 19,800,000 ) ( 29,978,000 ) Other income (expense): Interest income 1,289,000 629,000 Dividend income 16,000 159,000 Other income (expense) 532,000 1,518,000 Interest expense ( 553,000 ) ( 126,000 ) Litigation loss - ( 8,750,000 ) Gain on extinguishment of debt - 110,000 (Loss)/gain on equity method investment ( 34,000 ) 129,000 Loss on investments ( 4,967,000 ) ( 1,196,000 ) Impairment of investment - ( 5,637,000 ) Impairment of intangible assets ( 7,418,000 ) - Impairment of real estate assets ( 812,000 ) - Impairment of fixed assets - - Impairment of assets upon deconsolidation ( 6,220,000 ) - Provision for loan losses ( 3,794,000 ) - Impairment of goodwill ( 30,978,000 ) - (Loss)/gain on sale ( 1,300,000 ) 405,000 Loss from continuing operations before income taxes ( 74,039,000 ) ( 42,737,000 ) Income tax loss ( 4,000 ) ( 172,000 ) Loss from continuing operations ( 74,043,000 ) ( 42,909,000 ) Loss from discontinued operations, net of tax ( 3,481,000 ) ( 26,752,000 ) Net loss $ ( 77,524,000 ) $ ( 69,661,000 ) Loss attributed to noncontrolling interest 16,897,000 9,821,000 Net loss attributable to common stockholders $ ( 60,627,000 ) $ ( 59,840,000 ) Amounts attributable to DSS stockholders Loss from continuing operations net of taxes $ ( 57,335,000.00 ) $ ( 38,153,000.00 ) Loss from discontinued operations net of taxes ( 3,292,000.00 ) ( 21,687,000.00 ) Net loss attributable to DSS stockholders $ ( 60,627,000.00 ) $ ( 59,840,000.00 ) Loss per common share attributable to common stockholders – continuing operations Basic $ ( 8.20 ) $ ( 6.84 ) Diluted $ ( 8.20 ) $ ( 6.84 ) Loss per common share attributable to common stockholders - discontinued operations Basic $ ( 0.47 ) $ ( 3.89 ) Diluted $ ( 0.47 ) $ ( 3.89 ) Shares used in computing loss per common share: Basic 6,996,322 5,581,106 Diluted 6,996,322 5,581,106 See accompanying notes. 37 DSS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows For the Years Ended December 31, 2023 (as restated) 2022 (as restated) Cash flows from operating activities: Net loss $ ( 77,524,000 ) $ ( 69,661,000 ) Loss from discontinued operations ( 3,481,000 ) ( 26,752,000 ) Loss from continuing operations ( 74,043,000 ) ( 42,909,000 ) Adjustments to reconcile net loss from operations to net cash used by operating activities: Depreciation and amortization 5,206,000 12,173,000 Stock based compensation - 4,000 Gain/(loss) on equity method investment 34,000 ( 129,000 ) Loss on investments 7,307,000 24,650,000 Change in ROU assets 1,009,000 ( 7,521,000 ) Gain on extinguishment of debt - ( 110,000 ) Deferred tax loss - 38,000 Loss on sales of assets 1,300,000 - Impairment of fixed assets - - Impairment of assets upon deconsolidation 6,220,000 - Impairment of intangible assets 7,418,000 - Impairment of real estate 812,000 - Impairment of Goodwill 30,978,000 - Impairment of accounts receivable 3,023,000 - Impairment of notes receivable 3,794,000 1,525,000 Impairment of other investments - 5,637,000 Decrease (increase) in assets: Accounts receivable 1,316,000 ( 1,716,000 ) Inventory 5,483,000 ( 1,550,000 ) Prepaid expenses and other current assets 996,000 321,000 Other assets 2,392,000 ( 1,234,000 ) Increase (decrease) in liabilities: Accounts payable ( 2,260,000 ) 4218,000 Accrued expenses ( 15,646,000 ) 6,842,000 Change in ROU liabilities ( 1,013,000 ) 7,886,000 Other liabilities ( 39,000 ) 4,354,000 Net cash (used) provided by operating activities - continuing operations ( 15,713,000 ) 12,478,000 Net cash used by operating activities - discontinued operations ( 3,481,000 ) ( 39,431,000 ) Net cash used by operating activities ( 19,194,000 ) ( 26,953,000 ) Cash flows from investing activities: Purchase of property, plant and equipment ( 818,000 ) ( 1,862,000 ) Purchase of real estate - ( 732,000 ) Purchase of investment - ( 195,000 ) Purchase of marketable securities - ( 5,374,000 ) Disposal of property, plant & equipment 248,000 2,152,000 Asset acquired with APB acquisition - ( 1,879,000 ) Asset acquired with Sentinel acquisition 40,000 - Conversion of SHRG to consolidation - 3,038,000 Change in Equity investment - ( 113,000 ) Issuance of new notes receivable, net origination fees ( 1,046,000 ) ( 3,612,000 ) Payment received on notes receivable 1,010,000 1,067,000 Sale of marketable securities 9,502,000 - Purchase of intangible assets - ( 508,000 ) Net cash provided (used) by investing activities - continuing operations 8,936,000 ( 8,018,000 ) Net cash used by investing activities - discontinued operations - ( 9,951,000 ) Net cash provided (used) by investing activities 8,936,000 ( 17,969,000 ) Cash flows from financing activities: Payments of long-term debt ( 4,246,000 ) ( 3,362,000 ) Borrowings of long-term debt 1,829,000 9,602,000 Issuances of common stock, net of issuance costs - 1,519,000 Net cash (used) provided by financing activities - continuing operations ( 2,417,000 ) 7,759,000 Net cash used provided by financing activities - discontinued operations - ( 142,000 ) Net cash (used) provided by financing activities ( 2,417,000 ) 7,617,000 Net (decrease) increase in cash – continuing operations ( 9,194,000 ) 12,219,000 Net decrease in cash – discontinued operations ( 3,481,000 ) ( 49,524,000 ) Cash and cash equivalents at beginning of year 19,290,000 56,595,000 Cash and cash equivalents at end of year $ 6,615,000 $ 19,290,000 See accompanying notes. 38 DSS, INC. AND SUBSIDIARIES Consolidated Statements of Changes in Stockholders’ Equity For the Years Ended December 31, Common Stock Preferred Stock Additional Paid-in Accumulated Total DSS Non- controlling Interest in Shares Amount Shares Amount Capital Deficit (as restated) Equity (as restated) Subsidiary (as restated) Total (as restated) Balance, December 31, 2021 3,987,308 $ 80,000 - $ - $ 296,199,000 $ ( 134,503,000 ) $ 161,776,000 $ 36,409,000 $ 198,185,000 Issuance of common stock, net of expenses 2,146,200 43,000 - - 17,362,000 - 17,405,000 - 17,405,000 Acquisition of Sentinel Brokers Company, Inc. - - - - - - - 1,274,000 1,274,000 Acquisition of Sharing Services Global Corporation - - - - - - - 3,257,000 3,257,000 Stock based payments 817,350 16,000 - - 6,205,000 - 6,221,000 - 6,221,000 Net loss - - - - - ( 59,840,000 ) ( 59,840,000 ) ( 9,821,000 ) ( 69,661,000 ) Balance, December 31, 2022 6,950,858 $ 139,000 - $ - $ 319,766,000 $ ( 194,343,000 ) $ 125,562,000 $ 31,119,000 $ 156,681,000 Common Stock Preferred Stock Additional Paid-in Accumulated Total DSS Non- controlling Interest in Shares Amount Shares Amount Capital Deficit (as restated) Equity (as restated) Subsidiary (as restated) Total (as restated) Balance, December 31, 2022 6,950,858 $ 139,000 - $ - $ 319,766,000 $ ( 194,343,000 ) $ 125,562,000 $ 31,119,000 $ 156,681,000 Balance 6,950,858 $ 139,000 - $ - $ 319,766,000 $ ( 194,343,000 ) $ 125,562,000 $ 31,119,000 $ 156,681,000 Issuance of common stock, net of expenses 62,354 1 ,000 - - 267,000 - 268,000 - 268,000 Acquisition of Sentinel Brokers Company, Inc. shares - - - - ( 70,000 ) - ( 70,000 ) - ( 70,000 ) Fractional shares as a result of reverse stock split 53,560 - - - - - - - - Dividend in kind - Deconsolidation of Sharing Services Global Corporation - - - - - ( 1,206,000 ) ( 1,206,000 ) - ( 1,206,000 ) Deconsolidation of SHRG - - - - - - 5,065,000 5,065,000 Net loss - - - - - ( 60,627,000 ) ( 60,627,000 ) ( 16,897,000 ) ( 77,524,000 ) Balance, December 31, 2023 7,067,772 $ 140,000 - $ - $ 319,963,000 $ ( 256,176,000 ) $ 63,927,000 $ 19,287,000 $ 83,214,000 Balance 7,067,772 $ 140,000 - $ - $ 319,963,000 $ ( 256,176,000 ) $ 63,927,000 $ 19,287,000 $ 83,214,000 See accompanying notes. 39 DSS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. DESCRIPTION OF BUSINESS Description of Business The Company, incorporated in the state of New York in May 1984 has conducted business in the name of Document Security Systems, Inc. On September 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. to DSS, Inc. This change became effective on September 30, 2021. DSS, Inc. maintained the same trading symbol “DSS”. DSS, Inc. (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. These business lines are: (1) Product Packaging, (2) Biotechnology, (3) Direct, (4) Commercial Lending, (5) Securities and Investment Management, (6) Alternative Trading (7) Digital Transformation (discontinued in 2023), (8) Secure Living (discontinued in 2023), and (9) Alternative Energy (discontinued in 2023). Each of these business lines are in different stages of development, growth, and income generation. Our divisions, their business lines, subsidiaries, and operating territories: (1) Our Product Packaging line is 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. 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. Also in this segment is the Company’s real estate investment trusts (“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. Alternative 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 sector. Digital improves marketing, communications and operations processes with custom software development and implementation (discontinued in 2023). (8) 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 (discontinued in 2023). (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 (discontinued in 2023). On 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 to 75 % . In May of 2023, Sentinel LLC acquired an additional 5 % increasing its equity position to 80.1 % . 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 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 . Pursuant 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. On 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. On 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. Mr. Heng Fai 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. 40 2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS Restatement of Previously Issued Financial Statements The Company has restated the accompanying financial statements for the year ended December 31, 2023 and 2022, along with certain notes to such restated financial statements. The adjustments recorded were related to the correction of an error identified by management. The nature and impact of this adjustment on the Company’s previously issued financial statements is summarized as follows and the effects by impacted line items are detailed in the tables below. Impacted amounts and associated disclosures are restated within the accompanying notes to the financial statements. On May 4, 2023, the Company distributed approximately 280 million shares of Sharing Service Global Corporation (“SHRG”), beneficially held by the Company, in the form of a dividend to the shareholders of the Company’s common stock. Upon completion of this distribution, the Company retained an ownership interest in SHRG of approximately 7 %. Effective May 1, 2023, SHRG was deconsolidated from the consolidated financial statements (the “Deconsolidation”). The consolidated statement of operations does not include SHRG activity after April 30, 2023 and the assets and liabilities of SHRG are no longer included within the Company’s consolidated balance sheet. In the 10-Q for the second quarter of 2023, the Company recorded an approximate $ 29.9 million loss on deconsolidation. The Company also recorded an decrease in accumulated deficit of $ 18.7 million to reflect the reversal of balances as of deconsolidation. In preparation of the Form S-3 as well as the September 30, 2024 10-Q filing this transaction was revisited and it was determined that loss was unintentionally overstated by approximately $ 23.5 million driven primarily by the increases in accumulated deficit that should have been recorded as an offset to the initial income statement loss. In addition, the Company has determined that Deconsolidation also requires the recognition of discontinued operations. Management and the Audit Committee of the Company has concluded that restatement of its December 31, 2023 financial statements, filed on March 27, 2024, is required. The following tables summarize the effect of the restatement on each financial statement line items as of the December 31, 2023 and 2022: Schedule of Restatement of Previously Issued Financial Statements As Previously Reported Adjustments As Restated Consolidated Balance Sheets as of December 31, 2022 Cash and cash equivalents $ 19,290,000 ( 3,112,000 ) $ 16,178,000 Accounts receivable, net $ 7,564,000 ( 1,791,000 ) $ 5,773,000 Inventory $ 7,721,000 ( 2,728,000 ) $ 4,993,000 Current portion of notes receivable $ 11,719,000 ( 217,000 ) $ 11,502,000 Prepaid expenses and other current assets $ 1,700,000 ( 627,000 ) $ 1,073,000 Current assets - discontinued operations $ - 8,475,000 $ 8,475,000 Property, plant and equipment, net $ 13,391,000 ( 6,630,000 ) $ 6,761,000 Other investments $ 1,534,000 ( 179,000 ) $ 1,355,000 Marketable securities $ 27,307,000 ( 4,251,000 ) $ 23,056,000 Other assets $ 2,699,000 ( 1,184,000 ) $ 1,515,000 Right-of-use assets $ 8,219,000 ( 459,000 ) $ 7,760,000 Other intangible assets, net $ 30,740,000 ( 581,000 ) $ 30,159,000 Non-current assets - discontinued operations $ - 13,284,000 $ 13,284,000 Accounts payable $ 5,914,000 ( 435,000 ) $ 5,479,000 Accrued expenses and deferred revenue $ 19,341,000 ( 6,811,000 ) $ 12,530,000 Current portion of lease liability $ 796,000 ( 78,000 ) $ 718,000 Current Liabilities - discontinued operations $ - 7,324,000 $ 7,324,000 Long term lease liability $ 7,820,000 ( 414,000 ) $ 7,406,000 Non-current liabilities - discontinued operations $ - 414,000 $ 414,000 Consolidated Statements of Operations Loss for the year ended December 31, 2022 Direct marketing revenue $ 21,989,000 ( 18,924,000 ) $ 3,065,000 Total revenue $ 47,307,000 ( 18,924,000 ) $ 28,383,000 Cost of revenue $ 40,247,000 ( 7,255,000 ) $ 32,992,000 Selling, general and administrative (including stock based compensation) $ 53,531,000 ( 28,161,000 ) $ 25,370,000 Total costs and expenses $ 93,778,000 ( 35,416,000 ) $ 58,362,000 Operating loss $ ( 46,471,000 ) ( 16,493,000 ) $ ( 29,978,000 ) Other income (expense) $ 3,602,000 ( 2,084,000 ) $ 1,518,000 Interest expense $ 126,000 - $ 126,000 Gain (loss) on investments $ ( 10,697,000 ) ( 9,501,000 ) $ ( 1,196,000 ) Impairment of fixed assets $ ( 2,843,000 ) ( 2,843,000 ) $ - Loss form continuing operations before taxes $ ( 69,490,000 ) ( 26,752,000 ) $ ( 42,738,000 ) Loss from discontinued operations, net of taxes $ - 26,752,000 $ 26,752,000 Loss per common share - basic earnings per share $ ( 10.72 ) 4.79 $ ( 5.93 ) Loss per common share - diluted earnings per share $ ( 10.72 ) 4.79 $ ( 5.93 ) Loss per common share - discontinued operations basic $ - ( 4.79 ) $ ( 4.79 ) Loss per common share - discontinued operations diluted $ - ( 4.79 ) $ ( 4.79 ) Consolidated Statements of Cash Flows for the year ended December 31, 2022 Loss from discontinued operations $ - 26,752,000 $ ( 26,752,000 ) Loss from continuing operations $ - 42,909,000 $ ( 42,909,000 ) Depreciation and amortization $ 12,925,000 ( 752,000 ) $ 12,173,000 Loss (gain) on investments $ 13,386,000 11,264,000 $ 24,650,000 Change in ROU assets $ ( 7,721,000 ) ( 200,000 ) $ ( 7,521,000 ) Impairment of fixed assets $ 2,843,000 ( 2,843,000 ) $ - Accounts receivable $ ( 1,891,000 ) ( 175,000 ) $ ( 1,716,000 ) Inventory $ 540,000 ( 2,090,000 ) $ ( 1,550,000 ) Prepaid expenses and other current assets $ 1,766,000 ( 1,445,000 ) $ 321,000 Other assets $ ( 2,210,000 ) ( 976,000 ) $ ( 1,234,000 ) Accounts payable $ 3,994,000 224,000 $ 4,218,000 Accrued expenses $ 4,307,000 2,535,000 $ 6,842,000 Change in ROU liabilities $ 8,103,000 ( 217,000 ) $ 7,886,000 Other liabilities $ ( 298,000 ) 4,652,000 $ 4,354,000 Net cash used by operating activities - continuing operations $ ( 26,953,000 ) 39,431,000 $ 12,478,000 Net cash used by operating activities - discontinued operations $ - ( 39,431,000 ) $ ( 39,431,000 ) Purchase of property, plant and equipment $ ( 2,294,000 ) 432,000 $ ( 1,862,000 ) Purchase of marketable securities $ ( 14,884,000 ) 9,510,000 $ ( 5,374,000 ) Issuance of new notes receivable, net origination fees $ ( 3,621,000 ) 9,000 $ ( 3,612,000 ) Net cash used by investing activities - continuing operations $ ( 17,969,000 ) 9,951,000 $ ( 8,018,000 ) Net cash used by investing activities - discontinued operations $ - ( 9,951,000 ) $ ( 9,951,000 ) Payments of long-term debt $ ( 3,504,000 ) 142,000 $ ( 3,362,000 ) Net cash used by financing activities - continuing operations $ 7,617,000 142,000 $ 7,759,000 Net cash used by financing activities - discontinued operations $ - ( 142,000 ) $ ( 142,000 ) Net increase (decrease) in cash - continuing operations $ ( 37,305,000 ) 49,524,000 $ 12,219,000 Net increase (decrease) in cash - discontinued operations $ - ( 49,524,000 ) $ ( 49,524,000 ) Consolidated Statements of Operations Income (Loss) for the year ended December 31, 2023 Direct marketing revenue $ 6,088,000 ( 4,325,000 ) $ 1,763,000 Total revenue $ 30,258,000 ( 4,325,000 ) $ 25,933,000 Cost of revenue $ 26,647,000 ( 1,257,000 ) $ 25,390,000 Selling, general and administrative (including stock based compensation) $ 25,072,000 ( 4,729,000 ) $ 20,343,000 Total costs and expenses $ 51,719,000 ( 5,986,000 ) $ 45,733,000 Operating loss $ ( 21,461,000 ) ( 1,661,000 ) $ ( 19,800,000 ) Loss on investment $ ( 32,986,000 ) ( 28,019,000 ) $ ( 4,967,000 ) Impairment of assets due to deconsolidation $ - 6,220,000 $ ( 6,220,000 ) Loss from continuing operations before income taxes $ ( 97,499,000 ) ( 23,460,000 ) $ ( 74,039,000 ) Loss from discontinued operations, net of tax $ - ( 3,481,000 ) $ ( 3,481,000 ) Net loss $ ( 97,503,000 ) ( 19,979,000 ) ( 77,524,000 ) Net loss attributable to common stockholders $ ( 80,606,000 ) ( 19,979,000 ) ( 60,627,000 ) Loss per common share - basic earnings per share $ ( 11.52 ) 3.35 $ ( 8.17 ) Loss per common share - diluted earnings per share $ ( 11.52 ) 3.35 $ ( 8.17 ) Loss per common share - discontinued operations basic $ - ( 0.50 ) $ ( 0.50 ) Loss per common share - discontinued operations diluted $ - ( 0.50 ) $ ( 0.50 ) Consolidated Statements of Cash Flows for the year ended December 31, 2023 Net loss $ ( 97,503,000 ) ( 19,979,000 ) $ ( 77,524,000 ) Loss from discontinued operations $ - 3,481,000 $ ( 3,481,000 ) Loss from continuing operations $ - 74,043,000 $ ( 74,043,000 ) Loss (gain) on investments $ 33,506,000 ( 26,199,000 ) $ 7,307,000 Impairment of assets $ - 6,220,000 $ 6,220,000 Net cash used by operating activities - continuing operations $ - 15,713,000 $ ( 15,713,000 ) Net cash used by operating activities - discontinued operations $ - 3,481,000 $ ( 3,481,000 ) Net decrease in cash - continuing operations $ - 9,194,000 $ ( 9,194,000 ) Net decrease in cash - discontinued operations $ - 3,481,000 $ ( 3,481,000 ) Consolidated Statements of Changes in Stockholders’ Equity for the year ended December 31, 2023 Dividend in kind - Deconsolidation of Sharing Services Global Corporation $ - 1,206,000 $ ( 1,206,000 ) Net loss - total $ ( 97,503,000 ) $ ( 19,979,000 ) $ ( 77,524,000 ) Net loss - accumulated deficit $ ( 80,606,000 ) ( 19,979,000 ) $ ( 60,627,000 ) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Summary of Significant Accounting Policies Principles of Consolidation – The consolidated financial statements include the accounts of DSS and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Deconsolidation of Sharing Services Global Corporation - 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”) and will be treated as discontinued operations on the face of our financial statements. 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. Upon Deconsolidation, we recognized an impairment of assets due to the deconsolidation of SHRG approximately $ 6,071,000 which is recorded as an impairment of assets due to the deconsolidation in our consolidated statements of operations. Subsequent to the Deconsolidation, we accounted for our equity ownership interest in SHRG as a marketable security and at the quoted price stock price of SHRG, valued at approximately $ 74,000 at December 31, 2023. Use of Estimates – The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires the Company to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, the Company evaluates its estimates, including those related to the accounts receivable, convertible notes receivable, inventory, fair values of investments, intangible assets and goodwill, useful lives of intangible assets and property and equipment, fair values of options and warrants to purchase the Company’s common stock, preferred stock, deferred revenue, and income taxes, among others. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. 41 Reclassifications – Interest expense associated with the debt owed by AMRE has been reclassed from Interest expense to Cost of revenue for the year ended December 31, 2022 to conform to current period presentation. Cash Equivalents – All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents. Amounts included in cash equivalents in the accompanying consolidated balance sheets are money market funds whose adjusted costs approximates fair value. Accounts Receivable – The Company extends credit to its customers in the normal course of business. The Company performs ongoing credit evaluations and generally does not require collateral. Payment terms are generally 30 days but up to net 120 for certain customers. The Company carries its trade accounts receivable at invoice amounts and its rent receivables at contract amounts, less an allowance for credit losses. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for credit losses based upon management’s estimates that include a review of the history of past write-offs and collections and an analysis of current credit conditions. In estimating expected losses in the accounts receivable portfolio, customer-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 customers’ abilities to pay. At December 31, 2023, and December 31, 2022, the Company established a reserve for credit losses of approximately $ 2,494,000 and $ 29,000 , respectively. The Company does not accrue interest on past due accounts receivable. Accounts receivable, net was $ 5,673,000 , $ 7,564,000 , and $ 3,994,000 for January 1, 2022, December 31, 2022, and December 31, 2023, respectively. Concentration of Credit Risk - The Company maintains its cash in bank deposit accounts, which at times may exceed federally insured limits. The Company believes it is not exposed to any significant credit risk because of any non-performance by the financial institutions. As of December 31, 2022, two customers accounted for approximately 14 % and 6 % of our consolidated revenue and 36 % and 17 % of our trade accounts receivable balance. As of December 31, 2023, two customers accounted for approximately 20 % and 11 % of our consolidated revenue and 39 % and 30 % of our trade accounts receivable balance. Notes receivable, unearned interest, and related recognition - The Company records all future payments of principal and interest on notes as notes receivable, which are then offset by the amount of any related unearned interest income. For financial statement purposes, the Company reports the net investment in the notes receivable on the consolidated balance sheet as current or long-term based on the maturity date of the underlying notes. Such net investment is comprised of the amount advanced on the loans, adjusting for net deferred loan fees or costs incurred at origination, amounts allocated to warrants received upon origination, and any payments received in advance. The unearned interest is recognized over the term of the notes and the income portion of each note payment is calculated so as to generate a constant rate of return on the net balance outstanding. Net deferred loan fees or costs, together with discounts recognized in connection with warrants acquired at origination, are accreted as an adjustment to yield over the term of the loan. Allowance 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 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 date. Investments – Investments in equity securities with a readily determinable fair value, not accounted for under the equity method, are recorded at fair 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. If there is a decline that is other-than-temporary, the investment is written down to fair value. See Note 9 for further discussion on investments. 42 Fair Value of Financial Instruments - Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Fair Value Measurement 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). These tiers include: ● Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets. ● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and ● 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. The fair value of investments where the fair value is not considered readily determinable, are carried at cost. Inventory – Inventories consist primarily of paper, pre-printed security paper, paperboard, fully prepared packaging, air filtration systems, and health and beauty products which and are stated at the lower of cost or net realizable value on the first-in, first-out (“FIFO”) method. Packaging work-in-process and finished goods included the cost of materials, direct labor and overhead. At the closing of each reporting period, the Company evaluates its inventory in order to adjust the inventory balance for obsolete and slow-moving items. An allowance for obsolescence of approximately $ 18,000 and $ 57,000 associated with the inventory at our Premier subsidiary for December 31, 2023 and 2022, respectively. Also, SHRG had an allowance for obsolescence of approximately $ 685,000 at December 31, 2022. Write- downs and write-offs are charged to cost of revenue. Property, Plant and Equipment – Property, plant and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives or lease period of the assets whichever is shorter. Expenditures for renewals and betterments are capitalized. Expenditures for minor items, repairs and maintenance are charged to operations as incurred. Any gain or loss upon sale or retirement due to obsolescence is reflected in the operating results in the period the event takes place. Investments in real estate, net – Acquisition of assets are recorded at their relative fair value based on total accumulated costs of the acquisition. Direct acquisition-related costs are capitalized as a component of the acquired assets. 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 similar to those used by independent appraisers and that use appropriate discount and/or capitalization rates and available market information. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets. During 2023, the land and buildings related to AMRE LifeCare and AMRE Winter Haven were reclassified to Assets held for sale. Leases - ASC 842 requires recognition of leases on the consolidated balance sheets as right-of-use (“ROU”) assets and lease liabilities. ROU assets represent the Company’s right to use underlying assets for the lease terms and lease liabilities represent the Company’s obligation to make lease payments arising from the leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value and future minimum lease payments over the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company used its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. A number of the lease agreements contain options to renew and options to terminate the leases early. The lease term used to calculate ROU assets and lease liabilities only includes renewal and termination options that are deemed reasonably certain to be exercised. 43 The Company recognized lease liabilities, with corresponding ROU assets, based on the present value of unpaid lease payments for existing operating leases longer than twelve months.. Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term and is recorded in selling, general and administrative expenses. Variable lease payments for common area maintenance, property taxes and other operating expenses are recognized as expense in the period incurred. The Company has elected to separate lease and non-lease components for all property leases for the purposes of calculating ROU assets and lease liabilities. Impairment of Long-Lived Assets and Goodwill - The Company monitors the carrying value of long-lived assets for potential impairment and tests the recoverability of such assets whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. If a change in circumstance occurs, the Company performs a test of recoverability by comparing the carrying value of the asset or asset group to its undiscounted expected future cash flows. If cash flows cannot be separately and independently identified for a single asset, the Company will determine whether impairment has occurred for the group of assets for which the Company can identify the projected cash flows. If the carrying values are in excess of undiscounted expected future cash flows, the Company measures any impairment by comparing the fair value of the asset or asset group to its carrying value. Assets held for sale – The Company has several buildings and the associated land they occupy for sale as of December 31, 2023. These consist of primarily of retail space in Lindon, Utah approximating $ 5,593,000 and the medical facilities associated with AMRE LifeCare of approximately $ 41,541,000 and AMRE Winter Haven of approximately $ 4,396,000 , and $ 65,000 of other assets Goodwill – Goodwill is the excess of cost of an acquired entity over the fair value of amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill is subject to impairment testing at least annually and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. FASB ASC Topic 350 provides an entity with the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after completing the assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company will proceed to a quantitative test. The Company may also elect to perform a quantitative test instead of a qualitative test for any or all of our reporting units. The test compares the fair value of an entity’s reporting units to the carrying value of those reporting units. This quantitative test requires various judgments and estimates. The Company estimates the fair value of the reporting unit using a market approach in combination with a discounted operating cash flow approach. Impairment of goodwill is measured as the excess of the carrying amount of goodwill over the fair values of recognized and unrecognized assets and liabilities of the reporting unit. The Company performed its annual goodwill impairment test as of December 31, 2023, and no impairment was deemed necessary for the goodwill associated with Premier Packaging Company, and Impact BioMedical of $ 1,769,000 and $ 25,093,000 , respectively. The goodwill for APB, and Sentinel Co. of approximately $ 29,744,000 , and $ 1,234,000 respectively, were deemed impaired and written off at December 31, 2023. Intangible Assets - The estimated fair values of acquired intangibles are generally determined based upon future economic benefits such as earnings and cash flows. Acquired identifiable intangible assets are recorded at fair value and are amortized over their estimated useful lives. Acquired intangible assets with an indefinite life are not amortized but are reviewed for impairment at least annually or more frequently whenever events or changes in circumstances indicate that the carrying amounts of those assets are below their estimated fair values. Impairment is tested under ASC 350. At December 31, 2023, The Company impaired approximately $ 7,418,000 associated with intangible assets for AMRE Lifecare and AMRE Winter Haven. Revenue - The 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. 