What changed in this filing

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Item 1. Financial Statements

2026-08-14 compared with 2026-05-15 · 891 added, 812 removed, 828 unchanged (67% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

March 31, 2026

June 30, 2026

December 31, 2025

and cash equivalents

receivable, net

in trading securities

portion of notes receivable, net

portion of notes receivable - related party

portion of notes receivable

expenses and other current assets

Current assets:

Property, plant and equipment,

Investment in real estate,

Cash and cash equivalents

Restricted cash

Accounts receivable, net

Investments in trading securities

Current portion of notes receivable, net

Current portion of notes receivable - related party

Current portion of notes receivable

Prepaid expenses and other current assets

Total current assets

Property, plant and equipment, net

Investment in real estate, net

Investment, cost method

1 unchanged sentence

Investment in equity securities

bond investment – related party

Right-of-use assets

intangible assets, net

AND STOCKHOLDERS’ EQUITY

current liabilities

interest on long-term debt

portion of lease liability

portion of long-term debt, net

note payable - related party

portion of long-term debt - related party, net

portion of long-term debt

Other intangible assets, net

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

Accrued expenses and deferred revenue

Other current liabilities

Accrued interest on long-term debt

Current portion of lease liability

Current portion of long-term debt, net

Convertible note payable - related party, net

Current portion of long-term debt - related party, net

Current portion of long-term debt

Total current liabilities

Long-term debt, net

term lease liability

and contingencies (Note 13)

Stockholders’

equity (deficit)

stock, $ 0.02 par value;

47,000 shares authorized, zero shares issued and outstanding

Common stock, $ 0.02 par

200,000,000 shares authorized, 10,042,518 shares issued and outstanding ( 9,092,518 on December 31, 2025)

Long term lease liability

Total liabilities

Commitments and contingencies (Note 13)

Stockholders’ equity (deficit)

Preferred stock, $ .02

shares authorized, zero

shares issued and outstanding on June 30, 2026 ( zero

on December 31, 2025)

Common stock, $ .02

shares authorized, 10,042,518

shares issued and outstanding on June 30, 2026 ( 9,092,518

on December 31, 2025)

Additional paid-in capital

Accumulated deficit

( 337,390,000 )

( 327,001,000 )

stockholders’ equity of the Company

Non-controlling

interest in subsidiaries

stockholders’ equity

liabilities and stockholders’ equity

Total stockholders’ equity of the Company

Non-controlling interest in subsidiaries

Total stockholders’ equity

Total liabilities and stockholders’ equity

accompanying notes to the condensed consolidated financial statements.

1 unchanged sentence

Consolidated Statements of Operations

the Three Months Ended March 31,

For the Three Months Ended

For the Six Months Ended

Printed products

Commercial lending

Biotechnology

general and administrative (including stock-based compensation)

Total revenue

Costs and expenses:

Cost of revenue

Selling, general and administrative (including stock-based compensation)

Total costs and expenses

Operating loss

( 3,786,000 )

( 3,425,000 )

income on note receivable, related party

equity method investment

Change in fair value of convertible bond investment – related party

on sale on sale of real estate

operations before income taxes

( 9,274,000 )

( 7,151,000 )

Other income (expense):

Interest income

Interest income on note receivable, related party

Dividend income

Other income (expense)

Interest expense

Loss on equity method investment

(Loss) gain on investments

( 1,531,000 )

Impairment of intangible assets

Loss on sale of real estate

Loss from continuing operations before income taxes

( 5,035,000 )

( 2,607,000 )

( 11,262,000 )

( 7,969,000 )

Income tax benefit

$ ( 5,035,000 )

$ ( 2,607,000 )

$ ( 11,262,000 )

$ ( 7,902,000 )

Loss from operations attributed to noncontrolling interest

loss attributable to DSS common stockholders

Net loss attributable to DSS common stockholders

$ ( 4,789,000 )

$ ( 2,152,000 )

common share attributable to common stockholders

used in computing loss per common share:

$ ( 10,389,000 )

$ ( 6,929,000 )

Loss per common share attributable to common stock holders

Shares used in computing loss per common share:

accompanying notes to the condensed consolidated financial statements.

1 unchanged sentence

Consolidated Statements of Changes in Stockholders’ Equity

controlling Interest in

December 31, 2024

Preferred Stock

Additional Paid-

Non- controlling

Balance, December 31, 2024

$ 323,150,000

$ ( 303,072,000 )

payments for professional services

based payments

based payments - Impact BioMedical, Inc.

of common stock, net of expenses - Impact BioMedical, Inc.

of common stock award

Stock-based payments for professional services

Stock-based payments

Issuance of common stock, net of expenses - Impact BioMedical, Inc.

Issuance of common stock for bonus

( 6,929,000 )

1 unchanged sentence

( 7,902,000 )

March 31, 2025

Balance, June 30, 2025

$ 325,488,000

$ ( 310,001,000 )

December 31, 2025

Balance, December 31, 2025

( 327,001,000 )

of common stock, net of expenses

Issuance of warrants in

connection with convertible promissory note – related party

value adjustment related to convertible bond received from related party

based payments - Impact BioMedical, Inc.

Issuance of common stock, net of expenses

Fair value adjustment related to convertible bond received from related party

Issuance of warrants in connection with convertible promissory note

Stock-based payments - Impact BioMedical, Inc.

( 10,389,000 )

1 unchanged sentence

( 11,262,000 )

March 31, 2026

Balance, June 30, 2026

$ 336,808,000

2 unchanged sentences

$ 336,808,000

$ ( 337,390,000 )

$ ( 382,000 )

accompanying notes to the condensed consolidated financial statements.

1 unchanged sentence

Consolidated Statements of Cash Flows

the Three Months Ended March 31,

the Six Months Ended June 30,

Cash flows from operating activities:

3 unchanged sentences

Depreciation and amortization

Gain on allowance for obsolescence of inventory

Issuance of common stock for bonus

Stock-based payments for professional services rendered

3 unchanged sentences

Change in ROU assets

Change in inventory obsolescence

(Loss) gain on allowance for obsolescence of inventory

Provision for loan loss recoveries

Change in fair value of convertible bond investment - related party

Impairment of intangible asset

Amortization of debt discount

Loss on sale of real estate

3 unchanged sentences

Prepaid expenses and other current assets

Investment in trading securities

Investments in trading securities

Increase (decrease) in liabilities:

5 unchanged sentences

Net cash (used) provided by operating activities

( 1,985,000 )

Cash flows from investing activities:

21 unchanged sentences

( 2,246,000 )

Cash and cash equivalents and restricted

cash at beginning of period

( 1,947,000 )

Cash, cash equivalents and restricted cash at beginning of

Cash and cash equivalents at end of period

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The closing date

of the transaction is uncertain as of May 15, 2026, due to the pending approval from regulatory authorities.

Both parties agreed to

extend the closing date to July 1, 2026.

of the transaction is uncertain as of August 14, 2026, due to the pending approval from regulatory authorities.

Both parties agreed to extend

the closing which is expected to take place during the fourth quarter of 2026.

Management will continue evaluating the status of this deal.

Basis of Presentation and Significant Accounting Policies

of Presentation - The accompanying condensed unaudited consolidated financial statements contain all adjustments (consisting of normal

recurring adjustments, unless otherwise indicated) necessary to present fairly our consolidated financial position as of March 31, 2026

and December 31, 2025, and the results of our consolidated operations for the interim periods presented in conformity with accounting

of Presentation - The accompanying condensed unaudited consolidated financial statements contain all adjustments (consisting

of normal recurring adjustments, unless otherwise indicated) necessary to present fairly our consolidated financial position as of June 30, 2026 and December 31, 2025, and the results of our consolidated operations for the interim periods presented in conformity with accounting

principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the

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intercompany balances and transactions have been eliminated in consolidation.

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

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.

of prior period financial statements - The Company identified and corrected an immaterial classification error in our previously

reported Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of Changes in Shareholders’ Equity as of March

The correction of this error between Additional paid-in capital and Non-controlling interest in subsidiary for the Issuance

of common stock, net of expenses - Impact BioMedical, Inc.

resulted in a $ 205,000

reduction to Additional paid-in capital from the previously reported

number of $ 1,499,000

and an increase of $ 205,000

to Non-controlling interest in subsidiary previously reported at $ 0 .

Additionally, the Company reduced 36,433 shares

from Stock based payments for professional services rendered and increased Issuance of common stock award by 36,433

resulting in final amounts of 0

and 1,000,000

respectively.

The Company also identified certain immaterial errors in the classification of amounts reported

in the consolidated statement of cash flows for the three months ended March 31, 2025.

Specifically, $ 1,806,000

of cash inflows related to sales of marketable securities, which were previously presented within investing

activities, should have been presented within operating activities.

As a result of the revision, net cash used in operating activities

for the three months ended March 31, 2025 decreased from $ 1,638,000

to a cash provided by operating activities of $ 168,000 .

The Company assessed the materiality of this change in presentation on prior period financial statements in accordance with SEC Staff

Accounting Bulletin No.

99, “Materiality,” (ASC Topic 250, Accounting Changes and Error Corrections).

Based on this assessment,

the Company concluded that this classification error correction in its Balance Sheet is not material to any previously presented financial

statements based upon overall considerations of both quantitative and qualitative factors.

The correction had no effect on any previously

reported amounts in our consolidated financial statements as of and for three months ended March 31, 2025 other than those previously

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.

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.

Reclassifications

- Costs in the amount of $ 10,000 associated with third-party logistics services for the three and six months ended June 30, 2025

were reclassed from Cost of revenue to Other operating expenses on the accompanying Condensed Consolidated statements of operations to

conform with current period presentation.

Equivalents – All highly liquid investments with maturities of three months or less at the date of purchase are classified

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adjusted costs approximate fair value.

cash - Restricted cash consists of deposits and other cash balances that are restricted as to withdrawal or use under the terms

of certain contractual arrangements.

These amounts are generally maintained as collateral for letters of credit, lease-related security

deposits, or other business requirements.

The Company classifies restricted cash as a current assets on noncurrent asset on the Consolidated

balance sheets based on when the applicable restrictions are expected to lapse.

For purposes of the consolidated statements of cash flows,

cash, cash equivalents, and restricted cash are presented in total

Receivable - The Company extends credit to its customers in the normal course of business.

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abilities to pay.

March 31, 2026, December 31, 2025, the Company established a reserve for credit losses of approximately $ 974,000 , and $ 1,014,000 , respectively.

Accounts receivable, net at March 31, 2026, and December 31, 2025, was $ 2,042,000 , and $ 2,254,000 , respectively.

The Company does not

accrue interest on past due accounts receivable.

receivable, net at June 30, 2026, and December 31, 2025, was $ 1,286,000 , and $ 2,254,000 , respectively.

At June 30, 2026, December 31,

2025, the Company established a reserve for credit losses of approximately $ 974,000 ,

and $ 1,014,000 ,

respectively.

The Company does not accrue interest on past due accounts receivable.

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 March 31, 2026, one customer accounted for approximately

of our consolidated revenue and two customers accounted for approximately 25 %,

of our trade accounts receivable balance.

As of March 31, 2025, one customer accounted for approximately 30 %

of our consolidated revenue and two customers accounted for approximately 35 %

of our trade accounts receivable balance.

As of March 31, 2026 and 2025 one vendor accounted for approximately 13 % and 11 %, respectively, of our cost of revenue.

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.

of June 30, 2026, one customer accounted for approximately 26 % of our consolidated revenue and three customers accounted for approximately

16 %, 14 %, and 13 % of our trade accounts receivable balance.

As of June 30, 2025, one customer accounted for approximately 25 % of our

consolidated revenue and three customers accounted for approximately 18 %, 15 %, and 11 % of our trade accounts receivable balance.

of December 31, 2025, one customers accounted for approximately 29 % of our consolidated revenue.

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contractual life of the loans.

At March 31, 2026, and December 31, 2025, the Company established a reserve for credit losses of approximately

At June 30, 2026 and December 31, 2025, the Company established a reserve for credit losses of approximately

$ 7,478,000 .