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 and management fees related to loans managed for third parties 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. 44 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. Costs of revenue - Costs of revenue includes all direct cost of the Company’s packaging, commercial and security printing sales, primarily, paper, inks, dies, and other consumables, and direct labor, transportation, amortization, deprecation, and manufacturing facility costs. In addition, this category includes all direct costs associated with the manufacturing and procurement of the products sold in the Company’s Direct Marketing line of business as well as with the Company’s technology sales, services and licensing including hardware and software that is resold, third-party fees, and fees paid to inventors or others as a result 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. Costs of revenue do not include expenses related to product development, integration, and support. These costs are included in research and development, which is a component of selling, general and administrative expenses on the consolidated statement of operations. Legal costs are included in selling, general and administrative. Shipping and Handling Costs - Costs incurred by the Company related to shipping and handling are included in cost of revenue. Amounts charged to customers pertaining to these costs are reflected as revenue. Share-Based Payments - Compensation cost for stock awards are measured at fair value and the Company recognizes compensation expense over the service period for which awards are expected to vest. The Company uses the Black-Scholes-Merton option pricing model for determining the estimated fair value for stock-based awards. The Black-Scholes-Merton model requires the use of subjective assumptions which determine the fair value of stock-based awards, including the option’s expected term and the price volatility of the underlying stock. For equity instruments issued to consultants and vendors in exchange for goods and services the Company determines the measurement date for the fair value of the equity instruments issued at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement. Sales Commissions - Sales commissions are expensed as incurred for contracts with an expected duration of one year or less. A significant portion of the Company’s sales commissions expense is generated from its direct marketing line of business. These commissions are based on current month shipments and are paid one month in arrears. There were no sales commissions capitalized as of December 31, 2023. Contingent Legal Expenses - Contingent legal fees are expensed in the consolidated statements of operations in the period that the related revenues are recognized. In instances where there are no recoveries from potential infringers, no contingent legal fees are paid; however, the Company may be liable for certain out of pocket legal costs incurred pursuant to the underlying legal services agreement that will be paid out from the proceeds from settlements or licenses that arise pursuant to an enforcement action, which will be expensed as legal fees in the period in which the payment of such fees is probable. Any unamortized patent acquisition costs will be expensed in the period a conclusion is reached in an enforcement action that does not yield future royalties potential. Research and Development - Research and development costs are expensed as incurred. Research and development costs consist primarily of third-party research costs and consulting costs. The Company recognized costs of approximately $ 1,147,000 and $ 1,256,000 in 2023 and 2022, respectively. Income Taxes - The Company recognizes estimated income taxes payable or refundable on income tax returns for the current year and for the estimated future tax effect attributable to temporary differences and carry-forwards. Measurement of deferred income items is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not expected to be realized. We recognize penalties and accrued interest related to unrecognized tax benefits in income tax expense. Loss Per Common Share - The Company presents basic and diluted (loss) earnings per share. Basic (loss) earnings per share reflect the actual weighted average of shares issued and outstanding during the period. Diluted (loss) earnings per share are computed including the number of additional shares from outstanding warrants, stock options and preferred stock that would have been outstanding if dilutive potential shares had been issued and is calculated utilizing the treasury stock method. In a loss period, the calculation for basic and diluted (loss) earnings per share is the same, as the impact of potential common shares is anti-dilutive. For the year ended December 31, 2022 potential dilutive instruments include both warrants and options of 5,000 shares. For the year-ended December 31, 2023, potential dilutive instruments was 0 . 45 Discontinued Operations - On May 4, 2023, the Company distributed approximately 280 million shares of Sharing Service Global Corporation (“SHRG”), beneficially held by the Company, in the form of a dividend to the shareholders of the Company’s common stock. Upon completion of this distribution, the Company retained an ownership interest in SHRG of approximately 7 % . Effective May 1, 2023, SHRG was deconsolidated from the consolidated financial statements (the “Deconsolidation”). The consolidated statement of operations does not include SHRG activity after April 30, 2023 and the assets and liabilities of SHRG are no longer included within the Company’s consolidated balance sheet. The deconsolidation of SHRG is a strategic shift, as a significant portion of the Direct Marketing line of business was eliminated. While the Decentralized Sharing Systems part of the business will continue to provide these services, SHRG was a significant portion of this segment as it made up approximately 47 % and 20 % , respectively, of the total DSS revenue in 2022 and 2023. Accordingly, the Company has applied discontinued operations treatment for this deconsolidation as required by Accounting Standards Codification 205—Discontinued Operations. The major classes of assets and liabilities of SHRG are classified as Discontinued Operations on the Consolidated Balance Sheets and the operating results of the discontinued operations is reflected on the Consolidated Statements of Operations as Loss from Discontinued Operations. See Note 19. Acquisitions - Business combinations and non-controlling interests are recorded in accordance with FASB ASC 805 Business Combinations. Under the guidance, the assets and liabilities of the acquired business are recorded at their fair values at the date of acquisition and all acquisition costs are expensed as incurred. The excess of the purchase price over the estimated fair values is recorded as goodwill. If the fair value of the assets acquired exceeds the purchase price and the liabilities assumed, then a gain on acquisition is recorded. The application of business combination accounting requires the use of significant estimates and assumptions. 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 similar to those used by independent appraisers and that use appropriate discount and/or capitalization rates and available market information. Business Combinations - Business combinations and non-controlling interests are recorded in accordance with FASB ASC 805 Business Combinations. Under the guidance, the assets and liabilities of the acquired business are recorded at their fair values at the date of acquisition and all acquisition costs are expensed as incurred. The excess of the purchase price over the estimated fair values is recorded as goodwill. If the fair value of the assets acquired exceeds the purchase price and the liabilities assumed, then a gain on acquisition is recorded. The application of business combination accounting requires the use of significant estimates and assumptions. Continuing Operations and Going Concern - The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of our assets and the satisfaction of liabilities in the normal course of business. These consolidated financial statements do not include any adjustments to the specific amounts and classifications of assets and liabilities, which might be necessary should we be unable to continue as a going concern. While the Company has approximately $ 6.6 million in cash, the Company has incurred operating losses as well as negative cash flows from operating and investing activities over the past two years. Aside 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. 46 4. Inventory Inventory consisted of the following as of December 31: Schedule of Inventory 2023 2022 Finished Goods $ 2,218,000 $ 3,366,000 Work in Process 180,000 403,000 Raw Materials 439,000 1,281,000 Inventory Gross $ 2,837,000 $ 5,050,000 Less allowance for obsolescence ( 18,000 ) ( 57,000 ) Inventory Net $ 2,819,000 $ 4,993,000 5. Notes Receivable Note 1 On May 14, 2021, DSS Pure Air, Inc. a subsidiary of the Company entered a convertible promissory note (“Note 1”) with Borrower 1, a company registered in the state of Texas. Note 1 has an aggregate principal balance up to $ 5,000,000 , to be funded at the request of Borrower 1. Note 1, which incurs interest at a rate of 6.65 % due quarterly, has a maturity date of May 1, 2023 . Note 1 contains an optional conversion clause that allows the Company to convert all, or a portion of all, into newly issued member units of Borrower 1 with the maximum principal amount equal to 18% of the total equity position of Borrower 1 at conversion . The outstanding principal and interest as of December 31, 2023, and December 31, 2022, approximated $ 5,544,000 and $ 5,420,000 , respectively, which is included in current notes receivable on the accompanying consolidated balance sheet. As of December 31, 2023, the Company has a reserve of $ 2,772,000 against the principal and interest outstanding. This note is currently in default and its terms are currently being re-negotiated. Note 2 On September 23, 2021, APB entered into refunding bond anticipatory note (“Note 2”) with Borrower 2, which operates as a conservation and reclamation district pursuant to Chapter 3891, Texas Special District Local Laws Code ; Chapter 375, Texas Local Government Code; and Chapter 49, Texas Water Code. The District Note was in the sum of $ 3,500,000 and incurs interest at a rate of 5.59 % per annum. Principal and interest are due in full on September 22, 2022 , and later amended to extend the maturity date to September 19, 2024 . This note may be redeemed prior to maturity with 10 days written notice to APB at a price equal to principal plus interest accrued on the redemption date. The outstanding principal and interest of $ 3,910,000 and $ 3,701,000 is included in the current portion of notes receivable on the consolidated balance sheet at December 31, 2023 and December 31, 2022, respectively. 47 Note 3 On October 25, 2021, APB entered into a loan agreement (“Note 3”) with Borrower 3, a company registered in the state of Utah. Note 3 has an initial aggregate principal balance up to $ 1,000,000 , to be funded at the request of Borrower 3, with an option to increase the maximum principal borrowing to $ 3,000,000 . Note 3, which incurs interest at a rate of 8.0 % with principal and interest due at the maturity date of October 25, 2022 . This note contains an optional conversion feature allowing APB to convert the outstanding principal to a 10% membership interest. APB, as holder of Note 3, has the right to elect one member to the Board of Managers. This note is in default and the outstanding principal and interest of approximately $ 884,000 was reserved for fully as of December 31, 2022. Note 4 On May 14, 2021, APB extended the credit (“Note 4”) to an individual (“Borrower 4”) in the form of two promissory notes for $ 250,000 and $ 10,000 respectively, bearing interest at 12.5 %, with a maturity date of May 15, 2023 . This promissory note was secured by a deed of trust on a tract of land, which is approximately 315 acres, and located in Coke County, Texas. The outstanding principal and interest for both notes were paid in full during the third quarter of 2023. $ 252,000 and $ 9,000 are included in Note receivable at December 31, 2022. Note 5 On October 27, 2021, HWH World, Inc., a subsidiary of the Company entered a revolving loan commitment (“Note 5”) with Borrower 5, a company registered in Taiwan. The outstanding principal and interest at December 31, 2023 and December 31, 2022 is $ 0 and $ 63,000 , respectively, and was included in Notes receivable current portion. This note has been written-off during the third quarter 2023. Note 6 On December 28, 2021, APB entered into a promissory note (“Note 6”) with Borrower 6, a company registered in the state of California. Note 6 has a principal balance of $ 700,000 . Note 6, which incurs interest at a rate of 12.0 % with principal and interest due at the maturity date of December 28, 2022 . On December 29, 2022, the maturity date of this note was extended to May 31, 2023 . On November 27, 2023, the parties to Note 6 agreed to modify the payment terms of the note to be monthly payments of $ 50,000 until the outstanding principal and interest are paid in full. The outstanding principal and interest of $ 253,000 and $ 701,000 is included in the Current portion of notes receivable on the consolidated balance sheet at December 31, 2023 and December 31, 2022, respectively. Note 7 On January 24, 2022, APB and Borrower 7 entered into a promissory note (“Note 7”) in the principal sum of $ 100,000 with interest of 6 %, due annually, and maturing in January 2024 . The outstanding principal and interest at December 31, 2023 and December 31, 2022 approximates $ 103,000 and $ 106,000 , respectively, and is included in Notes receivable on the accompanying consolidate balance sheet. Note 8 On March 2, 2022, APB and Borrower 8, a corporation organized under the laws of the Republic of Korea entered into a promissory note (“Note 8”). Under the terms of Note 8, APB at its discretion, may lend up to the principal sum of $ 893,000 with an interest rate of 8 %, and matures in March 2024 , with interest payable quarterly. The outstanding principal and interest at December 31, 2023 is $ 446,000 , net of $ 3,500 of unamortized origination fees. The outstanding principal and interest at December 31, 2022 is $ 874,000 net of $ 25,000 of unamortized origination fees. APB and Borrower 8 are currently negotiating an extension of the maturity date of this note. Note 9 On May 9, 2022, DSS PureAir and Borrower 9 entered into a promissory note (“Note 9”) in the principal sum of $ 210,000 with interest of 10 %, is due in three quarterly installments beginning on August 9, 2022, with the first two payment consisting of interest only. All unpaid principal and interest are due on February 9, 2023 . This loan is currently in default and terms are currently being re-negotiated. The outstanding principal and interest at December 31, 2023 approximates $ 224,000 of which $ 112,000 has been reserved for and is included in current portions of notes receivable on the accompanying consolidate balance sheet. The outstanding principal and interest at December 31, 2022 approximates $ 213,000 and is included in current portions of notes receivable on the accompanying consolidate balance sheet. 48 Note 10, related party On August 29, 2022, DSS Financial Management Inc and Borrower 10, a related party, entered into a promissory note (“Note 10”) in the principal sum of $ 100,000 with interest of 8 %, is due in three quarterly installments beginning on September 14, 2022. All unpaid principal and interest is due on August 29, 2025 . The outstanding principal and interest at December 31, 2023 and December 31, 2022 approximates $ 100,000 , and $ 100,000 , respectively, and is included in Notes receivable on the accompanying consolidate balance sheet, of which $ 76,000 is included in the Current portion of notes receivable and $ 24,000 is included in the long-term portion of notes receivable at December 31, 2023. DSS owns 24.9 % of the outstanding common shares of Borrower 10. Note 11, related party On July 26, 2022, APB and Borrower 11 entered into a promissory note (“Note 11”) in the principal sum of $ 1,000,000 with interest of 8 %. All unpaid principal and interest due on July 26, 2024 . The outstanding principal and interest on December 31, 2023, approximates $ 939,000 , net of $ 20,000 of unamortized origination fees and is included in notes receivable on the accompanying consolidate balance sheet. The outstanding principal and interest at December 31, 2022 approximates $ 924,000 , net of $ 66,000 of unamortized origination fees and is included in Notes receivable on the accompanying consolidate balance sheet. Heng Fai Ambrose Chan, the Chairman of DSS, Inc is also the on the board of directors of Borrower 11. Note 12, related party On June 15, 2022, DSS and Borrower 12, entered into a convertible promissory note (“Note 12”) in the principal sum of $ 27,000,000 with interest of 8 %, with an optional conversion into shares of Borrower 12 at a conversion price of $ 0.03 , maturing on June 14, 2024 , with interest due quarterly. In December 2022, this note was fully reserved for. On August 31, 2023, the full value of the outstanding principal and interest of this note was exchanged for 26,000 shares of Series D Preferred Stock with a par value of $ 0.0001 per share. Beginning on September 1, 2028, these Series D Preferred Shares may be redeemed in the amount of $ 1,000 per share. Due to the lack of liquidity of these shares, the Company has placed no value on these shares. Heng Fai Ambrose Chan, the Chairman of DSS, Inc is also the Chairman of Borrower 12. Note 13 On February 19, 2021, Impact BioMedical, Inc, entered into a promissory note with an individual. The Company loaned the principal sum of $ 206,000 , with interest at a rate of 6.5 %, and maturity date of August 19, 2022 later amended to February 19, 2024. Monthly payments are due on the twenty-first day of each month and continuing each month thereafter until February 19, 2024. This note is secured by certain real property situated in Collier County, Florida. The outstanding principal and interest as of December 31, 2023, approximately $ 203,000 and is classified in current notes receivable on the accompanying consolidated balance sheets. The outstanding principal and interest as of December 31, 2022 is approximately $ 206,000 with $ 16,000 classified in Current portion of notes receivable and $ 190,000 classified as Notes receivable on the accompanying consolidated balance sheets. The due date of this loan is currently being re-negotiated. Note 14 On May 8, 2023, DSS Financial Management Inc and Borrower 14 entered into a promissory note (“Note 14”) in the principal sum of $ 102,000 with interest at the prime rate plus 2 % ( 10.5 % at December 31, 2023) with a maturity date of May 7, 2026 . The outstanding principal and interest at December 31, 2023 approximates $ 107,000 with approximately $ 53,000 of principal and accrued interest classified as Current portion notes receivable, and the remaining balance of approximately $ 54,000 is recorded as notes receivable, on the accompanying consolidated balance sheet. Note 15 On June 27, 2023, DSS and Borrower 15 entered into a convertible promissory note (“Note 15”) in the principal sum of $ 1,400,000 with a discount of $ 300,000 and interest rate of 10 % and maturity date of September 1, 2024 . The outstanding principal, interest, and associated discount was fully reserved for as of December 31, 2023. Note 16 On March 31,2023, DSS Biohealth Security, Inc and Borrower 16 entered into a promissory note (“Note 16”) in the principal sum of $ 140,000 and interest rate floating daily to Wall Street Journal Prime rate per annum ( 8.5 % at September 31, 2023) with the total outstanding principal and interest due at the maturity date of March 31, 2025 . The outstanding principal and interest at December 31, 2023 approximates $ 133,000 . Of the total financed, approximately $ 99,000 of principal and accrued interest is classified as Current portion of notes receivable and the remaining balance of approximately $ 34,000 is recorded as Notes receivable on the accompanying consolidated balance sheet. 49 Note 17 On September 28, 2023, APB and Borrower 17 entered into a promissory note (“Note 17”) in the principal sum of $ 400,000 with interest of 5 %. All unpaid principal and interest due on November 12, 2023 . As of December 31, 2023, this loan has been paid off in full. Note 18 On August 11, 2022, APB and Borrower 18 entered into a promissory note (“Note 18”) in the principal sum of $ 1,430,000 with interest of 8 %. All unpaid principal and interest due on August 12, 2024 . The outstanding principal and interest on December 31, 2023, approximates $ 1,102,000 , net of $ 375,000 of unamortized origination fees and is included in Notes receivable on the accompanying consolidate balance sheet. The outstanding principal, interest, and associated fees were fully reserved for as of December 31, 2023. 6. Provision for Credit Losses Effective January 1, 2022, the Company adopted amended accounting guidance “ ASU No.2016-13 – Credit Losses” for the measurement of credit losses on financial instruments and other financial assets. That guidance requires an allowance for credit losses to be deducted from the amortized cost basis of financial assets to present the net carrying value that is expected to be collected over the contractual term of the assets considering relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The guidance replaced the previous incurred loss model for determining the allowance for credit losses. Accounts receivable are stated at the amount owed by the customer. The Company maintains an allowance for credit losses for accounts receivable and unbilled receivables, based on expected credit losses resulting from the inability of our customers to make required payments. The allowance for credit losses is estimated based on historical experience, current economic conditions and the creditworthiness of customers. Receivables are charged to the allowance when determined to be no longer collectible. The Company regularly monitors and assesses its risk of not collecting amounts owed by customers and records its allowance for credit losses based on the results of this analysis. As of December 31, 2023, we have reviewed the entire loan portfolio as well as all financial assets of the Company for the purpose of evaluating the loan portfolio and the loan balances, including a review of individual and collective portfolio loan quality, loan(s) performance, including past due status and covenant defaults, assessment of the ability of the borrower to repay the loan on the loan terms, whether any loans should be placed on nonaccrual or returned to accrual, any concentrations in any single borrower and/or industry that we might need to further manage, and if any specific or general loan loss reserve should be established for the entire loan portfolio or for any specific loan. We analyzed the loan loss reserve from three basis: general loan portfolio reserves; industry portfolio reserves, and specific loan loss reserves. As of year-ended December 31, 2023 and December 2022, the Company recorded a Loan loss reserve of approximately $ 4,933,000 and $ 1,041,000 , respectively. General Loan Portfolio Reserve - Based upon a relatively young loan portfolio that are relatively new loans to generally credit worthy borrowers, we do not believe that a substantial general loan portfolio reserve is due at this time. However, we do recognize that some inherent risks are in all loan portfolios, thus we recorded a general contingent portfolio reserve of $ 194,000 for December 31, 2023 and $ 145,000 for December 31, 2022 or approximately ¼ of 1% of the loan portfolio loan balance. Industry Portfolio Reserves – Given the relatively young loan portfolio and a diversification of the portfolio over several different loan products, the risk is reduced. Accordingly, we have not recorded a discretionary reserve as of December 31, 2023 and December 31, 2022 Specific Loan Reserves - Previously, we had identified credit weaknesses and borrower repayment weakness in the Borrower 4 loan, which has a current principal and interest balance of $ 884,000 . As of December 31, 2023 and December 31, 2022 we have recorded a specific loan loss reserve for the full balance due the Company. As of December 31, 2023, the Company identified credit weakness in borrower 2 and has placed a reserve approximating $ 2,884,000 against the outstanding principal and interest. As of December 31, 2023, the Company identified credit weakness in borrower 16 and placed a reserve of $ 1,046,000 against the outstanding principal and interest. The Company identified credit weakness in Borrower 19 and has placed a reserve of $ 1,102,000 against the outstanding principal and interest. The following table identifies the loan loss reserve for the period ending December 31, : Schedule of Loan Loss Reserve 2023 2022 General Loan Portfolio Reserve $ 194,000 $ 145,000 Specific Loan Reserves $ 5,916,000 $ 896,000 Total $ 6,110,000 $ 1,041,000 50 Changes in the allowance for doubtful accounts and loan loss reserve were as follows: Schedule of Allowance for Doubtful Accounts and Loan Loss Reserve Allowance for credit losses Loan loss reserve Total Balance at January 1, 2022 $ 20,000 $ - $ 20,000 Adoption of CECL - 1,041,000 1,041,000 Bad debt expense 9,000 - 9,000 Write-offs - - - Recoveries - - - Balance at December 31, 2022 29,000 1,041,000 1,070,000 Bad debt expense 2,000 5,069,000 5,071,000 Write-offs 3,500,000 - 3,500,000 Recoveries ( 1,037,000 ) - ( 1,037,000 ) Balance at December 31, 2023 $ 2,494,000 $ 6,110,000 $ 8,604,000 7. FINANCIAL INSTRUMENTS Financial Instruments Cash, Cash Equivalents and Marketable Securities The following tables show the Company’s cash and marketable securities by significant investment category as of December 31: Schedule of Cash and Marketable Securities by Significant Investment Category 2023 Cost Unrealized Gain/Loss Fair Value Cash And Cash Equivalents Marketable Securities Cash $ 6,545,000 $ - $ 6,545,000 $ 6,545,000 $ - Level 1 Money Market Funds 70,000 - 70,000 70,000 - Marketable Securities 27,304,000 ( 17,325,000 ) 9,979,000 - 9,979,000 Total $ 33,919,000 $ ( 17,325,000 ) $ 16,594,000 $ 6,615,000 $ 9,979,000 2022 Cost Unrealized Gain/(Loss) Fair Value Cash and Cash Equivalents Marketable Securities Investment Cash $ 16,114,000 $ - $ 16,114,000 $ 16,114,000 $ - $ - Level 1 Money Market Funds 64,000 - 64,000 64,000 - - Marketable Securities 41,032,000 ( 17,976,000 ) 23,056,000 - 23,056,000 - Level 2 Warrants 3,318,000 - 3,318,000 - - 3,318,000 Convertible securities 1,023,000 - 1,023,000 - - 1,023,000 Total $ 61,551,000 $ ( 17,976,000 ) $ 43,575,000 $ 16,178,000 $ 23,056,000 $ 4,341,000 The following tables shows the Company’s net unrealized (loss) gain recognized during the year on marketable securities still held as of December 31: Schedule of Net Unrealized (Loss) Gain Recognized on marketable Securities 2023 2022 Net gains (losses) recognized during the year on marketable securities $ ( 5,521,000 ) $ ( 2,757,000 ) Less: Net gains (losses) realized during the year on marketable securities sold during the period ( 1,973,000 ) 1,077,000 Net unrealized gain (loss) recognized during the reporting year on marketable securities still held at the reporting date $ ( 3,548,000 ) $ ( 3,834,000 ) The Company typically invests with the primary objective of minimizing the potential risk of principal loss. The Company’s investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer. Fair values were determined for each individual security in the investment portfolio. 8. Disposal of assets Disposal of Assets On July 1 st , 2023, The Company intended to sell its subsidiary, HWH World, Inc. to SHRG. The proposed transaction had the Company sell 1,000 shares of common stock, representing all the issued and outstanding common stock shares of HWH World for the sum $ 706,000 representing the gross proceeds of the sale of HWH inventory less cost of goods sold. The parties involved amended the terms of this agreement during the third quarter of 2023 from that of equity transaction to the purchase of inventory and assumption of certain liabilities by SHRG. The amended agreement identified the purchase price approximating $ 758,000 to be paid from amongst other things, the gross proceeds generated by the sale of the inventory acquired. The value of the inventory sold approximates $ 698,000 and the value of the liabilities assumed by SHRG as part of this transaction is approximately $ 59,000 . Further, the agreement includes payment of 1% royalty, starting November 1, 2023, being defined as 1% of the gross sale price of all Seller’s new products made and sold outside of existing inventory on the schedule, for a period ending October 31, 2033. There is substantial doubt regarding SHRG’s ability to sell and pay for the inventory acquired, and therefore, the Company has determined not to record a receivable for the purchase price. A net loss approximating $ 639,000 associated with this transaction has been recorded during the third quarter of 2023 and is included in Loss/Gain on sale of assets on the consolidated statement of operations. On July 1 st , 2023, The Company sold 100 % of the equity in its subsidiary HWH Holdings, Inc, a Texas corporation (“HWHH”) to SHRG for a purchase price approximating $ 259,000 . This amount is to be paid from gross proceeds generated by the sale of the inventory acquired as part of the transaction. This transaction was later amended during the third quarter of 2023 to assign the purchase of HWHH from SHRG to Ascend Management Pte., Ltd. (“Ascend”), a Singaporean limited company. There is substantial doubt regarding Ascend’s ability to sell and pay for the inventory acquired, and therefore, the Company has determined not to record a receivable for the purchase price. A net loss approximating $ 617,000 associated with this transaction has been recorded during the third quarter of 2023 and is included in Loss/Gain on sale of assets on the consolidated statement of operations. 