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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.

For equity method investments, the investments are initially recorded at cost and subsequently adjusted for the Company’s proportionate share of

the investee’s earnings or losses and other comprehensive income and reduced by any distributions received.

Where an investee’s financial

information is not available in time for the Company’s reporting deadline, the Company records its share of the investee’s results on

a lag using the most recent financial information available, and records adjustment as needed when more current investee financial information

becomes available.

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

below book value.

If there is a decline that is other-than-temporary,

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These tiers include:

Level 1, defined as observable inputs such as quoted prices

for identical instruments in active markets.

Level 2, defined as inputs other than quoted prices in active

markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices

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

Level 3, defined as unobservable inputs in which little or

no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques

in which one or more significant inputs or significant value drivers are unobservable.

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

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

securities classify as a Level 1 fair value financial instrument.

The fair value of notes receivable approximates their carrying value

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

The fair value of revolving credit lines notes

payable and long-term debt approximates their carrying value as the stated or discounted rates of the debt reflect recent market conditions.

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

The fair value of the convertible bond investment is classified as a Level 3 asset within the fair value hierarchy

because there is no quoted price in an active market for the identical bond and the valuation requires significant unobservable inputs,

including issuer credit risk, expected term, volatility, liquidity, conversion probability, and the value of the embedded conversion feature.

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

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

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

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,

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

The carrying amounts reported

in the consolidated balance sheet for cash and cash equivalents, accounts receivable, prepaid expenses, accounts payable and accrued expenses

approximate their fair values due primarily to the short-term nature of these instruments.

The carrying amounts of notes receivable, notes

payable and long-term debt generally approximate their fair values based on the stated or discounted interest rates, contractual terms

and expected timing of cash flows.

Investments are accounted for in accordance with the applicable U.S.

GAAP guidance based on the nature

and classification of the investment.

Investments for which fair value is not readily determined are measured in accordance with the applicable

measurement alternative, when eligible.

Financial instruments measured at fair value are classified within the fair value hierarchy based

on the observability of the inputs used in the valuation.

– Inventories consist primarily of paper, pre-printed security paper, paperboard, fully prepared packaging, air filtration

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An allowance for obsolescence of approximately $ 55,000 and $ 53,000 associated with the inventory at our Premier subsidiary

for March 31, 2026 and December 31, 2025, respectively.

for June 30, 2026, and December 31, 2025, respectively.

Write-downs and write-offs are charged to cost of revenue.

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accompanying Condensed consolidated statement of operations.

The Company’s

policy is to obtain an independent third-party valuation for each major project in the United States as part of our assessment of identifying

potential triggering events for impairment.

Management may use the market comparison method to value the investments.

In addition to

the annual assessment of potential triggering events in accordance with ASC 360 – Property Plant and Equipment (“ASC 360”),

the Company applies a fair value-based impairment test to the net book value assets on an annual basis and on an interim basis if certain

events or circumstances indicate that an impairment loss may have occurred.

bond investment - The Company accounts for its convertible bond investment as a financial asset measured at fair value.

has elected the fair value option under ASC 825, Financial Instruments , and, accordingly, changes

in the fair value of the investment are recognized in earnings in the period of change.

Interest income is recognized when earned in

accordance with the contractual terms of the bond.

Fair value is determined in accordance with ASC 820, Fair

Value Measurement , using valuation techniques appropriate for the instrument and available market information.

The valuation considers,

among other factors, the stated interest rate, maturity date, conversion price, market price of the underlying equity securities, foreign

currency exchange rates, issuer credit risk, expected term, volatility, liquidity, and conversion economics.

The convertible bond investment is classified as a Level 3 financial asset

because there is no quoted price in an active market for the identical bond and the valuation requires significant unobservable inputs,

including issuer credit risk, expected term, volatility, liquidity, conversion probability, and conversion economics.

The Company’s policy is to obtain an independent third-party valuation

for each major project in the United States as part of our assessment of identifying potential triggering events for impairment.

may use the market comparison method to value the investments.

In addition to the annual assessment of potential triggering events in

accordance with ASC 360 – Property Plant and Equipment (“ASC 360”), the Company applies a fair value-based impairment

test to the net book value assets on an annual basis and on an interim basis if certain events or circumstances indicate that an impairment

loss may have occurred.

Convertible bond investment

- The Company accounts for its convertible bond investment as a financial asset measured at fair value.

The Company has elected the fair

value option under ASC 825, Financial Instruments, and, accordingly, changes in the fair value of the investment are recognized in earnings

in the period of change.

Interest income is recognized when earned in accordance with the contractual terms of the bond.

Fair value is

determined in accordance with ASC 820, Fair Value Measurement, using valuation techniques appropriate for the instrument and available

market information.

The valuation considers, among other factors, the stated interest rate, maturity date, conversion price, market price

of the underlying equity securities, foreign currency exchange rates, issuer credit risk, expected term, volatility, liquidity, and conversion

The convertible bond investment is classified as a Level 3 financial asset because there is no quoted price in an active market

for the identical bond and the valuation requires significant unobservable inputs, including issuer credit risk, expected term, volatility,

liquidity, conversion probability, and conversion economics.

Assets - The estimated fair values of acquired intangibles are generally determined based upon future economic benefits such

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No circumstances or events have occurred since the most recent analysis that would indicate

the need for an impairment is needed for the three months ended March 31, 2026.

the need for an impairment is needed for the six months ended June 30, 2026.

– 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.

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, 2025, and no impairment was deemed necessary for the goodwill associated with Premier Packaging

Company of approximately $ 1,769,000 .

No circumstances or events have occurred since the most recent analysis that would indicate the need for an impairment is needed for

the three months ended March 31, 2026.

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

The Company performed its annual goodwill impairment test as of December 31, 2025, and no impairment was deemed necessary for the

goodwill associated with Premier Packaging Company of approximately $ 1,769,000 .

No circumstances or events have occurred since the most

recent analysis that would indicate the need for an impairment is needed for the six months ended June 30, 2026.

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

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No circumstances or events have occurred since the most recent analysis

that would indicate the need for an impairment is needed for the three months ended March 31, 2026.

Promissory Note - The Company accounts for convertible promissory notes in accordance with

ASU 2020-06 and evaluates embedded and freestanding features under ASC 815.

Convertible notes are initially recorded at principal amount,

net of any original issue discount, debt issuance costs, and discounts arising from the allocation of proceeds to detachable warrants

or other freestanding instruments.

When a financing transaction includes multiple instruments, the Company allocates proceeds based on

the relative fair values of the instruments, or, when required, first records liability-classified instruments at fair value with residual

proceeds allocated to the remaining instruments.

The Company evaluates conversion options, redemption provisions, down-round

or anti-dilution features, most-favored-nation provisions, default rights, warrants, and other terms to determine whether separate accounting

Embedded derivatives or liability-classified instruments are measured at fair value, with changes in fair value recognized

Debt discounts, original issue discount, and issuance costs are amortized to interest expense using the effective interest

method over the contractual term.

Convertible notes are classified as current or noncurrent based on contractual maturity and settlement

For diluted earnings per share, the Company applies the if-converted method in accordance with ASC 260.

that would indicate the need for an impairment is needed for the six months ended June 30, 2026.

Promissory Note - The Company accounts for convertible promissory notes in accordance with ASU 2020-06 and evaluates embedded

and freestanding features under ASC 815.

Convertible notes are initially recorded at principal amount, net of any original issue discount,

debt issuance costs, and discounts arising from the allocation of proceeds to detachable warrants or other freestanding instruments.

When a financing transaction includes multiple instruments, the Company allocates proceeds based on the relative fair values of the instruments,

or, when required, first records liability-classified instruments at fair value with residual proceeds allocated to the remaining instruments.

Company evaluates conversion options, redemption provisions, down-round or anti-dilution features, most-favored-nation provisions, default

rights, warrants, and other terms to determine whether separate accounting is required.

Embedded derivatives or liability-classified

instruments are measured at fair value, with changes in fair value recognized in earnings.

Debt discounts, original issue discount, and

issuance costs are amortized to interest expense using the effective interest method over the contractual term.

Convertible notes are

classified as current or noncurrent based on contractual maturity and settlement provisions.

For diluted earnings per share, the Company

applies the if-converted method in accordance with ASC 260.

Combinations and 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.

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.

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diluted (loss) earnings per share is the same, as the impact of potential common shares is anti-dilutive.

For the three months ended

March 31, 2026 and 2025, there were no potential dilutive instruments issued and outstanding.

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.

For stock options and similar awards, fair value is estimated

on the grant date using an appropriate valuation model, such as the Black-Scholes option-pricing model, which requires management to

make assumptions regarding expected volatility, expected term, risk-free interest rate, expected dividends, and forfeitures.

restricted stock, restricted stock units, and common stock awards, fair value is generally based on the market price of the

Company’s common stock on the grant date.

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

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.

For the six months ended June

30, 2026 and 2025, there were no potential dilutive instruments issued and outstanding.

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.

For stock options and similar awards, fair value is estimated on the grant

date using an appropriate valuation model, such as the Black-Scholes option-pricing model, which requires management to make assumptions

regarding expected volatility, expected term, risk-free interest rate, expected dividends, and forfeitures.

For restricted stock, restricted

stock units, and common stock awards, fair value is generally based on the market price of the Company’s common stock on the grant

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.

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

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$ 4.1 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.

over the past two years and as of June 30, 2026 has negative working capital of approximately $ 39.9 million.

These factors raise substantial doubt about the Company’s ability to continue as a going concern within

one year of the date that the financial statements are issued.

from its $ 4.8 million in cash as of March 31,

2026, to continue as a going concern, the Company can generate operating cash through the sale of its $ 983,000

from its $ 4.1 million

in cash as of June 30, 2026, to continue as a going concern, the Company can generate operating cash through the sale of its $ 2.8 million

of Marketable Securities.

To continue as a going concern, historically, the Company has been able to obtain equity and/or debt-based

financing to meet its working capital needs.

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.

To continue as a going concern, historically, the Company has been able to obtain equity and/or

debt-based financing to meet its working capital needs.

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.

Management believes that the combination of cash on hand, potential proceeds from the sale of marketable securities

and real estate, additional financing, and reductions in operating expenditures will provide the Company with sufficient liquidity to

fund its operations and meet its obligations as they become due.

However, there can be no assurance that the Company will be successful

in completing asset sales, obtaining additional financing on acceptable terms, or achieving the anticipated reductions in operating expenditures .

Accordingly, management’s plans may not be sufficient to alleviate the substantial doubt about the Company’s ability to continue as a

going concern.

Party Transactions - Transactions with affiliates and other parties that meet the definition of a related party under ASC 850,

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Each of these pronouncements, as applicable, has been or will be adopted by the Company.

November 2023, the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”)

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure

through enhanced disclosures about significant segment expenses.

The amendment is effective for fiscal years beginning after December

15, 2023 and for interim periods within fiscal years beginning after December 15, 2024 and early adoption is permitted.

The amendments

should be applied retrospectively to all prior periods presented in the financial statements.

The Company has adopted the enhanced segment

disclosures for the year ended December 31, 2024.

The Company reports its segment information to reflect the manner in which the Company’s

chief operating decision maker (“CODM”) reviews and assesses performance.

The Company’s Interim Chief Executive Officer

has responsibilities as the CODM and review and assess the performance of the Company as a whole.

primary financial measures used by the CODM to evaluate performance and allocate resources are net income (loss) and operating income

The CODM uses net income (loss) and operating income (loss) to evaluate the performance of the Company’s ongoing operations

and as part of the Company’s internal planning and forecasting processes.

Information on Net loss and Operating loss is disclosed

in the Condensed Consolidated Statements of Operations.

Segment expenses and other segment items are provided to the CODM on the same

basis as disclosed in the Condensed Consolidated Statements of Operations.

CODM does not evaluate performance or allocate resources based on segment assets, and therefore such information is not presented in

the notes to the financial statements

December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures” which is intended to simplify various

aspects related to accounting for income taxes.