51 9. Investments Alset International Limited , related party The Company owns 127,179,291 shares or approximately 4 % of the outstanding shares of Alset International Limited (“Alset Intl”), a company incorporated in Singapore and publicly listed on the Singapore Exchange Limited. This investment is classified as a marketable security and is classified as long-term assets on the consolidated balance sheets as the Company has the intent and ability to hold the investments for a period of at least one year. The Chairman of the Company, Mr. Heng Fai Ambrose Chan, is the Executive Director and Chief Executive Officer of Alset Intl. Mr. Chan is also the majority shareholder of Alset Intl as well as the largest shareholder of the Company. The fair value of the marketable security as of December 31, 2023, and December 31, 2022, was approximately $ 3,269,000 and $ 3,319,000 respectively. During the year ended December 31, 2023 and December 31, 2022, the Company recorded unrealized loss on this investment of approximately $ 50,000 and unrealized loss of $ 1,590,000 , respectively. West Park Capital, Inc. On December 30, 2020, the Company signed a binding letter of intent with West Park Capital, Inc (“West Park”) and Century TBD Holdings, LLC (“TBD”) where the parties agreed to prepare a note and stock exchange agreement whereby DSS will assign the TBD Note to West Park and West Park shall issue to DSS a stock certificate reflecting 7.5 % of the issued and outstanding shares of West Park. This note and stock exchange agreement was finalized during the first quarter 2022 and valued at approximately $ 500,000 and is included in Investments on the consolidated balance sheet on December 31, 2022 and as of December 31, 2023. BMI Capital International LLC On September 10, 2020, the Company’s wholly owned subsidiary DSS Securities, Inc. entered into membership interest purchase agreement with BMI Financial Group, Inc. a Delaware corporation (“BMIF”) and BMI Capital International LLC, a Texas limited liability company (“BMIC”) whereas DSS Securities, Inc. purchased 14.9 % membership interests in BMIC for $ 100,000 . DSS Securities also had the option to purchase an additional 10 % of the outstanding membership interest which it exercised for $ 100,000 in January of 2021 and increased its ownership to 24.9 %. Upon achieving greater than 20 % ownership in BMIC during the quarter ended September 30, 2021, the Company is currently accounting for this investment under the equity method of accounting per ASC 323. The Company’s portion of net loss in BMIC during the year ended December 31, 2023, approximated $ 34,000 and $ 20,000 for year ended December 31, 2022. BMIC is a broker-dealer 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”). The Company’s chairman of the board and another independent board member of the Company also have ownership interest in BMIC. BioMed Technologies Asia Pacific Holdings Limited On December 19, 2020, Impact BioMedical, a wholly owned subsidiary of the Company, entered into a subscription agreement (the “Subscription Agreement”) with BioMed Technologies Asia Pacific Holdings Limited (“BioMed”), a limited liability company incorporated in the British Virgin Islands, pursuant to which the Company agreed to purchase 525 ordinary shares or 4.99 % of BioMed at a purchase price of approximately $ 632,000 . The Subscription Agreement provides, among other things, the Company has the right to appoint a new director to the board of BioMed. With respect to an issuance of shares to a third party by BioMed, the Company will have the right of first refusal to purchase such shares, as well as customary tag-along rights. In connection with the Subscription Agreement, Impact Biomedical entered into an exclusive distribution agreement (the “Distribution Agreement”) with BioMed, to directly market, advertise, promote, distribute, and sell certain BioMed products, which focus on manufacturing natural probiotics, to resellers. This investment is valued at cost as it does not have a readily determined fair value. 52 Under the terms of the Distribution Agreement, the Company will have exclusive rights to distribute the products within the United States, Canada, Singapore, Malaysia, and South Korea and non-exclusive distribution rights in all other countries. In exchange, the Company agreed to certain obligations, including mutual marketing obligations to promote sales of the products. This agreement is for ten years with a one year auto-renewal feature. Vivacitas Oncology, Inc. On March 15, 2021, the Company, through one of its subsidiaries, entered into a Stock Purchase Agreement (the “Vivacitas Agreement #1”) 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 . This option will terminate upon one of the following events: (i) Vivacitas’ board of directors cancels this option because it is no longer in the best interest of the Company; (ii) December 31, 2022; or (iii) the date on which Vivacitas receives more than $ 1.00 per share of the Company’s common stock in a private placement with gross proceeds of $ 500,000 . Under the terms of the Vivacitas Agreement #1, 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 purchase from the Seller’s its wholly owned subsidiary Impact Oncology PTE Ltd. (“IOPL”) for a purchase price $ 2,480,000 . The acquisition of IOPL has been treated as an asset acquisition as IOPL does not meet the definition of a business as defined in Topic 805. IOPL owns 2,480,000 shares of common stock of Vivacitas along with the option to purchase an additional 250,000 shares of common stock. The Sellers largest shareholder is Mr. Chan Heng Fai Ambrose, the Chairman of the Company’s board of directors and its largest shareholder. On April 1, 2021, the Company entered into an additional stock purchase agreement with Vivacitas (“Vivacitas Agreement #2”), whereas Vivacities wished to employ the service of the Chief Business Officer of Impact Biomedical, and in return for the services of this individual, Vivacitas shall issue to the Company, the aggregate purchase price for the Class A Common Shares of Vivacitas at the value of $ 1.00 per share shall be $ 120,000 to be paid in twelve (12) equal monthly installments for the period between April 1, 2021 and March 31, 2022 . On July 22, 2021, the Company exercised 1,000,000 of the available options under the Vivacitas Agreement #1 for $ 1,000,000 . This, along with the shares received as part Vivacitas Agreement #2 increased the Company’s equity position in Vivacitas to approximately 16 % as of December 31, 2022. As of December 31, 2021, the fair value of the Company’s investment in Vivacitas is not readily available, and therefore is recorded at cost in the amount of $ 4,035,000 , As of December 31, 2022, the Company determined to impair 100 % of its investment in Vivacitas, in the amount of $ 4,100,000 . Stemtech Corporation In September 2021, the Company’s former subsidiary SHRG, Stemtech Corporation (“Stemtech”) and Globe Net Wireless Corp. (“GNTW”) entered into a Securities Purchase Agreement (the “SPA”) pursuant to which SHRG invested $ 1.4 million in Stemtech in exchange for: (a) a Convertible Promissory Note in the amount of $ 1.4 million in favor of the Company (the “Convertible Note”) and (b) a detachable Warrant to purchase shares GNTW common stock (the “GNTW Warrant”). Stemtech is a subsidiary of GNTW. As an inducement to enter into the SPA, GNTW agreed to pay to the SHRG an origination fee of $ 500,000 , payable in shares of GNTW’s common stock. The Convertible Note matures on September 9, 2024 , bears interest at the annual rate of 10 %, and is convertible, at the option of the holder, into shares of GNTW’s common stock at a conversion rate calculated based on the closing price per share of GNTW’s common stock during the 30-dayperiod ended September 19, 2021. The GNTW Warrant expires on September 13, 2024 and conveys the right to purchase up to 1.4 million shares of GNTW’s common stock at a purchase price calculated based on the closing price per share of GTNW’s common stock during the 10-day period ended September 13, 2021. In September 2021, GNTW issued to the Company 154,173 shares of its common stock, or less than 1% of the shares of GNTW then issued and outstanding, in payment of the origination fee. In November 2021, Globe Net Wireless Corp. changed its corporate name to Stemtech Corporation. In connection therewith, the investee’s common stock is now traded under the symbol “STEK”. The SHRG carries its investment in the Convertible Note, the GNTW Warrant and the shares of GNTW common stock at fair value in accordance with GAAP. As of December 31, 2023 and December 31, 2022 the investment in the GNTW Warrant and Convertible Note, were valued at $ 0 , and $ 44,000 and $ 0 and $ 39,000 , respectively. In September 2021, SHRG entered into a Membership Unit Purchase Agreement pursuant to which the SHRG acquired a 30.75 % equity interest in MojiLife, LLC, a limited liability company organized in the State of Utah, in exchange for $ 1,537,000 . MojiLife is an emerging growth distributor of technology-based consumer products for the home and car. MojiLife’s products include esthetically attractive, cordless scent diffusers for the home or for the car, as well as proprietary home cleaning products and accessories. On a quarterly basis, SHRG evaluates the recoverability of its investments and reviews current economic trends to determine the adequacy of its allowance for impairment losses based on each investee financial performance data and other relevant information. An estimate for impairment losses is recognized when recovery in full of SHRG’s investment is no longer probable. Investment balances are written off against the allowance after the potential for recovery is considered remote. In March of 2022, SHRG impaired the MojiLife investment as the evaluation at such time determined the investment was not fully recoverable and 100 % valuation was reserved. 10. PROPERTY PLANT AND EQUIPMENT AND INVESTMENT IN REAL ESTATE, NET Property Plant and Equipment and Investment in Real Estate, Net Property, plant and equipment consisted of the following as of December 31, 2023: Schedule of Property, Plant and Equipment Estimated Useful Life 2023 2022 Machinery and equipment 5 - 10 years $ 9,974,000 $ 9,251,000 Building and improvements 39 years 294,000 290,000 Land - - Furniture and fixtures 7 years 432,000 502,000 Software and websites 3 years 273,000 320,000 Construction in progress 365,000 667,000 Total Cost 11,338,000 11,030,000 Less accumulated depreciation 4,921,000 4,269,000 Property, plant and equipment, net $ 6,417,000 $ 6,761,000 Depreciation expense for the years ended December 31, 2023 and 2022 was $ 802,000 and $ 1,569,000 respectively. 53 Real Estate consisted of the following at December 31: Schedule of Investment in Real Estate Estimated Useful Life 2023 2022 Building and improvements 1 - 30 years $ 5,273,000 $ 42,665,000 Land 1,600,000 14,861,000 Total Cost 6,873,000 57,526,000 Less: accumulated depreciation 594,000 2,497,000 Investment in real estate $ 6,279,000 $ 55,029,000 Depreciation expense for the years ended December 31, 2023 and 2022 was $ 2,085,000 and $ 2,077,000 respectively. 11. INTANGIBLE ASSETS Intangible Assets On August 25, 2022, DSS PureAir, a subsidiary of the Company finalized an asset purchase agreement with Celios Corporation (“Celios”) to acquire inventory, patents, and other intangible assets associated with that inventory, and other intangible assets from Celios for $ 900,000 . The related intangible assets were valued at $ 409,000 with an estimated remaining useful life between 3 and 20 years. Intangible assets are comprised of the following as of December 31: Schedule of Intangible Assets 2023 2022 Useful Life Gross Carrying Amount Accumulated Amortization Impairment Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Developed technology assets 20 years $ 22,260,000 $ 3,340,000 - 18,920,000 $ 22,260,000 $ 2,226,000 $ 20,034,000 Acquired intangibles customer lists, licenses, non-compete agreements, branding, product formulas, tenant improvements, in-place, favorable and unfavorable leases 1 - 11 years 19,245,000 10,613,000 7,418,000 1,214,000 19,056,000 9,011,000 10,045,000 Acquired intangibles patents and patent rights 500,000 500,000 - - 500,000 500,000 - Patent application costs Varied (1) 1,052,000 993,000 - 59,000 1,052,000 972,000 80,000 $ 43,057,000 $ 15,446,000 $ 7,418,000 $ 20,193,000 $ 42,868,000 $ 12,709,000 $ 30,159,000 (1) Patent application costs are amortized over their expected useful life which is generally the remaining legal life of the patent. As of December 31, 2023, the weighted average remaining useful life of these assets in service was approximately 1.7 years. 54 Amounts amortized for the year ended December 31, 2023 and 2022 was approximately $ 2,319,000 and $ 9,279,000 , respectively. Expected amortization for each of the five succeeding fiscal years is as follows: Schedule of Estimated Future Amortization of Intangible Assets Year Amount 2024 3,012,000 2025 3,009,000 2026 2,869,000 2027 2,869,000 2028 2,860,000 Thereafter 5,574,000 12. ACCRUED EXPENSES AND DEFERRED REVENUE Accrued Expenses and Deferred Revenue Accrued expenses and deferred revenue consist of the following for the year ended December 31: Summary of Accrued Expenses and Deferred Revenue 2023 2022 Customer deposits $ 222,000 $ 188,000 Deferred revenue - 519,000 Accrued wages 812,000 1,466,000 Settlement liability - 8,974,000 Uncertain tax positions - 926,000 Accrued expenses 1,468,000 273,000 Income tax payable - 172,000 Sales tax payable 10,000 12,000 Accrued expenses and deferred revenue $ 2,512,000 $ 12,530,000 13. SHORT TERM AND LONG-TERM DEBT Short Term and Long-Term Debt Promissory Notes - On March 2, 2020, AMRE entered into a $ 200,000 unsecured promissory note with LVAMPTE, a related party. The Note calls for interest to be paid annually on March 2 with interest fixed at 8.0 %. As further incentive to enter into this Note, AMRE granted LVAMPTE warrants to purchase shares of common stock of AMRE (the “Warrants”). The amount of the warrants granted is the equivalent of the Note Principal divided by the Exercise Price. The Warrants are exercisable for four years and are exercisable at $ 5.00 per share (the “Exercise” Price). In March 2022, this debt was converted into equity in AMRE, and LVAMPTE exercised the warrants for $ 200,000 (see the consolidated statement of changes in stockholders’ equity) The holder is a related party owned by the Chairman of the Company’s board of directors. On May 20, 2021, Premier Packaging entered into master loan and security agreement (“BOA Note”) with Bank of America, N.A. (“BOA”) to secure financing approximating $ 3,710,000 to purchase a new Heidelberg XL 106-7+L printing press. The aggregate principal balance outstanding under the BOA Note shall bear interest at a variable rate on or before the loan closing. As of December 31, 2023, and December 31, 2022, the outstanding principal on the BOA Note was $ 2,932,000 and $ 3,406,000 , respectively and had an interest rate of 4.63 %. As of December 31, 2023, $ 491,000 was included in the current portion of long-term debt, net, and the remaining balance of approximately $ 2,442,000 recorded as long-term debt, The BOA Note contains certain covenants that are analyzed annually. As of December 31, 2023, Premier is in compliance with these covenants. 