ASU 2023-09 removes certain exceptions to the general principles in Topic 740 and also

clarifies and amends existing guidance to improve consistent application.

The amendments in ASU 2023-09 are effective for public business

entities for fiscal years beginning after December 15, 2024, including interim periods therein.

Early adoption of the standard is permitted,

including adoption in interim or annual periods.

The adoption of this ASU did not have a material impact on the Condensed Consolidated

Financial Statements.

In November 2023, the Financial

Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic

Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure through enhanced disclosures about

significant segment expenses.

The amendment is effective for fiscal years beginning after December 15, 2023 and for interim periods within

fiscal years beginning after December 15, 2024 and early adoption is permitted.

The amendments should be applied retrospectively to all

prior periods presented in the financial statements.

The Company has adopted the enhanced segment disclosures for the year ended December

The Company reports its segment information to reflect the manner in which the Company’s chief operating decision maker

(“CODM”) reviews and assesses performance.

The Company’s Interim Chief Executive Officer has responsibilities as the

CODM and review and assess the performance of the Company as a whole.

The primary financial measures

used by the CODM to evaluate performance and allocate resources are net income (loss) and operating income (loss).

The CODM uses net income

(loss) and operating income (loss) to evaluate the performance of the Company’s ongoing operations and as part of the Company’s

internal planning and forecasting processes.

Information on Net loss and Operating loss is disclosed in the Condensed Consolidated Statements

of Operations.

Segment expenses and other segment items are provided to the CODM on the same basis as disclosed in the Condensed Consolidated

Statements of Operations.

The CODM does not evaluate

performance or allocate resources based on segment assets, and therefore such information is not presented in the notes to the financial

In December 2023, the FASB

issued ASU 2023-09, “Improvements to Income Tax Disclosures” which is intended to simplify various aspects related to accounting

for income taxes.

ASU 2023-09 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing

guidance to improve consistent application.

The amendments in ASU 2023-09 are effective for public business entities for fiscal years

beginning after December 15, 2024, including interim periods therein.

Early adoption of the standard is permitted, including adoption

in interim or annual periods.

The adoption of this ASU did not have a material impact on the Condensed Consolidated Financial Statements.

November 2024, the FASB issued ASU No.

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ASU 2024-03 to have a material effect on our consolidated financial statements taken as a whole.

November 2024, the FASB issued ASU 2024-04 (“ASU 2024-04”), Debt—Debt with Conversion and Other Options (Subtopic

Induced Conversions of Convertible Debt Instruments , which clarifies the requirements for determining whether certain settlements

of convertible debt instruments should be accounted for as induced conversions or as extinguishments.

The amendments in ASU 2024-04 are

effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting

November 2024, the FASB issued ASU 2024-04 (“ASU 2024-04”), Debt—Debt with Conversion and Other Options

(Subtopic 470-20):

Induced Conversions of Convertible Debt Instruments , which clarifies the requirements for determining whether

certain settlements of convertible debt instruments should be accounted for as induced conversions or as extinguishments.

amendments in ASU 2024-04 are effective for annual reporting periods beginning after December 15, 2025, and interim reporting

periods within those annual reporting periods.

Early adoption is permitted for entities that have adopted ASU 2020-06.

The Company is currently evaluating the effect of adopting

ASU 2024-04 on its consolidated financial statements and related disclosures.

The Company does not currently expect the adoption of this

standard to have a material impact on its consolidated financial statements.

In December 2025, the Financial Accounting Standards Board issued Accounting

Standards Update No.

adopted the amendments as effective January 1, 2026.

The adoption of ASU 2024-04 did not have a material impact on the

Company’s consolidated financial statements.

December 2025, the Financial Accounting Standards Board issued Accounting Standards Update No.

2025-11, Interim Reporting (Topic 270) .

The amendments are intended to improve interim financial reporting

disclosures and clarify the application of Topic 270.

The Company is currently evaluating the provisions of ASU 2025-11, including the

timing of adoption and the potential impact on its interim financial statement presentation and related disclosures.

The Company does

not currently expect the adoption of ASU 2025-11 to have a material impact on its consolidated financial position, results of operations,

or cash flows.

The amendments are intended to improve interim financial reporting disclosures and clarify the application of Topic 270.

is currently evaluating the provisions of ASU 2025-11, including the timing of adoption and the potential impact on its interim financial

statement presentation and related disclosures.

The Company does not currently expect the adoption of ASU 2025-11 to have a material

impact on its consolidated financial position, results of operations, or cash flows.

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

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of the related lease.

Commission revenues are generated when the Company buys and sells bond and equity securities on behalf of its customers.

Each time a customer enters into a buy or sell transaction, the Company recognizes a commission.

Commissions and related clearing expenses

are recorded on the trade date.

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.

of March 31, 2026, the Company had no unsatisfied performance obligations for contracts with an original expected duration of greater

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.

of June 30, 2026, the Company had no unsatisfied performance obligations for contracts with an original expected duration of greater

than one year.

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There were no sales commissions capitalized

as of March 31, 2026 or March 31, 2025.

as of June 30, 2026 or June 30, 2025.

and Handling Costs

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Schedule of Inventory

June 30, 2026

December 31, 2025

Finished Goods

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Inventory gross

allowance for obsolescence

Less allowance for obsolescence

Inventory net

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The outstanding

principal and interest as of March 31, 2026 and December 31, 2025, approximated $ 5,544,000 .

As of March 31, 2026 and December 31, 2025

principal and interest as of June 30, 2026 and December 31, 2025, approximated $ 5,544,000 .

As of June 30, 2026 and December 31, 2025

this note is in default and the Company has a reserve of $ 5,544,000 against the principal and interest outstanding.

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entered into a promissory note (“WUURII Note”).

Under the terms of WUURRI Note, APF at its discretion, may lend up to

the principal sum of $ 893,000

with an interest rate of 8 %,

and matured in March

2024 and was extended to April 2025 , with interest payable quarterly.

The outstanding principal and interest at March 31,

2026, and December 31, 2025 is $ 465,000

and $ 465,000 ,

respectively.

This loan is currently in default and as of March 31, 2026 the Company has a reserve of $ 465,000

against the principal and interest outstanding.

May 9, 2022, DSS PureAir and Puradigm entered into a promissory note (“Puradigm Note 1”) 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.

unpaid principal and interest are due on February 9, 2023 .

Under the terms of WUURRI Note, APF at its discretion, may lend up to the

principal sum of $ 893,000 with an interest rate of 8 %, and matured in March 2024 and was extended to April 2025 , with interest payable

The outstanding principal and interest at June 30, 2026, and December 31, 2025 is $ 465,000 and $ 465,000 , respectively.

loan is currently in default and as of June30, 2026 the Company has a reserve of $ 465,000 against the principal and interest outstanding.

May 9, 2022, DSS PureAir and Puradigm entered into a promissory note (“Puradigm Note 1”) 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

All unpaid principal and interest are due on February 9, 2023 .

This loan is currently in default.

The outstanding principal and interest

at March 31, 2026 and December 31, 2025 approximates $ 224,000 .

This note was fully reserved for as of March 31, 2026 and December 31,

The outstanding principal and

interest at June 30, 2026 and December 31, 2025 approximates $ 224,000 .

This note was fully reserved for as of June 30, 2026 and December

4, related party

Capital International LLC.

(“BMIC LLC”), a related party, entered into a promissory note (“BMIC Note 1”) 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 was due on August

The outstanding principal and interest at March 30,2026 and December 31, 2025 approximated $ 86,000 ,

and was fully reserved for as of March 31, 2026 and December 31, 2025.

DSS owns 24.9 %

of the outstanding common shares of BMIC LLC.

(“BMIC LLC”), a related party, entered into a promissory note (“BMIC Note 1”) 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 was due on August 29, 2025 .

The outstanding principal and interest at June 30, 2026 and December 31, 2025 approximated $ 86,000

and was fully reserved for as of June 30, 2026 and December 31, 2025.

DSS owns 24.9 % of the outstanding common shares of BMIC LLC.

5, related party

May 8, 2023, DSS Financial Management Inc and BMIC LLC entered into a promissory note (“BMIC Note 2”) in the principal sum of

$ 102,000 with interest at the prime rate plus 2 % with a maturity date of May 7, 2026 .

The outstanding principal and interest at March

31, 2026, and December 31, 2025 approximated $ 110,000 , and was fully reserved for as of March 31, 2026 and December 31, 2025.

May 8, 2023, DSS Financial Management Inc and BMIC LLC entered into a promissory note (“BMIC Note 2”) in the principal sum

of $ 102,000 with interest at the prime rate plus 2 % with a maturity date of May 7, 2026 .

The outstanding principal and interest at June

30, 2026, and December 31, 2025 approximated $ 110,000 , and was fully reserved for as of June 30, 2026 and December 31, 2025.

24.9 % of the outstanding common shares of BMIC LLC.

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principal and interest is due July 26, 2025.

The outstanding principal and interest as of March 31, 2026 and December 31, 2025 approximates

This note was fully reserved for as of March 31, 2026 and December 31, 2025.

The outstanding principal and interest as of June 30, 2026 and December 31, 2025 approximates

This note was fully reserved for as of June 30, 2026 and December 31, 2025.

Heng Fai Ambrose Chan, the Chairman of DSS, Inc

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is secured by certain real property situated in Collier County, Florida.

The outstanding principal and interest as of March 31, 2026,

approximately $ 199,000 with $ 199,000 classified in Current portion of notes receivable on the accompanying consolidated balance sheet.

The outstanding principal and interest as of December 31, 2025 is approximately $ 198,000 and is classified in Current portion of notes

receivable on the accompanying consolidated balance sheet.

The outstanding principal and interest as of June 30, 2026,

and December 31, 2025 was approximately $ 198,000 and $ 198,000 , respectively.

As of June 30, 2026, approximately $ 198,000 is classified

in Current notes receivable.

As of December 31, 2025, $ 198,000 is classified in Current notes receivable on the accompanying consolidated

balance sheet.

The maturity date of this note is currently being renegotiated.

2 unchanged sentences

interest due at the maturity date of March 31, 2025 .

As of March 31, 2026 and December 31, 2025, the outstanding principal and interest

As of June 30, 2026 and December 31, 2025, the outstanding principal and interest

approximated $ 135,000 .

This balance was fully reserved for as of March 31, 2026 and December 31, 2025.

This balance was fully reserved for as of June 30, 2026 and December 31, 2025.

August 29, 2024, APF entered into a promissory note (“Note 9”) with WestPark.

Note has a principal balance of $ 459,000 .

Note 14, which incurs interest at a rate of 10.0 %

with principal and interest due at the maturity date of April

As of March 31, 2026, the outstanding

principal and interest approximates $ 229,000 ,

which is classified as Current notes receivable on the accompanying consolidated balance sheet.

As of December 31, 2025, the outstanding

principal and interest approximates $ 237,000 ,

which is classified as Current notes receivable on the accompanying consolidated balance sheet.

9, which incurs interest at a rate of 10.0 % with principal and interest due at the maturity date of April 27, 2026 .

As of June 30, 2026,

the outstanding principal and interest approximates $ 231,000 , which is classified as Current notes receivable on the accompanying consolidated

balance sheet.

As of December 31, 2025, the outstanding principal and interest approximates $ 237,000 , which is classified as Current

notes receivable on the accompanying consolidated balance sheet.

The maturity date of this note is currently being renegotiated.

April 16, 2026, the Company, entered into a promissory note (“Note 10”) with an individual.

The Company loaned the principal

sum of $ 25,000 , with interest at a rate of 6.75 %, and maturity date of April 16, 2027 at which time all outstanding principal and interest

This loan is secured by certain stock in BMI Financial Group, Inc.

The outstanding principal and interest as of June 30, 2026,

and December 31, 2025 was approximately $ 25,000 and $ 0 , respectively.

As of June 30, 2026, approximately $ 25,000 is classified in Current

notes receivable.

June 23, 2026, the Company, entered into a promissory note (“Note 11”) with an individual.

The Company loaned the principal

sum of $ 25,000 , with interest at a rate of 6.75 %, and maturity date of June 23, 2027 at which time all outstanding principal and interest

This loan is secured by certain stock in BMI Financial Group, Inc.

The outstanding principal and interest as of June 30, 2026,

and December 31, 2025 was approximately $ 25,000 and $ 0 , respectively.

As of June 30, 2026, approximately $ 25,000 is classified in Current

notes receivable.

Convertible Bond Investment – related party

March 27, 2026, the Company received a convertible bond investment from True Partners Capital Holding Limited (“True

Partners”), a publicly listed company on the Hong Kong Stock Exchange and a related party of the Company.

The bond has a face

value of $ 2,450,000 , bears interest at 3.0 %

per annum, was registered on March 27, 2026, and matures on March 26, 2028, unless earlier converted, redeemed, or otherwise settled

in accordance with its terms.

On March 27, 2026, the Company

received a convertible bond investment from True Partners Capital Holding Limited (“True Partners”), a publicly listed company

on the Hong Kong Stock Exchange and a related party of the Company.

The bond has a face value of $ 2,450,000 , bears interest at 3.0 % per

annum, was registered on March 27, 2026, and matures on March 26, 2028 , unless earlier converted, redeemed, or otherwise settled in accordance

with its terms.

Interest accrues daily on a 365-day basis and is payable annually in cash.

At maturity, the outstanding principal

balance is mandatorily and automatically convertible into ordinary shares of True Partners.

True Partners is considered a related party because the Company holds a

significant equity investment in True Partners and has determined that it has the ability to exercise significant influence over True

This determination is based on the Company’s equity ownership, its additional investment through the convertible bond,

and the election of the Company’s Executive Chairman and significant stockholder, Heng Fai Ambrose Chan, to True Partners’

board of directors.

Accordingly, the Company’s receipt of the convertible bond is considered a related party transaction.

is convertible into ordinary shares of True Partners at a conversion price of HKD $ 0.10 per share, which was approximately USD $ 0.01 per

share as of both March 27, 2026 and March 31, 2026, based on the applicable exchange rate or rounded U.S.

dollar equivalent used by the

Based on the bond’s fixed currency conversion rate, the bond is convertible into approximately 190,684,000 ordinary shares

of True Partners.

accounts for the convertible bond investment at fair value and has elected the fair value option under ASC 825, Financial Instruments.

Based on a valuation performed as of March 27, 2026, the estimated fair value of the convertible bond was approximately $ 8,648,000 , consisting

of a $ 127,000 debt-like component related to the present value of contractual cash interest payments and an $ 8,521,000 equity-like conversion

feature related to the value of the shares issuable upon conversion of principal.

Based on a valuation performed as of March 31, 2026,

the estimated fair value of the convertible bond was approximately $ 8,520,000 , consisting of a $ 129,000 debt-like component and an $ 8,391,000

equity-like conversion feature.

At maturity, the outstanding principal balance

is mandatorily and automatically convertible into ordinary shares of True Partners.

True Partners is considered

a related party because the Company holds a significant equity investment in True Partners and has determined that it has the ability

to exercise significant influence over True Partners.

This determination is based on the Company’s equity ownership, and the election of the Company’s Executive Chairman and significant stockholder, Heng

Fai Ambrose Chan, to True Partners’ board of directors.

Accordingly, the Company’s receipt of the convertible bond is considered

a related party transaction.

The bond is convertible into

ordinary shares of True Partners at a conversion price of HKD $ 0.10 per share, which was approximately USD $ 0.01 per share as of both

March 27, 2026 and March 31, 2026, based on the applicable exchange rate or rounded U.S.

dollar equivalent used by the Company.

on the bond’s fixed currency conversion rate, the bond is convertible into approximately 190,684,000 ordinary shares of True Partners.

The Company accounts for the

convertible bond investment at fair value and has elected the fair value option under ASC 825, Financial Instruments.

Based on a valuation

performed as of March 27, 2026, the estimated fair value of the convertible bond was approximately $ 8,648,000 , consisting of a $ 127,000

debt-like component related to the present value of contractual cash interest payments and an $ 8,521,000 equity-like conversion feature

related to the value of the shares issuable upon conversion of principal.

Based on a valuation performed as of March 31, 2026, the estimated

fair value of the convertible bond was approximately $ 8,520,000 , consisting of a $ 129,000 debt-like component and an $ 8,391,000 equity-like

conversion feature.

The Company recorded the convertible bond investment at March 31, 2026 estimated fair value of approximately $ 8,520,000 .

$ 8,520,000 .

value of the convertible bond investment was determined in accordance with ASC 820, Fair Value Measurement.

The valuation considered,

among other factors, the contractual interest rate, maturity date, mandatory conversion terms, conversion price, market price of the underlying

True Partners ordinary shares, foreign currency exchange rates, issuer credit risk, expected term, liquidity, discount rates, and conversion

The investment is classified as a Level 3 asset within the fair value hierarchy because there is no quoted price in an active

market for the identical convertible bond and the valuation requires significant unobservable inputs, including issuer credit risk, expected

term, liquidity assumptions, discount rates, and conversion economics.

Because the convertible bond was received from a related party, the Company

evaluated the substance of the transaction, including the relationship between the parties, the nature of the consideration exchanged,

and whether the fair value of the bond exceeded the stated face amount or consideration transferred.

The Company determined that the excess

of the estimated fair value of the convertible bond over the stated face amount or consideration transferred was attributable to the related

party nature of the transaction and, accordingly, was deemed to be a contribution to capital.

As a result, the Company recorded the initial

excess fair value of approximately $ 6,198,000 as a fair value adjustment related to convertible bond received from related party within

additional paid-in capital, rather than recognizing the amount as a gain in earnings.

Subsequent changes in fair value are recognized

in earnings in accordance with the Company’s election of the fair value option under ASC 825.

As of March 31, 2026 the Company recognized

a loss of approximately $ 128,000 on the condensed consolidated statement of operations.

The fair value of the convertible

bond investment was determined in accordance with ASC 820, Fair Value Measurement.

The valuation considered, among other factors, the

contractual interest rate, maturity date, mandatory conversion terms, conversion price, market price of the underlying True Partners ordinary

shares, foreign currency exchange rates, issuer credit risk, expected term, liquidity, discount rates, and conversion economics.

The investment

is classified as a Level 3 asset within the fair value hierarchy because there is no quoted price in an active market for the identical

convertible bond and the valuation requires significant unobservable inputs, including issuer credit risk, expected term, liquidity assumptions,

discount rates, and conversion economics.

Because the convertible bond

was received from a related party, the Company evaluated the substance of the transaction, including the relationship between the parties,

the nature of the consideration exchanged, and whether the fair value of the bond exceeded the stated face amount or consideration transferred.

Because the convertible bond was issued in connection with the Company’s

additional investment in True Capital Holdings and the parties are related, the Company evaluated the difference between the fair value

of the convertible bond and the consideration transferred in accordance with the applicable U.S.

GAAP guidance.

Based on the Company’s

assessment of the economic substance of the transaction, the Company determined that the excess of the fair value of the convertible bond

over the consideration transferred represented a capital contribution and recorded approximately $ 6,198,000 in additional paid-in capital.

changes in fair value are recognized in earnings in accordance with the Company’s election of the fair value option under ASC 825.

As of March 31, 2026 the Company recognized a loss of approximately $ 128,000 on the condensed consolidated statement of operations.

On April 29, 2026, True Partner

International Limited, a subsidiary of the Company, delivered a conversion notice to True Partners to convert the full outstanding principal

amount of the $ 2,450,000 , 3.0 % convertible bond.

Pursuant to the notice, the bond was converted at a conversion price of HKD $ 0.10 per

share, resulting in the issuance of 190,683,500 ordinary shares of True Partners.

Accrued interest of approximately $ 6,000 remained payable

in cash and was not converted into shares.

Immediately prior to conversion, the Company remeasured the convertible bond to fair value.

Based on a valuation performed as of April 29, 2026, the estimated fair value of the convertible bond was approximately $ 8,647,000 , consisting

of a $ 131,000 debt-like component and an $ 8,516,000 equity-like conversion feature.

The Company recognized an increase in fair value

of approximately $ 127,000 from March 31, 2026 through the conversion date in the condensed consolidated statement of operations.

conversion, the Company derecognized the convertible bond investment and recorded the ordinary shares received as part of its equity

method investment in True Partners.

Following the conversion, the Company owned approximately 45 % of the issued and outstanding shares

of True Partners and continues to account for its investment in True Partners under the equity method of accounting.

Financial Instruments

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Schedule of Cash and Marketable Securities by Significant Investment Category

March 31, 2026

Convertible bond investment – related party

June 30, 2026

Cash and Cash

Restricted Cash

Money Market Funds

1 unchanged sentence

( 13,702,000 )

Convertible bond investment – related party

$ ( 13,702,000 )

December 31, 2025

Cash and Cash

Restricted Cash

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risk of not collecting amounts owed by customers and records its allowance for credit losses based on the results of this analysis.

of March 31, 2026 and December 31, 2025, we have reviewed the entire loan portfolio as well as all financial assets of the Company for

of June 30, 2026 and December 31, 2025, 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,

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industry portfolio reserves, and specific loan loss

For the three months ended March 31, 2026 and year ended December 31, 2025, the Company recorded a Loan loss reserve of approximately$ 7,478,000 and

$ 7,478,000 , respectively.

For the six months ended June 30, 2026, and year ended December 31, 2025, the Company recorded a Loan loss reserve of approximately

$ 7,478,000 , and $ 7,478,000 , respectively.

Loan Portfolio Reserve - Based upon the review of our loan portfolio, we do not believe that a substantial general loan portfolio

1 unchanged sentence

However, we do recognize that some inherent risks are in all loan portfolios, thus we recorded a general

contingent portfolio reserve of $ 0 and $ 196,000 of the loan portfolio loan balance as of March 31, 2026 and December 31, 2025, respectively.

contingent portfolio reserve of $ 0 and $ 0 of the loan portfolio loan balance as of June 30, 2026 and December 31, 2025, respectively.

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 March 31, 2026 and December 31, 2025.

Accordingly, we have not recorded a discretionary reserve as of June 30, 2026 and December 31, 2025.

Loan Reserves - The Company had previously identified credit weakness in Puradigm and has placed a reserve approximating $ 5,768,000

14 unchanged sentences

No additional reserves were deemed

necessary as of December 31, 2025.

additional reserves were deemed necessary as of March 31, 2026.

necessary as of June 30, 2026.

Disposal of assets

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Chan is also the majority shareholder of Alset Intl as well as the largest shareholder of

The fair value of the marketable security as of March 31, 2026 and December 31, 2025, was approximately $ 2,277,000 and $ 2,277,000 ,

respectively.

During the three months ended March 31, 2026 and 2025, the Company recorded unrealized loss of approximately $ 0 and $ 241,000 ,

The fair value of the marketable security as of June 30, 2026 and December 31, 2025, was approximately $ 1,666,000 and $ 2,277,000 ,

respectively.

Partners Capital Holding Limited, related party

Company owns 81,836,908 shares

or approximately 19.55 % of True Partners Capital Holding Limited (“True Partners”), a publicly listed company on the

Hong Kong Stock Exchange.

On February 28, 2022, the Company entered into a Stock Purchase Agreement with Alset EHome International

(“AEI”), pursuant to which AEI has agreed to sell a subsidiary holding 62,336,908 shares

of stock of True Partner Capital Holding Limited exchange for 17,570,948 shares

of common stock of the Company (the “DSS Shares”).

The Company’s Executive Chairman and a significant stockholder,

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

Further, on February 20, 2025, the

Company acquired an additional 19,500,000 shares

of True Partners.

The fair value of the marketable security as of March 31, 2026 and December 31, 2025, was approximately $ 3,600,000 and

$ 4,206,000 ,

During the six months ended June 30, 2026 and 2025, the Company recorded unrealized loss of approximately $ 610,000 and

$ 420,000 , respectively.