55 On August 1, 2021, AMRE Shelton, LLC., (“AMRE Shelton”) a subsidiary of AMRE, entered into a loan agreement (“Shelton Agreement”) with Patriot Bank, N.A. (“Patriot Bank”) in an amount up to $ 6,155,000 , with the amount financed approximating $ 5,105,000 . The Shelton Agreement contains monthly payments of principal and an initial interest of 4.25 %. The interest will be adjusted commencing on July 1, 2026 and continuing for the next succeeding 5-year period shall be determined one month prior to the change date and shall be an interest rate equal to two hundred fifty (250) basis points above the Federal Home Loan Bank Boston 5-Year/25-Year amortizing advance rate, but in no event less than 4.25% for the term of 120 months with a balloon payment approximating $ 2,829,000 due at term end. The affective interest rate at December 31, 2022 was 4.25 %. The funds borrowed were used to purchase a 40,000 square foot, 2.0 story, Class A+ multi-tenant medical office building located on a 13.62-acre site. The purchase price has been allocated as $ 4,640,000 , $ 1,600,000 , and $ 325,000 for the facility, land, and tenant improvements, respectively. Also included in the value of the property is $ 585,000 of intangible assets with an estimated useful life of approximating 3 years. The net book value of these assets as of December 31, 2023 approximated $ 6,729,000 . Of the total financed, approximately $ 206,000 of principal and accrued interest is classified as current portion of long-term debt, net, and the remaining balance of approximately $ 4,402,000 recorded as long-term debt, net of $ 50,000 in deferred financing costs. On October 13, 2021, LVAM entered into loan agreement with BMIC (“BMIC Loan”), a related party, whereas LVAM borrowed the principal amount of $ 3,000,000 , with interest to be charged at a variable rate to be adjusted at the maturity date. The BMIC Loan matures on October 12, 2022 , and contains an auto renewal period of three months. As of December 31, 2023 and December 31, 2022, $ 547,000 and $ 3,000,000 , respectively, are included in Current portion of long-term debt, net on the consolidated balance sheet. On October 13, 2021, LVAM entered into a loan agreement with Lee Wilson Tsz Kin (“Wilson Loan”), a related party, whereas LVAM borrowed the principal amount of $ 3,000,000 , with interest to be charged at a variable rate to be calculated at the maturity date. The Wilson Loan matures on October 12, 2022 , and contains an auto renewal period of nine months. This loan was funded during March 2022. As of December 31, 2023 $ 2,131,000 is included in the Current portion of long-term debt, net on the consolidated balance sheet. As of December 31, 2022 $ 3,008,000 is included in the Current portion of long-term debt, net on the consolidated balance sheet. On November 2, 2021, AMRE LifeCare entered into a loan agreement (“LifeCare Agreement”) with Pinnacle Bank, (“Pinnacle Bank”) in the amount of $ 40,300,000 . The LifeCare Agreement supported the acquisition of three medical facilities located in Fort Worth, Texas, Plano, Texas, and Pittsburgh, Pennsylvania for a purchase price of $ 62,000,000 . These assets are classified as investments, real estate on the consolidated balance sheet. The purchase price has been allocated as $ 32,100,000 , $ 12,100,000 , and $ 1,500,000 for the facility, land and site improvements, respectively. Also included in the value of the property is $ 15,901,000 of intangible assets with estimated useful lives ranging from 1 to 11 years. The net book value of the assets acquired as of December 31, 2022 is approximately $ 52,407,000 . The LifeCare Agreement calls for the principal amount of the in equal, consecutive monthly installments based upon a twenty-five (25) year amortization of the original principal amount of the LifeCare Agreement at an initial rate of interest equal to the interest rate determined in accordance as of July 29, 2022 provided, however, such rate of interest shall not be less than 4.28 %, with the first such installment being payable on August 29, 2022 and subsequent installments being payable on the first day of each succeeding month thereafter until the maturity date, at which time any outstanding principal and interest is due in full . The affective interest rate at December 31, 2022 was 8.46 %. The maturity date of November 2, 2023 , may be extended to November 2, 2024 . As of December 31, 2022, the outstanding principal and interest of the LifeCare agreement approximates $ 40,193,000 , net of deferred financing costs of $ 270,000 . As of December 31, 2023, the outstanding principal and interested approximates $ 41,331,000 . Interest expense for the year-ended December 31, 2023 and 2022 approximated $ 3,773,000 and $ 2,418,000 , respectively. This note is in default and demand was made for final payment to be made by December 22, 2023. This amount is past due. 56 In November 2021, AMRE entered into a convertible promissory note (“Alset Note”) with Alset International Limited (“Alset International”), a related party, for the principal amount of $ 8,350,000 . The Alset Note accrues interest at 8 % per annum and matures in December 2023 , with interest due quarterly and the principal due at maturity. Principal and interest of approximately $ 8,805,000 is included in long-term debt, net on the accompanying consolidated balance sheet on December 31, 2022. On May 17, 2022, the shareholders of the Company approved the issuance of up to 21,366,177 Shares our Common Stock to Alset International to purchase the Convertible Promissory Note issued by American Medical REIT, Inc. with a principal amount of $ 8,350,000 and accrued unpaid interest of $ 119,000 through December 31, 2022. This transaction was finalized in July 2022 and is eliminated upon consolidation into DSS. Interest expense for this note totaled $ 677,000 for year ended December 31, 2023 and $ 346,000 for year ended December 31, 2022. On March 17, 2022, AMRE Winter Haven, LLC (“AMRE Winter Haven”) and Pinnacle Bank (“Pinnacle”) entered into a term loan (“Pinnacle Loan”) whereas Pinnacle lent to AMRE Winter Haven the principal sum of $ 2,990,000 , maturing on March 7, 2024 to acquire a medical facility located in Winter Haven, Florida for a purchase price of $ 4,500,000 . The assets acquired are classified as investments, real estate on the consolidated balance sheet. 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 included in the value of the property is $ 29,000 of intangible assets with an estimated useful life of approximately 5 years. The net book value of the assets acquired as of December 31, 2022 is approximately $ 4,450,000 . Payments are to be made in equal, consecutive installments based on a 25 -year amortization period with interest at 4.28 %. The first installment is due January 1, 2023. The Pinnacle Loan contains certain covenants that are to be tested annually. This AMRE note is currently due. The outstanding principal and interest, net of debt issuance costs of $ 17,000 , approximates $ 2,977,000 and is included in long-term debt, net on the accompanying consolidated balance sheet at December 31, 2023. The outstanding principal and interest, net of debt issuance costs of $ 60,000 , approximates $ 2,952,000 and is included in long-term debt, net on the accompanying consolidated balance sheet at December 31, 2022. Interest expense equaled $ 25,000 for year ended December 31, 2023 and $ 153,000 for year ended December 31, 2022. On March 30, 2023, Premier Packaging, a subsidiary of the Company entered into a loan and security agreement with Union Bank & Trust Company for the principal amount of $ 790,000 and shall accrued interest at the rate of 7.44 %. Principal and interest shall be repaid in the approximate amount of $ 14,000 through March 2029. This loan is collateralized by a Bobst Model Novacut and is guaranteed by DSS, Inc. As of December 31, 2023, the outstanding principal and interest approximates $ 719,000 of which $ 112,000 was included in the current portion of long-term debt, net, and the remaining balance of approximately $ 607,000 recorded as long-term debt. A summary of scheduled principal payments of long-term debt, not including revolving lines of credit, subsequent to December 31, 2023 are as follows: Schedule of Notes Payable and Long-term Debt Year Amount 2024 $ 47,776,000 2025 859,000 2026 901,000 2027 947,000 2028 1,200,000 Thereafter 3,544,000 Total $ 55,227,000 14. Lease Liability The Company has operating leases predominantly for operating facilities. As of December 31, 2023, the remaining lease terms on our operating leases range from less than one to twelve years . Renewal options to extend our leases have not been exercised due to uncertainty. Termination options are not reasonably certain of exercise by the Company. There is no transfer of title or option to purchase the leased assets upon expiration. There are no residual value guarantees or material restrictive covenants. There are no significant finance leases as of December 31, 2023. 57 Future minimum lease payments as of December 31, 2023, are as follows: Maturity of Lease Liability: Schedule of Future Minimum Lease Payments Totals 2024 956,000 2025 861,000 2026 839,000 2027 808,000 2028 824,000 After 4,913,000 Total lease payments 9,201,000 Less: Imputed Interest ( 1,598,000 ) Present value of remaining lease payments $ 7,603,000 Current $ 686,000 Noncurrent $ 6,917,000 Weighted-average remaining lease term (years) 14.3 Weighted-average discount rate 4.1 % In March of 2022, Premier Packaging began leasing its relocated manufacturing facilities to West Henrietta, New York. This lease contains an escalating payment clause, ranging from $ 61,000 per month to $ 78,000 per month, over the twelve-year term of the lease. Total lease expense during the years ended December 31, 2023 and 2022 approximated $ 790,000 and $ 975,000 , respectively. 15. STOCKHOLDERS’ EQUITY Stockholders’ Equity Equity transactions – On 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 . Pursuant 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. On March 10, 2022, the Company issued 894,084 shares of common stock to Mr. Heng Fai Ambrose Chan pursuant to his employment agreement. These shares were issued in consideration of $ 340,000 due under this employment agreement. On May 5, 2022, the Company issued 63,205 shares of common stock to Mr. Frank Heuszel, CEO of DSS, pursuant to his employment agreement. These shares were issued in consideration of $ 29,000 due under this employment agreement. On May 25, 2022, the Company issued 15,389,995 shares of common stock to Mr. Heng Fai Ambrose Chan pursuant to his employment agreement. These shares were issued in consideration of $ 5,848,000 due under this employment agreement. On 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. On 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 value on the agreed upon date of February 18, 2022 which was approximately $ 0.41 per share. The True Partner shares were acquired from Alset EHome International, Inc. (“Alset EHome”), a related party. Mr. Heng Fai 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. On April 10, 2023, the Company issued 62,354 shares of common stock to Mr. Frank Heuszel, CEO of DSS, pursuant to his employment agreement. These shares were issued to settle a previously recorded liability of approximately $ 268,000 . On January 4, 2024 the Company effected a reverse stock split of 1 for 20 . As of December 31, 2023 and December 31, 2022, there were 140,264,240 and 139,017,000 shares of our Common Stock issued and outstanding, respectively, which was converted to 7,066,772 and 6,950,858 shares, respectively. 58 Stock-Based Compensation – The Company records stock-based payment expense related to options and warrants based on the grant date fair value in accordance with FASB ASC 718. Stock-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. During the year ended December 31, 2022, the Company’s stock compensation approximated $ 4,000 . During the year ended December 31, 2023 there were none . Stock Warrants – The Company did not issue any warrants in 2023 or 2022, nor did it have any outstanding warrants as of December 31, 2023 and 2022. Equity Incentive Plan – On December 9, 2019, the Company’s shareholders adopted the 2020 Employee, Director and Consultant Equity Incentive Plan (the “2020 Plan”). The 2020 Plan provides for the issuance of an initial 241,204 shares of common stock authorized to be issued for grants of options, restricted stock and other forms of equity to employees, directors and consultants. In addition, on the first day of each calendar year, for a period of not more than ten (10) years, commencing January 1, 2021, or the first business day of the calendar year if the first day of the calendar year falls on a Saturday or Sunday, the shares available under this plan will automatically increase in an amount equal to the lesser of (i) five percent (5%) of the total number of shares of Common Stock outstanding as of December 31 of the preceding fiscal year or (ii) such number of shares of Common Stock as determined by the Board of Directors. Under the terms of the 2020 Plan, options granted thereunder may be designated as options which qualify for incentive stock option treatment (“ISOs”) under Section 422A of the Internal Revenue Code, or options which do not qualify (“NQSOs”). As of December 31, 2023, there are 460,846 shares available under this plan. Stock Options – On June 20, 2013, the Company’s shareholders adopted the 2013 Employee, Director and Consultant Equity Incentive Plan (the “2013 Plan”). The 2013 Plan provides for the issuance of up to a total of 50,000 shares of common stock authorized to be issued for grants of options, restricted stock and other forms of equity to employees, directors and consultants. Under the terms of the 2013 Plan, options granted thereunder may be designated as options which qualify for incentive stock option treatment (“ISOs”) under Section 422A of the Internal Revenue Code, or options which do not qualify (“NQSOs”). During the year ended December 31, 2023, 5,333 options were forfeited. As of December 31, 2023, no shares remained available under this plan. 59 Impact BioMedical, Inc. Equity Transactions – On August 8, 2023 DSS BioHealth Securities, Inc. (“DSS BioHealth”), a wholly-owned subsidiary of the Company, and the sole shareholder of Impact BioMedical Inc., distributed to the shareholders of DSS on record as of July 10, 2023 4 shares of Impact Bio’s stock for 1 share they owned of DSS stock. Each share of Impact BioMedical distributed as part of the distribution will not be eligible for resale until 180 days from the date Impact BioMedical’s initial public offering becomes effective under the Securities Act, subject to the discretion of the Company to lift the restriction sooner. On October 31, 2023, Impact BioMedical effected a reverse stock split of 1 for 55 . As of December 31, 2023 and December 31, 2022, there were 3,877,282,251 shares of our Common Stock issued and outstanding which was converted to 70,496,041 shares. Also on October 31, 2023, DSS BioHealth Securities, Inc., the Company’s largest shareholder converted 60,496,041 shares of Common Stock into 60,496,041 shares of Series A Convertible Preferred Shares, reducing its ownership of the Company’s Common Stock from approximately 88 % to approximately 12 %. The Preferred Shares are voting shares and convertible. 16. INCOME TAXES Income Taxes The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities. Deferred tax assets are reduced, if deemed necessary, by a valuation allowance for the amount of tax benefits which are not expected to be realized. The following is a summary of the components giving rise to the income tax provision (benefit) for the years ended December 31: The provision (benefit) for income taxes consists of the following: Schedule of Income Tax Provision 2023 2022 Currently payable: Federal $ - $ 15,000 State 4,000 - Foreign - 119,000 Total currently payable 4,000 134,000 Deferred: Federal ( 5,392,000 ) ( 14,839,000 ) State ( 79,000 ) ( 492,000 ) Foreign ( 48,000 ) ( 58,000 ) Total deferred ( 5,519,000 ) ( 15,390,000 ) Less: increase in allowance 5,519,000 15,427,000 Net deferred - 38,000 Total income tax loss (benefit) $ 4,000 $ 172,000 60 Individual components of deferred tax assets and liabilities are as follows: Schedule of Deferred Tax Assets and Liabilities 2023 2022 Deferred tax assets: Net operating loss carry forwards $ 21,496,000 $ 24,975,000 Net operating loss IRC 382 limited 9,634,000 9,634,000 Unrealized loss on securities 4,655,000 5,753,000 Equity issued for services 190,000 190,000 Goodwill and other intangibles 63,000 34,000 Investment in pass-through entity 11,000 11,000 Deferred revenue 176,000 176,000 Operating Lease Liability 1,713,000 1,935,000 Depreciation and amortization 1,000 24,000 Other 2,507,000 696,000 Gross deferred tax assets 40,446,000 33,794,000 Deferred tax liabilities: Goodwill and other intangibles 3,369,000 2,822,000 Depreciation and amortization 614,000 ( 194,000 ) Right -of-use asset 1,625,000 1,846,000 Gross deferred tax liabilities 5,608,000 4,474,000 Less: valuation allowance ( 34,838,000 ) ( 29,357,000 ) Net deferred tax liabilities $ - $ ( 38,000 ) At December 31, 2023 and 2022, the Company has approximately $ 138.9 million and $ 108.4 million in federal net operating loss carryforwards (“NOLs”), respectively, available to reduce future taxable income. Under the provisions of the Internal Revenue Code, the net operating losses are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Certain tax attributes are subject to an annual limitation as a result of certain cumulative changes in ownership interest of significant shareholders which could constitute a change of ownership as defined under Internal Revenue Code Section 382. For the year ended December 31, 2021, the Company has completed a full analysis of historical ownership changes and determined that a portion of the net operating losses have a limitation on future deductibility. Approximately $ 43.8 million of net operating losses incurred prior to 2020 will be unable to offset future taxable income and have been reserved via a valuation allowance to reduce the deferred tax asset to the expected realizable amount, leaving $ 2.9 million available for use which expire at various dates through 2038 and the residual which never expire. This analysis is currently being performed for tax year ending December 31, 2023. Additionally, at December 31, 2023 and 2022, the Company had approximately $ 20.7 million and $ 43.6 of California and Illinois NOL carry-forwards, respectively, which expire through 2043 . The NOL carry-forwards may be limited in certain circumstances, including ownership change and have been fully reserved via a valuation allowance. The valuation allowance for deferred tax assets increased approximately $ 5.5 million and $ 15.4 million for the years ended December 31, 2023 and December 31, 2022, respectively. The valuation allowance for deferred tax liability increased approximately $ 1.1 million in the year ended December 31,2023 and decreased approximately $ 9.9 million for the year ended December 31, 2022. The differences between the United States statutory federal income tax rate and the effective income tax rate in the accompanying consolidated statements of operations are as follows: Schedule of Effective Income Tax Rate Reconciliation 2023 2022 Statutory United States federal rate 21.0 % 21.0 % State income taxes net of federal benefit 0.38 % 0.51 % Permanent differences ( 6.68 )% 0.03 % Other ( 9.04 )% 0.93 % Foreign taxes - % ( 0.07 )% Change in valuation allowance ( 5.66 )% ( 22.66 )% Effective rate - % ( 0.25 )% The Company recognizes interest accrued and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, 2023 and 2022 the Company recognized no interest and penalties. The Company files income tax returns in the U.S. federal jurisdiction and various states. The tax years 2020-2023 generally remain open to examination by major taxing jurisdictions to which the Company is subject. 61 17. DEFINED CONTRIBUTION PENSION PLAN Defined Contribution Pension Plan The Company maintains a qualified employee savings plans (the “401(k) Plan”) that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code and which covers all eligible employees. Employees generally become eligible to participate in the 401(k) Plan two months following the employee’s hire date. Employees may contribute a percentage of their earnings, subject to the limitations of the Internal Revenue Code. Commencing on January 1, 2018, the Company matched 100 % of the first 1% of employee contributions, then 50 % of additional contributions up to an aggregate maximum match of 3.5 %. The total matching contributions for 2023 and 2022 were approximately $ 124,000 and $ 124,000 , respectively. 18. COMMITMENTS AND CONTINGENCIES Commitments and Contingencies License Agreement – On March 19, 2022, Impact BioMedical entered into a License Agreement (“Equivir License”) with a third-party (“Licensee”) where the Licensor is granted the right, amongst other things, to develop, commercialize, and sell the Company’s Equivir technology. In exchange, the Licensee shall pay the Company a royalty of 5.5 % of net sales. Under the terms of the Equivir Agreement, the Company shall reimburse the Licensee for 50 % of the development costs provided that the development costs shall not exceed $ 1,250,000 . As of December 31, 2023 and December 31, 2022, $200,000 and $0, respectively, has been accrued for in relation to the Equivir License as development of the Equivir technology. Employment Agreements – As of December 31, 2023, the Company has no employment or severance agreements with members of its management team. 62 Legal Proceedings – Maiden Biosciences Litigation On February 15, 2021, Maiden Biosciences, Inc. (“Maiden”) commenced an action against DSS, Inc. (“DSS”), Decentralized Sharing Systems, Inc. (“Decentralized”), HWH World, Inc. (“HWH”), RBC Life International, Inc. (RBC International) (together, the “DSS Defendants”), Frank D. Heuszel (“Heuszel”), RBC Life Sciences, Inc (“RBC”), Steven E. Brown, Clinton Howard, and Andrew Howard (collectively, “Defendants”). The lawsuit is currently pending in the United States District Court Northern District of Texas, Dallas Division, and is styled and numbered Maiden Biosciences, Inc. v. Document Security Stems, Inc., et al., Case No. 3:21-cv-00327. This lawsuit relates to two promissory notes executed by RBC in the 4 th quarter of 2019 in favor of Decentralized and HWH, totaling approximately $1,000,000. Maiden, a 2020 default judgment creditor of RBC, in the principal amount of $4,329,000, now complains about those notes, the funding of those notes, the subsequent default of those notes by RBC, and HWH and Decentralized’s subsequent Article 9 foreclosure or deed-in-lieu debt conveyances. In the instant lawsuit, Maiden first asserted claims against Defendants for unjust enrichment, fraudulent transfer under the Texas Uniform Fraudulent Transfer Act (“TUFTA”), and violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO”). Maiden also sought a judgment from the court declaring: “(1) Defendants lacked a valid security interest in RBC and RBC Subsidiaries’ assets and therefore lacked the authority to sell the assets during the public foreclosure sale; (2) Defendant Heuszel’s low bid at the public foreclosure sale was invalid and void; (3) the public foreclosure sale was conducted in a commercially unreasonable manner; and (4) Defendants do not have the legal authority to transfer RBC and RBC’s Subsidiaries assets to Heuszel and HWH.” Maiden sought to recover from Defendants: (1) treble damages or, alternatively, damages in the amount of their underlying judgment plus the other creditors’ claims or the value of the assets transferred, whichever is less, plus punitive or exemplary damages; (2) pre- and post-judgment interest; and (3) attorneys’ fees and cost . 63 On March 30, 2021, Defendants DSS, Decentralized, HWH, RBC International, and Heuszel filed a motion to dismiss seeking to dismiss Maiden’s unjust enrichment, exemplary damages, and RICO claims against DSS, Decentralized, HWH, RBC Life International, Inc., and Heuszel, as well as Maiden’s fraudulent transfer claims against DSS and RBC International. On August 9, 2021, the Court then entered an order granting in part the motion to dismiss filed on behalf of DSS, Decentralized, HWH, RBC International, and Heuszel. Among other things, the Court held that Maiden failed to plausibly plead certain causes of action, including (1) the civil RICO claim against DSS, Decentralized, HWH, RBC International, and Heuszel, (2) the TUFTA claim against DSS, and (3) the unjust enrichment claim against DSS and RBC International. Notably, the Court declined the request to dismiss the TUFTA claim against RBC International. On September 3, 2021, Maiden filed its first amended complaint, asserting a single cause of action against the DSS Defendants, Heuszel, and RBC for an alleged TUFTA violation. Generally, Maiden sought the same relief requested in its original complaint. Maiden, however, abandoned its request for treble damages. On September 17, 2021, the DSS Defendants filed a motion to dismiss the amended complaint seeking to dismiss Maiden’s TUFTA claim to the extent it seeks to avoid a transfer of assets owned by any of RBC’s subsidiaries, including but not limited to RBC Life Sciences USA, Inc. (“RBC USA”). Further, the motion to dismiss sought the dismissal of Maiden’s TUFTA claim against Heuszel. On November 19, 2021, the Court granted the motion to dismiss in part, dismissing Maiden’s claim against Heuszel and determined Maiden failed to plead that it was a creditor of RBC USA or RBC’s other subsidiaries. However, the Court permitted Maiden to replead once again. On December 17, 2021, Maiden filed its second amended complaint which asserted a single TUFTA claim against only the DSS Defendants, RBC, and RBC USA. During the discovery period, the Parties conducted written discovery, production of documents, and depositions of fact witnesses and expert witnesses. The discovery period closed on August 9, 2022. The DSS Defendants have engaged Stout Risius Ross, LLC (“Stout”) to provide expert opinions regarding the value of the assets at issue. The trial in this matter began on December 12, 2022. The Company vigorously defended its position that Maiden should recover nothing on its TUFTA claim. The DSS Defendants’ experts at Stout provided expert opinions regarding the value of the assets at issue and the deficiencies with Maiden’s designated expert’s opinions. The jury returned a verdict in favor of Maiden, and the Court entered a judgment on December 20, 2022. The DSS Defendants filed post-judgment motions seeking reversal of the judgment for several reasons, including that: (1) the evidence does not support Maiden’s claim against the Company; (2) recovery of exemplary damages under TUFTA is unsupported; and (3) the evidence established that the DSS Defendants are entitled to judgment in their favor on their affirmative defenses. After the DSS Defendants filed their post-judgment motions, the case was settled for $8.75 million, the Court’s December 20, 2022 judgment was vacated, and the case was dismissed with prejudice . In addition to the foregoing, we may become subject to other legal proceedings that arise in the ordinary course of business and have not been finally adjudicated. Adverse decisions in any of the foregoing may have a material adverse effect on our results of operations, cash flows or our financial condition. The Company accrues for potential litigation losses when a loss is probable and estimable. Contingent Litigation Payments – The Company retains the services of professional service providers, including law firms that specialize in intellectual property licensing, enforcement and patent law. These service providers are often retained on an hourly, monthly, project, contingent or a blended fee basis. In contingency fee arrangements, a portion of the legal fee is based on predetermined milestones or the Company’s actual collection of funds. The Company accrues contingent fees when it is probable that the milestones will be achieved, and the fees can be reasonably estimated. As of December 31, 2023 and 2022 the Company had not accrued any contingent legal fees pursuant to these arrangements. 64 Contingent Payments – The Company is party to certain agreements with funding partners who have rights to portions of intellectual property monetization proceeds that the Company receives. As of December 31, 2023 and 2022, there are no contingent payments due. 19. DISCONTINUED OPERATIONS 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”) and will be treated as discontinued operations on the face of our financial statements. 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. Upon Deconsolidation, we recognized an impairment of assets due to the deconsolidation of SHRG approximately $ 6,220,000 which is recorded as an impairment of assets due to the deconsolidation in our consolidated statements of operations. Subsequent to the Deconsolidation, we accounted for our equity ownership interest in SHRG as a marketable security and at the quoted price stock price of SHRG, valued at approximately $ 74,000 at December 31, 2023. The following tables show the major classes of assets and liabilities held for sale and results of operations of the discontinued operation: SCHEDULE OF MAJOR CLASSES OF ASSETS AND LIABILITIES HELD FOR SALE AND RESULTS OF OPERATIONS Sharing Services Global Corporation Balance Sheets - Discontinued Operations As of December 31, 2023 2022 ASSETS Current assets: Cash and cash equivalents $ - $ 3,112,000 Accounts receivable, net - 1,791,000 Inventory - 2,728,000 Current portion of notes receivable - 216,000 Prepaid expenses and other current assets - 627,000 Total current assets - 8,474,000 Property, plant and equipment, net - 6,630,000 Other investments - 179,000 Marketable securities - 4,251,000 Other assets - 1,184,000 Right-of-use assets - 459,000 Other intangible assets, net - 581,000 Total assets $ - $ 21,758,000 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ - $ 435,000 Accrued expenses and deferred revenue - 6,810,000 Current portion of lease liability - 78,000 Current portion of long-term debt, net - - Total current liabilities - 7,323,000 Long term lease liability - 414,000 Sharing Services Global Corporation Statements of Operations Loss - Discontinued Operations For the Years Ended December 31, 2023 2022 For the Year Ended December 31, 2023 2022 Revenue: Direct marketing $ 4,325,000 $ 18,924,000 Total revenue 4,325,000 18,924,000 Costs and expenses: Cost of revenue 2,055,000 7,255,000 Selling, general and administrative 5,743,000 28,161,000 Total costs and expenses 7,798,000 35,416,000 Operating loss 3,473,000 ( 16,492,000 ) Other income (expense): Other income (expense) ( 96,000 ) 2,084,000 Interest income 6,000 ) - Gain (loss) on investments 82,000 ( 9,501,000 ) Impairment of assets - ( 2,843,000 ) Loss from discontinued operations before income taxes ( 3,481,000 ) ( 26,752,000 ) Income tax benefit/(loss) - - Loss from discontinued operations ( 3,481,000 ) ( 26,752,000 ) 65 20. SUPPLEMENTAL CASH FLOW INFORMATION Supplemental Cash Flow Information Supplemental cash flow information for the years ended December 31: Schedule of Supplemental Cash Flow Information 2023 2022 Cash paid for interest $ 4,806,000 $ 3,270,000 Non-cash investing and financing activities: Right of use asset $ - $ 9,568,000 Shares issued in lieu of bonus cash $ 268,000 $ 6,221,000 Purchase of notes receivable with company stock $ - $ 8,717,000 Purchase of marketable security with Company stock $ - $ 7,169,000 Third party Note receivable received in lieu of cash $ 1,100,000 - 21. SEGMENT INFORMATION Segment Information The Company’s nine businesses lines are organized, managed, and internally reported as five operating segments. One of these operating segments, Product Packaging, is the Company’s packaging and printing group. Product Packaging operates in the paper board folding carton, smart packaging, and document security printing markets. It markets, manufactures, and sells mailers, photo sleeves, sophisticated custom folding cartons, and complex 3-dimensional direct mail solutions. These products are designed to provide functionality and marketability while also providing counterfeit protection. A second, Biotechnology, invests in, or acquires 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 developing open-air defense initiatives, which curb transmission of air-borne infectious diseases, such as tuberculosis and influenza. Biotechnology is also targeting unmet, urgent medical needs. A third operating segment, Securities and Investment Management (“Securities”) was established to develop and/or acquire assets and investments in the securities trading and/or funds management arena. Further, Securities, 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, stable coins and cryptocurrency via a digital asset 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, STO 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). Also 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. The fourth segment, Direct, provides services to assist companies in the emerging growth gig business model of peer-to-peer decentralized sharing marketplaces. It 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 products include, among other things, nutritional and personal care products sold throughout North America, Asia Pacific and Eastern Europe. The fifth business line, Commercial Banking, 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. 