On March 27, 2026, the

Company acquired or received a convertible bond investment issued by True Partners with an initial fair value of approximately

$ 8,648,000 , which was adjusted to $ 8,520,000 (see Note 6) as of March 31, 2026.

During the three months ended March 31, 2026, in

connection with the Company’s additional investment in True Partners through the convertible bond and the election of Mr.

to the board of directors of True Partners, the Company determined that it has the ability to exercise significant influence over

True Partners.

Accordingly, beginning on March 27, 2026, the Company began accounting for its investment in True Partners under the

equity method of accounting.

Partners Capital Holding Limited

Company owns 272,520,408 shares or approximately 44.66 % of True Partners Capital Holding Limited (“True Partners”.

“TPCH”), a publicly

listed company on the Hong Kong Stock Exchange.

On February 28, 2022, the Company entered into a Stock Purchase Agreement with Alset

EHome International Inc.

(“AEI”), pursuant to which AEI has agreed to sell a subsidiary holding 62,336,908 shares of stock

of True Partner Capital Holding Limited exchange for 17,570,948 shares of common stock of the Company (the “DSS Shares”).

The Company’s Executive Chairman and a significant stockholder, Heng Fai Ambrose Chan is the Chairman, Chief Executive Officer

and largest shareholder of AEI.

Further, on February 20, 2025, the Company acquired an additional 19,500,000 shares of True Partners.

The fair value of the marketable security as of December 31, 2025, was approximately $ 4,206,000 .

March 27, 2026, the Company acquired or received a convertible bond investment issued by True Partners with an initial fair value of

approximately $ 8,648,000 , which was adjusted to $ 8,520,000 as of March 31, 2026.

During the three months ended March 31, 2026, in connection

with the Company’s additional investment in True Partners through the convertible bond and the election of Mr.

Chan to the board

of directors of True Partners, the Company determined that it has the ability to exercise significant influence over True Partners.

beginning on March 27, 2026, the Company began accounting for its investment in True Partners under the equity method of accounting.

a result of the change to equity method accounting, the Company reclassified its investment in True Partners from Investment in equity

securities to Investment, equity method on the consolidated balance sheet.

As of March 31, 2026, the carrying value of the Company’s

investment in True Partners, was approximately $ 3,600,000 .

Prior to the ability to exercise significant influence, the Company recognized an unrealized

loss of approximately $ 606,000 during the three months ended March 31, 2026 related to the change in fair value of the True Partners

marketable equity securities.

During the three months ended March 31, 2025, the Company recognized an unrealized loss of approximately

$ 902,000 related to the investment.

On April 29, 2026, the convertible bond was converted into

approximately 190,683,500 ordinary shares of TPCH increasing its total ownership to 272,520,408 shares or approximately 44.66 %.

prior to conversion the fair value of convertible bond approximately $ 8,647,000 , resulting in an approximate $ 127,000 gain on the change

in fair value.

As of June 30, 2026, the carrying value of the Company’s investment in True Partners, was approximately $ 11,897,000 .

Prior to the ability to exercise significant influence, the Company recognized an unrealized loss of approximately $ 606,000 during the

three months ended March 31, 2026 related to the change in fair value of True Partners’ marketable equity securities.

six months ended June 30, 2025, the Company recognized an unrealized loss of approximately $ 126,000 related to the investment.

Capital Group, LLC.

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Note to WestPark and WestPark 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 utilizing the cost method at approximately

$ 500,000 and is included in Investments on the consolidated balance sheet on March 31, 2026 December 31, 2025.

As of March 31, 2026,

and December 31, 2025 the Company has recorded no impairment losses on this investment.

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 June 30, 2026 December 31, 2025.

Capital International LLC, related party

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a Delaware corporation (“BMIF”) and BMI Capital International LLC, a Texas limited liability

company (“BMIC LLC”) whereas DSS Securities, Inc.

purchased 14.9 % membership interests in BMIC LLC 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

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 LLC 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 gain in BMIC during the three months ended March 31, 2026 was approximately $ 4,000 and a net loss for the three months ended March

31, 2025, of approximately $ 3,000 .

The Company is currently accounting for this investment under the equity method of accounting per

The Company’s portion of net loss in BMIC during the six months ended June 30, 2026 and 2025, approximated $ 13,000 and

$ 5,000 , respectively.

is a broker-dealer registered with the Securities and Exchange Commission, is a member of the Financial Industry Regulatory Authority,

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chairman of the board and another independent board member of the Company also have ownership interest in BMIC.

Technologies Asia Pacific Holdings Limited

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

was impaired in full at December 31, 2024 as it does not have a readily determined fair value.

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.

Short-Term and Long-Term Debt

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before the loan closing.

As of March 31, 2026, and December 31, 2025, the outstanding principal on the BOA Note was $ 1,783,000 and $ 1,916,000 ,

As of June 30, 2026, and December 31, 2025, the outstanding principal on the BOA Note was $ 1,647,000 and $ 1,916,000 ,

respectively and had an interest rate of 4.63 %.

As of March 31, 2026, $ 544,000 was included in the Current portion of long-term debt,

As of June 30, 2026, $ 544,000 was included in the Current portion of long-term debt,

net, and the remaining balance of approximately $ 1,103,000 is recorded as Long-term debt.

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note matures in April of 2029.

Interest expense for the three months ended March 31, 2026 and 2025 approximated $ 22,000 and $ 27,000 ,

respectively.

Interest expense for the six months ended June 30, 2026 and 2025 approximated $ 42,000 and $ 54,000 , respectively.

The BOA Note contains certain covenants that are analyzed annually.

As of March 31, 2026, Premier is in compliance with

these covenants.

As of June 30, 2026, Premier is in compliance with these covenants.

August 1, 2021, AMRE Shelton, LLC., (“AMRE Shelton”) a subsidiary of AMRE, entered into a loan agreement (“Shelton

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intangible assets with an estimated useful life of approximating 3 years.

The net book value of these assets as of March 31, 2026, and

The net book value of these assets as of June 30, 2026, and

December 31, 2025, approximated $ 6,190,000 and $ 6,231,000 , respectively.

As of March 31, 2026, the outstanding principal and interest

As of June 30, 2026, the outstanding principal and interest

of approximately $ 4,109,000 , net of $ 2,000 in deferred financing costs.

As of March 31, 2026, approximately $ 225,000 is classified as

Current portion of long-term debt, net with the remaining $ 3,940,000 classified as Current portion of long-term debt, net on the consolidated

balance sheet.

Interest expense for the three months ended March 31, 2026 and 2025 approximated $ 15,000 and $ 47,000 , respectively.

of December 31, 2025 approximately $ 226,000 of principal and accrued interest is classified as current portion of long-term debt, net,

and the remaining balance of approximately $ 4,001,000 recorded as long-term debt, net of $ 4,000 in deferred financing costs.

This agreement

matures in July of 2031.

October 13, 2021, Liquid Value Asset Management Limited (“LVAM”), a majority owned subsidiary of the Company, 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 contains an auto renewal period of three months,

with a maturity date of April 2026 as of March 31, 2026.

The BMIC Loan was automatically extended to January 2026.

As of March 31, 2026,

and December 31, 2025, the outstanding principal and interest of approximately $ 33,000 and $ 33,000 , respectively, are included in Current

portion of long-term debt – related party, net on the consolidated balance sheet.

As of June 30, 2026, approximately $ 225,000 is classified as

Current portion of long-term debt, net with the remaining $ 3,884,000 classified as long-term debt, net on the consolidated balance sheet.

Interest expense for the six months ended June 30, 2026 and 2025 approximated $ 89,000 and $ 93,000 , respectively.

As of December 31, 2025

approximately $ 226,000 of principal and accrued interest is classified as current portion of long-term debt, net, and the remaining balance

of approximately $ 4,001,000 recorded as long-term debt, net of $ 4,000 in deferred financing costs.

This agreement matures in July of

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 contains an auto

renewal period of three months, with a current maturity date of July 2026 .

As of June 30, 2026, and December 31, 2025, the outstanding

principal and interest of approximately $ 33,000 and $ 33,000 , respectively, are included in Current portion of long-term debt –

related party, net on the consolidated balance sheet.

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.

Wilson Loan contains an auto renewal period of three months, with a maturity date of April 2026 as of March 31, 2026 .

The Wilson Loan

was automatically extended to January 2026.

As of March 31, 2026, and December 31, 2025, the outstanding principal and interest of approximately

$ 145,000 and $ 145,000 , respectively, are included in Current portion of long-term debt – related party, net on the consolidated

balance sheet.

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 (sold in March 2025), and Pittsburgh, Pennsylvania for a purchase price of $ 62,000,000 .

These assets are classified

as investments, real estate on the consolidated balance sheet, and serves as collateral for the LifeCare Agreement.

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.

value of the assets acquired as of March 31, 2026 and December 31, 2025 is approximately $ 10,274,000 and $ 10,381,000 , respectively.

LifeCare Agreement calls for the principal amount of the in equal, consecutive monthly instalments 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 instalment

being payable on August 29, 2022 and subsequent instalments 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 March 31, 2026

As of March 31, 2026, the outstanding principal and interest of the LifeCare agreement approximates $ 30,287,000 and is included

Current portion of long-term debt, net on the accompanying balance sheet.

As of December 31, 2025, the outstanding principal and interest

of the LifeCare agreement approximates $ 37,401,000 and is included Current portion of long-term debt, net on the accompanying balance

Interest expense for the three months ended March 31, 2026 and 2024 approximated $ 582,000 and $ 867,000 , respectively.

is in default and demand was made for final payment to be made by December 22, 2023.

As of March 31, 2026, this amount is past due.

Wilson Loan matures on October 12, 2022 , and contains an auto renewal period of three months with a current maturity date of July 2026 .

As of June 30, 2026, and December 31, 2025, the outstanding principal and interest of approximately $ 145,000 and $ 145,000 , respectively,

are included in Current portion of long-term debt – related party, net on the consolidated balance sheet.

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 (sold in

March 2025), and Pittsburgh, Pennsylvania for a purchase price of $ 62,000,000 .

These assets are classified as investments, real estate on the consolidated balance sheet, and serves as collateral for the LifeCare

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

The net book value of the assets acquired as of June 30, 2026 is approximately $ 10,167,000 .

The LifeCare Agreement calls for the principal amount of the in equal, consecutive monthly instalments 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 instalment being payable on August 29, 2022 and subsequent instalments 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.

affective interest rate at June 30, 2026 was 7.9 %.

As of June 30, 2026, and December 31, 2025, the outstanding principal and interest of the LifeCare agreement approximates $ 38,504,000

and $ 37,401,000 , respectively.

As June 30, 2026, $ 30,187,000 is included Current portion of long-term debt, net and $ 8,317,000 is

included in Accrued interest on long-term debt on the accompanying balance sheet.

As December 31, 2025, $ 30,254,000 is included Current portion of long-term debt, net and $ 7,147,000 is included in

Accrued interest on long-term debt on the accompanying balance sheet.

Interest expense for the six months ended June 30,

2026 and 2025 approximated $ 1,171,000

and $ 1,572,000 ,

respectively.

This note is in default and demand was made for final payment to be made by December 22, 2023.

As of June 30, 2026,

this amount is past due.

March 30, 2023, Premier Packaging, a subsidiary of the Company entered into a loan and security agreement with Union Bank & Trust

3 unchanged sentences

This loan is collateralized by a Bobst Model Novacut and is guaranteed by DSS,

As of March 31, 2026, the outstanding principal and interest approximates $ 450,000 of which $ 132,000 was included in the current

As of June 30, 2026, the outstanding principal and interest approximates $ 417,000 of which $ 132,000 was included in the current

portion of long-term debt, net, and the remaining balance of approximately $ 285,000 recorded as long-term debt.

2 unchanged sentences

net, and the remaining balance of approximately $ 350,000 recorded as long-term debt.

Interest expense for the three months ended March

Interest expense for the six months ended June 30,

2026 and 2025 approximated $ 17,000 and $ 22,000 , respectively.

1 unchanged sentence

(“holder”), the Company’s largest

shareholder and a related party, bearing interest at Prime ( 7.25 % at March 31, 2026).

shareholder and a related party, bearing interest at Prime ( 6.75 % at June 30, 2026).

The first 12 months’ interest is to be paid

14 unchanged sentences

related period.

The outstanding principal and interest, approximates $ 520,000 and is included in Current portion of long-term debt, net

on the accompanying consolidated balance sheet at March 31, 2026.

The outstanding principal and interest, approximates $ 529,000 and is included in Convertible note payable, related party

on the accompanying consolidated balance sheet at June 30, 2026.

The outstanding principal and interest, approximates $ 512,000 and is

1 unchanged sentence

Interest expense

for the three months ended March 31, 2026 and 2025 approximated $ 8,000 and $ 0 , respectively.

March 26, 2026, the Company issued a $ 2,450,000 convertible promissory note to Alset International Limited (“AIL”), a related

The note bears interest at 3.0 % per annum, matures five years from issuance, and is convertible at any time into shares of the

Company’s common stock at a conversion price of $ 0.74 per share.

Interest is payable at maturity either in cash or shares of common

stock, at the holder’s election.

The note also contains a most favored nation provision allowing AIL to exchange the note for a

subsequent convertible instrument issued by the Company if AIL determines that such instrument contains more favorable terms.

a related party because the Company owns approximately 4% of AIL’s outstanding shares, and the Company’s Chairman is the

Executive Director, Chief Executive Officer, majority shareholder of AIL, and the largest shareholder of the Company.

In connection with

the note, the Company issued AIL a warrant to purchase up to 16,554,055 shares of the Company’s common stock at an exercise price

of $ 0.93 per share.

for the six months ended June 30, 2026 and 2025 approximated $ 17,000 and $ 0 , respectively.

March 26, 2026, the Company issued a $ 2,450,000

convertible promissory note to Alset International Limited (“AIL”), a related party.

The note bears interest at 3.0 %

per annum, is payable on demand by Alset International Limited, or if the demand is not sooner made, is payable on the earliest to occur of (i) five years from issuance;

acceleration of the note upon occurrence of an event of default;

(iii) upon full conversion of the note;

or (iv) upon repurchase of the

note by the Company.

This note is convertible

at any time into shares of the Company’s common stock at a conversion price of $ 0.74

Interest is payable at maturity either in cash or shares of common stock, at the holder’s election.

The note also

contains a most favored nation provision allowing AIL to exchange the note for a subsequent convertible instrument issued by the

Company if AIL determines that such instrument contains more favorable terms.

AIL is a related party because the Company owns

approximately 4% of AIL’s outstanding shares, and the Company’s Chairman is the Executive Director, Chief Executive

Officer, majority shareholder of AIL, and the largest shareholder of the Company.

In connection with the note, the Company issued

AIL a warrant to purchase up to 16,554,055

shares of the Company’s common stock at an exercise price of $ 0.93

The warrant expires five years from the issuance date.

The Company evaluated the conversion feature, most favored

nation provision, and warrant under ASC 815, ASC 815-40, and ASC 480 and concluded that no derivative liability was required.

The conversion

feature qualified for the scope exception for instruments indexed to and classified in the Company’s own equity, and the warrant

was classified as equity because it is share-settled, contains a fixed share limit, does not require net cash settlement, and the Company

has sufficient authorized and unissued shares to settle the warrant.

The Company allocated the $2,450,000 proceeds between the convertible

note and warrant based on their relative fair values.

The Company evaluated the conversion feature, most favored nation

provision, and warrant under ASC 815, ASC 815-40, and ASC 480 and concluded that no derivative liability was required.

conversion feature qualified for the scope exception for instruments indexed to and classified in the Company’s own equity,

and the warrant was classified as equity because it is share-settled, contains a fixed share limit, does not require net cash

settlement, and the Company has sufficient authorized and unissued shares to settle the warrant.

The Company allocated the $2,450,000 proceeds between the convertible note and warrant based on their relative fair values.

The warrant valuation was determined using a Black-Scholes option-pricing model.

Significant valuation inputs included the Company’s common stock price of $0.91 per share, exercise price of $0.93 per share, expected

term of 5.0 years, risk-free rate of 4.0%, selected volatility of 85.0%, expected dividend rate of 0.0%, and 16,554,055 warrants outstanding.

Significant valuation inputs included the Company’s common stock price of $0.91 per share, exercise price of $0.93 per share, expected term of 5.0 years, risk-free rate of 4.0%, selected volatility of 85.0%, expected dividend rate of 0.0%, and 16,554,055 warrants outstanding.

Based on these inputs, the calculated warrant value was $0.63 per warrant, resulting in an indicated fair value of $10,368,000.

value of the convertible note was determined using valuation techniques that considered the contractual note terms, conversion feature,

most favored nation provision, Company-specific credit risk, market interest rates, expected volatility, and probability-weighted conversion

The fair value of the convertible note was determined using valuation techniques that considered the contractual note terms, conversion feature, most favored nation provision, Company-specific credit risk, market interest rates, expected volatility, and probability-weighted conversion scenarios.

The valuation considered two scenarios:

a no subsequent convertible instrument issuance before expiration scenario, with an

indicated value of $3,418,000.

For purposes of allocating the $2,450,000 proceeds at issuance, the Company used the relative fair values

of the warrant and convertible note.

Accordingly, $1,843,000 was allocated to the warrant and recorded in additional paid-in capital,

and $607,000 was allocated to the note.

The allocation resulted in a debt discount of $1,843,000, which will be amortized to interest

expense over the five-year term of the note using the effective interest method.

As of March 31, 2026, the note had a principal amount

of $2,450,000, unamortized debt discount of approximately $1,843,000 and a net carrying amount of approximately $607,000.

The debt discount

is being amortized to interest expense over the five-year contractual term of the note using the effective interest method.

summary of scheduled principal payments of long-term debt, not including revolving lines of credit, subsequent to March 31, 2026, are

Schedule of Notes Payable and Long-term Debt

Notes payable

a no subsequent convertible instrument issuance before expiration scenario, with an indicated value of $3,418,000.

For purposes of allocating the $2,450,000 proceeds at issuance, the Company used the relative fair values of the warrant and convertible note.

Accordingly, $1,843,000 was allocated to the warrant and recorded in additional paid-in capital, and $607,000 was allocated to the note.

The allocation resulted in a debt discount of $1,843,000, which will be amortized to interest expense over the five-year term of the note using the effective interest method.

As of June 30, 2026, the note had a principal amount of $2,450,000, unamortized debt discount of approximately $1,792,000 and a net carrying amount of approximately $658,000.

The debt discount is being amortized to interest expense over the five-year contractual term of the note using the effective interest method.

June 23, 2026, the Company issued a $ 1,000,000 convertible promissory note to Alset, Inc.

(“Alset”), a related party, and

received aggregate proceeds of $ 1,000,000 .

The note bears interest at 3.0 % per annum, calculated based on the actual number of days elapsed

over a 360-day year, is payable on demand by Alset, and otherwise matures on June 23, 2031 .

The outstanding principal and accrued interest

are convertible into shares of the Company’s common stock at a conversion price of $ 0.45 per share, subject to required stockholder

approval and customary anti-dilution adjustments.

Interest is payable at maturity either in cash or shares of common stock, at the holder’s

Beginning June 23, 2027, the Company may redeem all or a portion of the outstanding principal without penalty.

Alset is a related

party due to common control and overlapping directors and officers, and the transaction is disclosed in accordance with ASC 850-10-50.

In connection with the note, the Company issued Alset warrants to purchase up to 17,777,776 shares of the Company’s common stock

at an exercise price of $ 0.50 per share.

The warrants are immediately exercisable and expire on June 23, 2029.

The Company evaluated

the conversion feature, holder demand provision, issuer redemption provision, and warrants under ASC 470-20, ASC 815-15, ASC 815-40,

and ASC 480 and concluded that no derivative liability was required.

The conversion feature qualified for the scope exception for instruments

indexed to and classified in the Company’s own equity.

The holder demand and issuer redemption provisions were determined to be

clearly and closely related to the debt host.

The warrants were classified as equity because they are share-settled, have a fixed exercise

price and fixed share limit, do not require net cash settlement, and the Company has sufficient authorized and unissued shares to settle

the warrants.

Accordingly, the warrants were recorded in additional paid-in capital and are not subsequently remeasured while they continue

to qualify for equity classification.

The Company allocated the $1,000,000 of proceeds between the convertible note and warrants based on their relative fair values in accordance with ASC 470-20-30-1 and ASC 470-20-30-2.

The warrant valuation was determined using a Black-Scholes option-pricing model.

Significant valuation inputs included the Company’s common stock price of $0.61 per share, exercise price of $0.50 per share, expected term of 3.0 years, risk-free interest rate of 4.2%, selected volatility of 85.0%, expected dividend rate of 0.0%, and 17,777,776 warrants outstanding.

Based on these inputs, the calculated warrant value was $0.37 per warrant, resulting in an indicated fair value of $6,651,000.

The fair value of the convertible note at issuance was determined using a binomial lattice model that considered the contractual note terms, conversion feature, Company-specific credit risk, market interest rates, expected volatility, and the Company’s redemption right.

Significant valuation inputs included the Company’s common stock price of $0.61 per share, conversion price of $0.45 per share, contractual term of 5.0 years, risk-free interest rate of 4.2%, selected volatility of 85.0%, and discount rate of 13.25%.

Based on these inputs, the indicated fair value of the convertible note at issuance was $1,531,000.

For purposes of allocating the $1,000,000 of proceeds at issuance, the Company used the relative fair values of the warrants and convertible note.

Accordingly, $813,000 was allocated to the warrants and recorded in additional paid-in capital, and $187,000 was allocated to the note.

The allocation resulted in an initial debt discount of $813,000, which is being amortized to interest expense over the five-year contractual term of the note using the effective interest method.

As of June 30, 2026, the note had a principal amount of $1,000,000, an unamortized debt discount of approximately $812,000, and a net carrying amount of approximately $188,000.

summary of scheduled principal payments of long-term and current debt, not including revolving lines of credit, convertible notes

and notes payable – related party subsequent to June 30, 2026, are as follows:

of Long-Term And Current Debt

- related party

summary of scheduled principal payments of long-term and current debt, not including revolving lines of credit, convertible notes and

notes payable – related party subsequent to December 31, 2025, are as follows:

Convertible note payable

4 unchanged sentences

Company has operating leases predominantly for operating facilities.

As of March 31, 2026, the remaining lease terms on our operating

leases range from less than one to three years.

As of June 30, 2026, the remaining lease terms on our operating

leases range from less than one to nine years.

Renewal options to extend our leases have not been exercised due to uncertainty.

4 unchanged sentences

There are no significant finance leases as

of March 31, 2026.

minimum lease payments as of March 31, 2026 are as follows:

of June 30, 2026.

minimum lease payments as of June 30, 2026 are as follows:

Minimum Lease Payments

of Lease Liability:

Total lease payments

Less imputed interest

( 1,235,000 )

Present value of remaining lease payments

Present value of remaining

lease payments

Weighted average remaining lease term (years)

Weighted average discount

cash paid for leases during the three months ended March 31, 2026 and 2025 approximated $ 212,000 and $ 220,000 , respectively.

Weighted average discount rate

cash paid for leases during the six months ended June 30, 2026 and 2025 approximated $ 426,000 and $ 440,000 , respectively.

Commitments and Contingencies

3 unchanged sentences

In exchange, the Licensee shall pay the Company a royalty of 5.5 % of net sales.

If not terminated

under terms of the agreement, the Equivir License expires the later of a) expiration date of the last to expire valid claim comprising

the licensed patents, or (b) twelve (12) years from the date of first commercial sale.

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 March 31, 2026 and December 31, 2025, a liability of $ 0 has been recorded in relation to the Equivir License.

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 June 30, 2026 and December 31, 2025, a liability of $ 0 has been recorded in relation to the

Equivir License.