66 Our segment structure presented below represents a change from the prior year for the inclusion of our Biotechnology, Securities, and Commercial Lending segments and the removal of our Plastics segment, Digital Group and IP Technology Management segment as the Plastics segment was discontinued in 2020, DSS Digital was sold and discontinued in May 2021 and activities surrounding our IP Technology Management segment have significantly decreased. The amounts for these segments have been included in the Corporate reporting segment for the year ended December 31, 2023 and 2022, as necessary, below for reconciliation purposes. Approximate information concerning the Company’s operations by reportable segment for the twelve months ended December 31, 2023 and 2022 is as follows. The Company relies on intersegment cooperation and management does not represent that these segments, if operated independently, would report the results contained herein: Schedule of Operations by Reportable Segment Year Ended December 31, 2023 Product Packaging Commercial Lending Direct Marketing Biotechnology Securities Corporate Total Revenue $ 18,497,000 $ 385,000 $ 1,763,000 $ - $ 5,288,000 $ - $ 25,933,000 Assets held for sale - - - - 51,595,000 - 51,595,000 Depreciation and amortization 761,000 - 157,000 1,163,000 3,047,000 78,000 5,206,000 Cost of revenue 15,282,000 1,139,000 818,000 77,000 8,003,000 71,000 25,390,000 Interest expense 185,000 - ( 5,000 ) - 4,632,000 - 4,812,000 Interest Income - - 986,000 155,000 148,000 - 1,289,000 Stock based compensation - - - - - - - Net income (loss) from continuing operations 327,000 ( 31,497,000 ) ( 9,400,000 ) ( 7,168,000 ) ( 19,792,000 ) ( 6,513,000 ) ( 74,043,000 ) Capital expenditures 689,000 - 4,000 17,000 104,000 4,000 818,000 Identifiable assets 21,508,000 12,285,000 6,303,000 49,305,000 59,345,000 4,446,000 153,192,000 Year Ended December 31,2022 Product Packaging Commercial Lending Direct Biotechnology Securities Corporate Total Revenue $ 17,973,000 $ 764,000 $ 3,065,000 $ - $ 6,581,000 $ - $ 28,383,000 Depreciation and amortization 715,000 - 413,000 1,113,000 9,093,000 129,000 11,463,000 Cost of revenue 16,960,000 1,041,000 2,573,000 - 11,784,000 634,000 32,992,000 Interest expense 140,000 - 1,000 - ( 15,000 ) - 126,000 Stock based compensation 1,000 - - - - 3,000 4,000 Net income (loss) from continuing operations ( 1,234,000 ) ( 459,000 ) ( 13,429,000 ) ( 7,462,000 ) ( 8,238,000 ) ( 12,084,000 ) ( 42,909,000 ) Capital expenditures 1,612,000 - 384,000 276,000 18,000 4,000 2,294,000 Identifiable assets 24,641,000 48,240,000 27,526,000 53,069,000 83,873,000 11,566,000 248,915,000 67 International revenue, which consists of sales to customers with operations in Canada, Western Europe, Latin America, Africa, the Middle East and Asia comprised 7.0 % of total revenue for 2023 ( 11.0 % - 2022). Revenue is allocated to individual countries by customer based on where the product is shipped. The Company had no long-lived assets in any country other than the United States for any period presented. The following tables disaggregate our business segment revenues by major source: Printed Products Revenue Information: Schedule of Disaggregation of Revenue Twelve months ended December 31, 2023 Packaging Printing and Fabrication $ 18,036,000 Commercial and Security Printing 461,000 Total Printed Products $ 18,497,000 Twelve months ended December 31, 2022 Packaging Printing and Fabrication $ 17,499,000 Commercial and Security Printing 474,000 Total Printed Products $ 17,973,000 Direct Marketing Twelve months ended December 31, 2023 Direct Marketing Internet Sales $ 1,763,000 Total Direct Marketing $ 1,763,000 Twelve months ended December 31, 2022 Direct Marketing Internet Sales $ 3,065,000 Total Direct Marketing $ 3,065,000 Rental Income Twelve months ended December 31, 2023 Rental income $ 3,647,000 Total Rental Income $ 3,647,000 Twelve months ended December 31, 2022 Rental income $ 6,287,000 Total Rental Income $ 6,287,000 68 Commission Income Twelve months ended December 31, 2023 Commission income $ 1,641,000 Total commission income $ 1,641,000 Twelve months ended December 31, 2022 Commission income $ 294,000 Total commission income $ 294,000 Management Fee Income Twelve months ended December 31, 2023 Management fee income $ - Total Management fee income $ - Twelve months ended December 31, 2022 Management fee income $ 134,000 Total Management fee income $ 134,000 Net Investment Income Twelve months ended December 31, 2023 Net investment income $ 385,000 Total Net Investment Income $ 385,000 Twelve months ended December 31, 2022 Net investment income $ 630,000 Total Net Investment Income $ 630,000 22. Related Party Transactions The Company owns 127,179,291 shares or approximately 4 % of the outstanding shares of Alset International Limited (“Alset Intl”), a company incorporated in Singapore and publicly listed on the Singapore Exchange Limited. This investment is classified as a marketable security and is classified as long-term assets on the consolidated balance sheets as the Company has the intent and ability to hold the investments for a period of at least one year. The Chairman of the Company, Mr. Heng Fai Ambrose Chan, is the Executive Director and Chief Executive Officer of Alset Intl. Mr. Chan is also the majority shareholder of Alset Intl as well as the largest shareholder of the Company. The fair value of the marketable security as of December 31, 2023, and December 31, 2022, was approximately $ 3,269,000 and $ 3,319,000 respectively. During the year ended December 31, 2023 and December 31, 2022, the Company recorded unrealized loss on this investment of approximately $ 50,000 and unrealized loss of $ 1,590,000 , respectively. On March 2, 2020, AMRE entered into a $ 200,000 unsecured promissory note with LVAMPTE, a related party. The Note calls for interest to be paid annually on March 2 with interest fixed at 8.0 %. As further incentive to enter into this Note, AMRE granted LVAMPTE warrants to purchase shares of common stock of AMRE (the “Warrants”). The amount of the warrants granted is the equivalent of the Note Principal divided by the Exercise Price. The Warrants are exercisable for four years and are exercisable at $ 5.00 per share (the “Exercise” Price). In March 2022, this debt was converted into equity in AMRE, and LVAMPTE exercised the warrants for $ 200,000 (see the consolidated statement of changes in stockholders’ equity) The holder is a related party owned by the Chairman of the Company’s board of directors. On March 18, 2021, the Company entered into an agreement with Alset EHome International, Inc. (“Seller”), a related party, to purchase from the Seller’s its wholly owned subsidiary Impact Oncology PTE Ltd. (“IOPL”) for a purchase price $ 2,480,000 . The acquisition of IOPL has been treated as an asset acquisition as IOPL does not meet the definition of a business as defined in Topic 805. IOPL owns 2,480,000 shares of common stock of Vivacitas along with the option to purchase an additional 250,000 shares of common stock. The Sellers largest shareholder is Mr. Heng Fai Ambrose Chan, the Chairman of the Company’s board of directors and its largest shareholder. At December 31, 2022 the full value of this investment was impaired. 69 On October 13, 2021, LVAM entered into loan agreement with BMIC (“BMIC Loan”), a related party, whereas LVAM borrowed the principal amount of $ 3,000,000 , with interest to be charged at a variable rate to be adjusted at the maturity date. The BMIC Loan matures on October 12, 2022 , and contains an auto renewal period of three months. As of December 31, 2023 and December 31, 2022, $ 547,000 and $ 3,000,000 , respectively, are included in Current portion of long-term debt, net on the consolidated balance sheet. On October 13, 2021, LVAM entered into a loan agreement with Lee Wilson Tsz Kin (“Wilson Loan”), a related party, whereas LVAM borrowed the principal amount of $ 3,000,000 , with interest to be charged at a variable rate to be calculated at the maturity date. The Wilson Loan matures on October 12, 2022 , and contains an auto renewal period of nine months. This loan was funded during March 2022. As of December 31, 2023 $ 2,131,000 is included in the Current portion of long-term debt, net on the consolidated balance sheet. As of December 31, 2022 $ 3,008,000 is included in the Current portion of long-term debt, net on the consolidated balance sheet. In November 2021, AMRE entered into a convertible promissory note (“Alset Note”) with Alset International Limited (“Alset International”), a related party, for the principal amount of $ 8,350,000 . The Alset Note accrues interest at 8 % per annum and matures in December 2023 , with interest due quarterly and the principal due at maturity. Principal and interest of approximately $ 8,805,000 is included in long-term debt, net on the accompanying consolidated balance sheet on December 31, 2022. On May 17, 2022, the shareholders of the Company approved the issuance of up to 21,366,177 Shares our Common Stock to Alset International to purchase the Convertible Promissory Note issued by American Medical REIT, Inc. with a principal amount of $ 8,350,000 and accrued unpaid interest of $ 119,000 through December 31, 2022. This transaction was finalized in July 2022 and is eliminated upon consolidation into DSS. Interest expense for this note totaled $ 677,000 for year ended December 31, 2023 and $ 346,000 for year ended December 31, 2022. 70 On 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 . Pursuant 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. On July 26, 2022, APB and Borrower 11 entered into a promissory note (“Note 11”) in the principal sum of $ 1,000,000 with interest of 8 %. All unpaid principal and interest due on July 26, 2024 . The outstanding principal and interest on December 31, 2023, approximates $ 939,000 , net of $ 20,000 of unamortized origination fees and is included in notes receivable on the accompanying consolidate balance sheet. The outstanding principal and interest at December 31, 2022 approximates $ 924,000 , net of $ 66,000 of unamortized origination fees and is included in Notes receivable on the accompanying consolidate balance sheet. Heng Fai Ambrose Chan, the Chairman of DSS, Inc is also the on the board of directors of Borrower 11. In October 2017, Sharing Services issued a Convertible Promissory Note in the principal amount of $ 50,000 (the “Note”) to HWH International, Inc. (“HWH” or the “Holder”), a related party. HWH is affiliated with Heng Fai Ambrose Chan, who became a Director of the Company in April 2020. The Note is convertible into 333,333 shares of the Company’s Common Stock. Concurrent with issuance of the Note, the Company issued to HWH a detachable stock warrant to purchase up to an additional 333,333 shares of the Company’s Common Stock, at an exercise price of $ 0.15 per share. Under the terms of the Note and the detachable stock warrant, the Holder is entitled to certain financing rights. If the Company enters into more favorable transactions with a third-party investor, it must notify the Holder and may have to amend and restate the Note and the detachable stock warrant to be identical. On August 9, 2022, HWH and the Company executed an agreement to settle the Note and cancel the related stock warrant for $ 78,635.62 , which amount represents the principal plus accrued interest. The Company made the payment to HWH on August 9, 2022. On 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. Mr. Heng Fai 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. On August 29, 2022, DSS Financial Management Inc and Borrower 10, a related party, entered into a promissory note (“Note 10”) in the principal sum of $ 100,000 with interest of 8 %, is due in three quarterly installments beginning on September 14, 2022. All unpaid principal and interest is due on August 29, 2025 . The outstanding principal and interest at December 31, 2023 and December 31, 2022 approximates $ 100,000 , and $ 100,000 , respectively, and is included in Notes receivable on the accompanying consolidate balance sheet, of which $ 76,000 is included in the Current portion of notes receivable and $ 24,000 is included in the long-term portion of notes receivable at December 31, 2023. 23. SUBSEQUENT EVENTS Subsequent Events The Company has evaluated all subsequent events and transactions through March 26, 2024, the date that the consolidated financial statements were available to be issued and other then the reverse stock split identified in Note 15 and noted no subsequent events requiring financial statement recognition or disclosure. 71 ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE On June 29, 2022, the Company’s Board of Directors (the “Board”) approved replacing Turner, Stone & Company, LLP (the “Former Accountant”) as our independent registered public accounting firm, with Grassi & Co. CPAs, P.C. (the “New Accountant”) as our independent registered public accounting firm, effective July 1, 2022. The engagement of the New Accountant was recommended and approved by the Board. The Former Accountant’s audit report on our financial statements for the year ended December 31, 2021 contained no adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles. The audit report of Turner, Stone & Company, LLP on our financial statements for the year ended December 31, 2021 contained no adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles. For the year ended December 31, 2021 and the interim period ending June 30, 2022, there were no “disagreements” (as such term is defined in Item 304 of Regulation S-K) with the Former Accountant or the Previous Accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of the Former Accountant or Previous Accountant, would have caused them to make reference thereto in their reports on the financial statements for such periods. Prior to retaining the New Accountant, the Company did not consult with the New Accountant regarding either: (i) the application of accounting principles to a specified transaction, either contemplated or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements; or (ii) any matter that was the subject of a “disagreement” or a “reportable event” (as those terms are defined in Item 304 of Regulation S-K).