Agreement - On August 15, 2018, the Impact BioMedical entered into Royalty Agreement with Chemia Corporation (“Chemia”)

16 unchanged sentences

by the Company towards patent application and licensing should be reimbursed to the Company before any royalty payments are made.

the three months ended March 31, 2026 and 2025, there were no reimbursements or royalties paid to the Company and the Company cannot

be assured that Chemia’s efforts will end up in any future sales of the technology.

the six months ended June 30, 2026 and 2025, there were no reimbursements or royalties paid to the Company and the Company cannot be

assured that Chemia’s efforts will end up in any future sales of the technology.

Agreements – Impact BioMedical has an employment agreement with it CEO Frank Heuszel in which Mr.

agreement contains a mandatory bonus clause of $ 150,000

for the first year of the employment term, beginning September 2024, $ 100,000

for the second year of the employment term, beginning September 2025, and $ 100,000

for the third year of the employment term, beginning September 2026.

As of March 31, 2026, approximately $ 96,000

is accrued for year one and year two of Mr.

Heuszel’s agreement

contains a mandatory bonus clause of $ 150,000 for the first year of the employment term, beginning September 2024, $ 100,000 for the second

year of the employment term, beginning September 2025, and $ 100,000 for the third year of the employment term, beginning September 2026.

As of June 30, 2026, approximately $ 96,000 and $ 50,000 is accrued for year one and year two of Mr.

Heuszel’s bonus, respectively.

As of December 31, 2025, approximately $ 96,000

is accrued for year one of Mr.

Heuszel’s bonus and $ 25,000

for the second year of Mr.

As of December 31, 2025, approximately $ 96,000 is accrued for year one of Mr.

Heuszel’s bonus and $ 25,000 for the second year of

Heuszel’s bonus.

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March 21, 2025, DSS, the parent company of Impact Biomedical, Inc.

completed the sale of 499,800

shares of Impact Biomedical common stock.

These shares were acquired by DSS during Impact’s initial public offering on

September 16, 2024.

The sale of these shares, which were previously held by DSS as part of its ownership interest in Impact, was

completed for a total value of $ 1,500,000 ,

of which $ 205,000 has been classified as non-controlling interest in subsidiary, which represents the consideration received from

the transaction.

With this sale, the shares are now publicly held and are no longer held by DSS.

completed the sale of 499,800 shares of Impact Biomedical common stock.

These shares were acquired by DSS during Impact’s initial public offering on September 16, 2024.

The sale of these shares, which

were previously held by DSS as part of its ownership interest in Impact, was completed for a total value of $ 1,500,000 , of which $ 205,000

has been classified as non-controlling interest in subsidiary, which represents the consideration received from the transaction.

this sale, the shares are now publicly held and are no longer held by DSS.

February 4, 2026, DSS entered into an underwriting agreement (the “Underwriting Agreement”) with Aegis Capital Corp.

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and consultants.

Such awards include option grants, warrant grants, and restricted stock awards On February 6, 2025, as a bonus for compensation awarded to Heng Fai Holdings Limited (“HFHL”), a Hong

Kong Company, which is beneficially owned by Mr.

Heng Fai Ambrose Chan, Director of DSS, Inc., and pursuant to DSS, Inc’s.

Employee, Director and Consultant Equity Incentive Plan (the “Plan”), HFHL was awarded 1,000,000 shares of the Company’s

common stock, approximating $ 870,000 , under the Plan, for strategic planning and merger and acquisition services rendered at the beginning

Such awards include option grants, warrant grants, and restricted stock awards On February 6, 2025, as a bonus for compensation

awarded to Heng Fai Holdings Limited (“HFHL”), a Hong Kong Company, which is beneficially owned by Mr.

Heng Fai Ambrose Chan,

Director of DSS, Inc., and pursuant to DSS, Inc’s.

2020 Employee, Director and Consultant Equity Incentive Plan (the “Plan”),

HFHL was awarded 1,000,000 shares of the Company’s common stock, approximating $ 870,000 , under the Plan, for strategic planning

and merger and acquisition services rendered at the beginning of 2025.

The issuance was approved by the board of directors on January

During the three months ended March 31, 2026 there were

no such awards.

During the three and six months ended June 30, 2026 there were no such awards.

BioMedical, Inc.

Transaction - On February 26, 2025, Impact BioMedical issued 36,433

shares of the its common stock as payment of legal

fees incurred associated with Impact’s IPO, registration of shares associated with its equity incentive plan as well as other related

Transaction - On February 26, 2025, Impact BioMedical issued 36,433 shares of the its common stock as payment of legal fees incurred

associated with Impact’s IPO, registration of shares associated with its equity incentive plan as well as other related services.

The legal fees received were valued at approximately $ 29,000 .

February 25, 2025, the Company completed the acquisition of certain assets owned by DSS Pure Air, Inc.

(DSS PureAir”), a related

party, for $ 1,150,000 to be paid by 545,024 shares of the Company’s common stock calculated on a 10-day VWAP.

Assets acquired included

accounts receivable, inventory and intellectual property of the Celios air purification system.

February 26, 2025, the Company issued 36,433 shares of the Company’s common stock as payment of legal fees incurred associated

with the Company’s initial public offering (“IPO”), registration of shares associated with its equity incentive plan

as well as other related services.

June 23, 2025, the Company issued 100,000 shares of the Company’s common stock as payment of legal fees incurred associated with

the Company’s merger and share exchange agreement with Dr.

Ashleys Limited.

October 16, 2025, the Company converted its Note payable, related party to 31,939,778 shares common stock as agreed upon by the Company

and DSS (lender).

Compensation – IBO records stock-based payment expense related to options and warrants based on the grant date fair

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Impact recorded stock-based compensation expense of approximately $ 2,000

for the three month and year ended March 31, 2025 and is included in Sales, general and administrative compensation (inclusive of

stock-based compensation) on the accompanying Statement of Operations.

These options were forfeited during the fourth quarter of

and $ 4,000 for the three and six month and year ended June 30, 2025, respectively, and is included in Sales, general and administrative

compensation (inclusive of stock-based compensation) on the accompanying Statement of Operations.

January 2026, the Impact BioMedical granted and issued 3,200,000

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Impact Biomedical recorded

stock-based compensation expense of approximately $ 1,440,000 , of which $ 158,000 has been classified as non-controlling interest in subsidiary,

for the three months ended March 31, 2026, and is included in Sales, general and administrative compensation (inclusive of

stock-based compensation) on the accompanying Condensed Consolidated Statement of Operations.

stock-based compensation expense of approximately $ 1,440,000 ,

of which $ 158,000

has been classified as non-controlling interest in subsidiary, for the three and six months ended June 30, 2026, and is included in

Sales, general and administrative compensation (inclusive of stock-based compensation) on the accompanying Condensed Consolidated

Statement of Operations.

Supplemental Cash Flow Information

following table summarizes supplemental cash flows for the three months ended March 31, 2026 and 2025:

Schedule of Supplemental Cash Flow Information

paid for interest

investing and financing activities:

issued in lieu of cash as payment for legal services

Stock-based compensation

following table summarizes supplemental cash flows for the six months ended June 30, 2026 and 2025:

of Supplemental Cash Flow Information

Cash paid for interest

Non-cash investing and financing activities:

Fair value adjustment related to convertible bond received from related party

Conversion of convertible bond investment – related party into equity

method investment

Transfer of investment in equity securities to equity method investment

upon obtaining significant influence

Issuance of warrants in connection with convertible promissory note from related party

Segment Information

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a result of this CODM realignment, Direct Marketing is no longer a reportable segment and is now reported within Corporate and Other

or the year ended December 31, 2025 and the three months ended March 31, 2026.

This change did not impact consolidated revenue, consolidated net income (loss), total assets,

or cash flows for any period presented;

it only impacted the presentation of segment information.

Segment information for prior

periods presented has been recast to conform to the current-period segment presentation.

Our four reporting segments are:

or the year ended December 31, 2025 and the three and six months ended June 30, 2026.

This change did not impact consolidated

revenue, consolidated net income (loss), total assets, or cash flows for any period presented;

it only impacted the presentation of

segment information.

Segment information for prior periods presented has been recast to conform to the current-period segment

presentation.

reporting segments are:

(“Premier”) Premier Packaging Corporation provides custom packaging services and serves clients in the

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mutual funds management.

information concerning the Company’s operations by reportable segment for the three months ended March 31, 2026 and 2025

is as follows.

The Company relies on intersegment cooperation and management does no t represent that these segments, if operated independently,

would report the results contained herein:

information concerning the Company’s operations by reportable segment for the six months ended June 30, 2026 and 2025 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

Three Months Ended March 31, 2026

Months Ended June 30, 2026

Biotechnology

Cost of Revenue

Gross profit (loss)

profit (loss)

income (loss)

( 1,171,000 )

Operating expense

Operating income (loss)

( 3,786,000 )

income (expense)

( 1,083,000 )

( 1,249,000 )

income (loss) from operations before taxes

$ ( 984,000 )

Other income (expense)

Net income (loss) from

operations before taxes

$ ( 695,000 )

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$ ( 5,035,000 )

Months Ended June 30, 2025

Biotechnology

profit (loss)

income (loss)

( 1,191,000 )

Three Months Ended March 31, 2025

( 3,425,000 )

income (expense)

income (loss) from operations before taxes

$ ( 597,000 )

$ ( 470,000 )

$ ( 1,188,000 )

$ ( 814,000 )

$ ( 2,607,000 )

Months Ended June 30, 2026

Biotechnology

Cost of revenue

Gross profit (loss)

Operating expense

Operating income (loss)

profit (loss)

( 1,780,000 )

( 2,118,000 )

income (loss)

( 2,130,000 )

Other income (expense)

( 2,995,000 )

( 2,429,000 )

Net income (loss) from

operations before taxes

( 1,561,000 )

( 9,274,000 )

income (expense)

( 2,151,000 )

( 1,988,000 )

income (loss) from operations before taxes

$ ( 2,189,000 )

$ ( 114,000 )

$ ( 2,988,000 )

$ ( 2,259,000 )

$ ( 3,712,000 )

$ ( 11,262,000 )

Months Ended June 30, 2025

Biotechnology

profit (loss)

income (loss)

( 1,073,000 )

( 2,244,000 )

( 1,560,000 )

( 1,952,000 )

( 7,151,000 )

income (expense)

income (loss) from operations before taxes

$ ( 1,148,000 )

$ ( 738,000 )

$ ( 2,198,000 )

$ ( 2,530,000 )

$ ( 1,355,000 )

$ ( 7,969,000 )

following tables disaggregate our business segment revenues by major source:

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Products Revenue Information:

ended March 31, 2026

months ended June 30, 2026

Packaging Printing and Fabrication

Commercial and Security Printing

Real Property Rental Income

Real Property Rental

Printed Products Revenue

ended March 31, 2025

months ended June 30, 2025

Packaging Printing and Fabrication

Commercial and Security Printing

Real Property Rental Income

Real Property Rental

Printed Products Revenue

months ended June 30, 2026

Packaging Printing and Fabrication

Commercial and Security Printing

Real Property Rental

Printed Products Revenue

months ended June 30, 2025

Packaging Printing and Fabrication

Commercial and Security Printing

Real Property Rental

Printed Products Revenue

Lending Revenue Information:

ended March 31, 2026

months ended June 30, 2026

Net investment

Commercial Lending Revenue

ended March 31, 2025

months ended June 30, 2025

Net Investment

Commercial Lending Revenue

months ended June 30, 2026

Net investment

Commercial Lending Revenue

months ended June 30, 2025

Net Investment

Commercial Lending Revenue

Biotechnology

Revenue Information:

ended March 31, 2026

Retail internet

months ended June 30, 2026

internet sales

Biotechnology Revenue

ended March 31, 2025

Retail internet

months ended June 30, 2025

internet sales

Biotechnology Revenue

Securities Revenue Information:

ended March 31, 2026

months ended June 30, 2026

internet sales

Biotechnology Revenue

months ended June 30, 2025

internet sales

Biotechnology Revenue

Revenue Information:

months ended June 30, 2026

Rental income

1 unchanged sentence

Securities Revenue

ended March 31, 2025

months ended June 30, 2025

Rental income

1 unchanged sentence

Securities Revenue

months ended June 30, 2026

Rental income

Commission income

Securities Revenue

months ended June 30, 2025

Rental income

Commission income

Securities Revenue

Related Party Transactions

8 unchanged sentences

Chan is also the majority shareholder of Alset Intl as well as the largest shareholder of

The fair value of the marketable security as of March 31, 2026 and December 31, 2025, was approximately $ 2,277,000 and $ 2,467,000 ,

The fair value of the marketable security as of June 30, 2026 and December 31, 2025, was approximately $ 1,666,000 and $ 2,277,000 ,

respectively.

During the three months ended March 31, 2026 and 2025, the Company recorded unrealized loss of approximately $ 0 and $ 241,000 ,

During the six months ended June 30, 2026 and 2025, the Company recorded unrealized loss of approximately $ 610,000 and

$ 420,000 , respectively.

3 unchanged sentences

a Delaware corporation (“BMIF”) and BMI Capital International LLC, a Texas limited liability

company (“BMIC LLC”) whereas DSS Securities, Inc.

purchased 14.9 % membership interests in BMIC LLC 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

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 LLC 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 gain in BMIC during the three months ended March 31, 2026 was approximately $ 4,000 and a net loss for the three months ended March

31, 2025, of approximately $ 3,000 .

Company owns 81,836,908 shares or approximately 19.55 % of True Partners

Capital Holding Limited (“True Partners”), a publicly listed company on the Hong Kong Stock Exchange.

On February 28, 2022,

the Company entered into a Stock Purchase Agreement with Alset EHome International Inc.

(“AEI”), pursuant to which AEI has

agreed to sell a subsidiary holding 62,336,908 shares of stock of True Partner Capital Holding Limited exchange for 17,570,948 shares

of common stock of the Company (the “DSS Shares”).

The Company’s Executive Chairman and a significant stockholder, Heng

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

Further, on February 20, 2025, the Company acquired

an additional 19,500,000 shares of True Partners.

The fair value of the marketable security as of March 31, 2026 and December 31, 2025,

was approximately $ 3,600,000 and $ 4,206,000 , respectively.

On March 27, 2026, the Company acquired or received a convertible bond investment

issued by True Partners with an initial recorded value of approximately $ 2,450,000 (see Note 6).

During the three months ended March 31,

2026, in connection with the Company’s additional investment in True Partners through the convertible bond and the election of Mr.

Chan to the board of directors of True Partners, the Company determined that it has the ability to exercise significant influence over

True Partners.

Accordingly, beginning on March 27, 2026, the Company began accounting for its investment in True Partners under the equity

method of accounting.

As a result of the change to equity method accounting, the Company reclassified its investment in True Partners

from Investment in equity securities to Investment, equity method on the consolidated balance sheet.

As of March 31, 2026, the carrying

value of the Company’s investment in True Partners, was approximately $ 3,600,000 .

Prior to the ability to exercise significant influence,

the Company recognized an unrealized loss of approximately $ 606,000 during the three months ended March 31, 2026 related to the change

in fair value of the True Partners marketable equity securities.

During the three months ended March 31, 2025, the Company recognized

an unrealized loss of approximately $ 902,000 related to the investment.

The Company is currently accounting for this investment under the equity method of accounting per

The Company’s portion of net loss in BMIC during the six months ended June 30, 2026 and 2025, approximated $ 13,000 and

$ 5,000 , respectively.

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.

Capital International LLC.

(“BMIC LLC”), a related party, entered into a promissory note (“Note 4”) 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 was due on August 29, 2025 .

The outstanding principal and interest at March 30,2026 and December 31, 2025 approximated $ 86,000 ,

and was fully reserved for as of March 31, 2026 and December 31, 2025.

(“BMIC LLC”), a related party, entered into a promissory note (“BMIC Note 1”) 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 was due on August 29, 2025 .

The outstanding principal and interest at June 30, 2026 and December 31, 2025 approximated $ 86,000

and was fully reserved for as of June 30, 2026 and December 31, 2025.

DSS owns 24.9 % of the outstanding common shares of BMIC LLC.

May 8, 2023, DSS Financial Management Inc and BMIC LLC entered into a promissory note (“Note 5”) in the principal sum of

$ 102,000 with interest at the prime rate plus 2 % with a maturity date of May 7, 2026 .

The outstanding principal and interest at March

31, 2026, and December 31, 2025 approximated $ 110,000 , and was fully reserved for as of March 31, 2026 and December 31, 2025.

May 8, 2023, DSS Financial Management Inc and BMIC LLC entered into a promissory note (“BMIC Note 2”) in the principal sum

of $ 102,000 with interest at the prime rate plus 2 % with a maturity date of May 7, 2026.

The outstanding principal and interest at June

30, 2026, and December 31, 2025 approximated $ 110,000 , and was fully reserved for as of June 30, 2026 and December 31, 2025.

24.9 % of the outstanding common shares of BMIC LLC.

4 unchanged sentences

principal and interest is due July 26, 2025.

The outstanding principal and interest as of March 31, 2026 and December 31, 2025 approximates

This note was fully reserved for as of March 31, 2026 and December 31, 2025.

The outstanding principal and interest as of June 30, 2026 and December 31, 2025 approximates

This note was fully reserved for as of June 30, 2026 and December 31, 2025.

Heng Fai Ambrose Chan, the Chairman of DSS, Inc

is also the on the board of directors of VEII.

October 13, 2021, Liquid Value Asset Management Limited (“LVAM”), a majority owned subsidiary of the Company, 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 contains an auto renewal period of three months,

with a maturity date of April 2026 as of March 31, 2026 .

The BMIC Loan was automatically extended to January 2026.

As of March 31, 2026,

and December 31, 2025, the outstanding principal and interest of approximately $ 33,000 and $ 33,000 , respectively, are included in Current

portion of long-term debt – related party, net on the consolidated balance sheet.

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 contains an auto

renewal period of three months, with a current maturity date of July 2026 .

As of June 30, 2026, and December 31, 2025, the outstanding

principal and interest of approximately $ 33,000 and $ 33,000 , respectively, are included in Current portion of long-term debt –

related party, net on the consolidated balance sheet.

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.

Wilson Loan contains an auto renewal period of three months, with a maturity date of April 2026 as of March 31, 2026 .

The Wilson Loan

was automatically extended to January 2026.

As of March 31, 2026, and December 31, 2025, the outstanding principal and interest of approximately

$ 145,000 and $ 145,000 , respectively, are included in Current portion of long-term debt – related party, net on the consolidated

balance sheet.

February 6, 2025, as a bonus for compensation awarded to Heng Fai Holdings Limited (“HFHL”), a Hong Kong Company, which is

beneficially owned by Mr.

Heng Fai Ambrose Chan, Director of DSS, Inc., and pursuant to DSS, Inc’s.

2020 Employee, Director and

Consultant Equity Incentive Plan (the “Plan”), HFHL was awarded 1,000,000 shares of the Company’s common stock under

the Plan, for services rendered.

The issuance was approved by the board of directors on January 31, 2025.

Wilson Loan matures on October 12, 2022, and contains an auto renewal period of three months with a current maturity date of July 2026 .

As of June 30, 2026, and December 31, 2025, the outstanding principal and interest of approximately $ 145,000 and $ 145,000 , respectively,

are included in Current portion of long-term debt – related party, net on the consolidated balance sheet.

August of 2025, DSS issued a $ 500,000 convertible promissory note to Alset, Inc.

18 unchanged sentences

The outstanding principal and interest, approximates $ 529,000 and is included in Current portion of long-term debt, net

on the accompanying consolidated balance sheet at March 31, 2026.

on the accompanying consolidated balance sheet at June 30, 2026.

The outstanding principal and interest, approximates $ 512,000 and is

1 unchanged sentence

Interest expense

for the three months ended March 31, 2026 and 2025 approximated $ 8,000 and $ 0 , respectively.

February 6, 2025, as a bonus for compensation awarded to Heng Fai Holdings Limited (“HFHL”), a Hong Kong Company, which is

beneficially owned by Mr.

Heng Fai Ambrose Chan, Director of DSS, Inc., HFHL was awarded 1,000,000 shares of the Company’s common

stock, approximating $ 870,000 .

The issuance was approved by the board of directors on January 31, 2025.

March 21, 2025, DSS, the parent company of Impact Biomedical, Inc.

completed the sale of 499,800 shares of Impact Biomedical common stock.

These shares were acquired by DSS during Impact’s initial public offering on September 16, 2024.

The sale of these shares, which

were previously held by DSS as part of its ownership interest in Impact, was completed for a total value of $ 1,500,000 , which represents

the consideration received from the transaction.

With this sale, the shares are now publicly held and are no longer held by DSS.

April 4, 2025, DSS, the parent company of Impact Biomedical, Inc.

completed the sale of 890,800 shares of Impact Biomedical common stock.

The sale of these shares, which were previously held by DSS as part of its ownership interest in Impact, was completed for a total approximate

value of $ 845,000 , which represents the consideration received from the transaction.

With this sale, the shares are now publicly held

and are no longer held by DSS.

May 22, 2025, DSS, the parent company of Impact Biomedical, Inc.

completed the sale of 115,600 shares of Impact Biomedical common stock.

The sale of these shares, which were previously held by DSS as part of its ownership interest in Impact, was completed for a total approximate

value of $ 63,000 , which represents the consideration received from the transaction.

With this sale, the shares are now publicly held

and are no longer held by DSS.

May 23, 2025, DSS, the parent company of Impact Biomedical, completed the sale of 45,400 shares of Impact Biomedical common stock.

sale of these shares, which were previously held by DSS as part of its ownership interest in Impact, was completed for a total approximate

value of $ 24,000 , which represents the consideration received from the transaction.

With this sale, the shares are now publicly held

and are no longer held by DSS.

March 26, 2026, Alset International Limited (“AIL”), a majority-owned subsidiary of Alset Inc.

(the “Company”)

entered into a securities purchase agreement (the “SPA”) with DSS pursuant to which AIL will loan DSS $ 2,450,000 , in exchange

for a convertible promissory note (the “Note”) and warrants to purchase 16,554,055 shares of DSS common stock (the “Warrants”).

The Note, SPA, and Warrants are collectively referred to herein as the “Transaction Documents.” The Note will bear a simple

interest rate of 3 % per annum.

Under the terms of the Note, AIL may convert any outstanding principal and interest into shares of DSS

common stock at $ 0.74 per share upon notice prior to maturity of the Note five ( 5 ) years from the date of thereof.

The Warrants to be

issued to AIL are to purchase up to 16,554,055 shares of DSS common stock at an exercise price of $ 0.93 per share.

The Warrants expire

on their fifth anniversary.

2026, the Company received a convertible bond from True Partners Capital Holding Limited (“True Partners”), a related

The bond has a face value of $ 2,450,000 ,

bears interest at 3.0 %

per annum, matures on March 27, 2028, and is mandatorily convertible at maturity into ordinary shares of True Partners at HKD $ 0.10

True Partners is a related party because the Company holds a significant equity investment in True Partners and has the

ability to exercise significant influence through its ownership interest, the convertible bond investment, and the election of the

Company’s Executive Chairman and significant stockholder, Heng Fai Ambrose Chan, to True Partners’ board of directors.

The Company recorded the bond at its estimated fair value of approximately

$ 8,520,000 based on a valuation performed as of March 31, 2026.

is classified as a Level 3 fair value measurement because there is no quoted market price for the identical instrument and the valuation

uses significant unobservable inputs, including issuer credit risk, expected term, liquidity assumptions, credit spread, and conversion

The excess of the bond’s estimated fair value over its stated face amount or consideration transferred was deemed a contribution

to capital and recorded as a Fair value adjustment related to convertible bond received from related party within additional paid-in capital,

rather than as a gain in earnings.