Item 7. Management’s Discussion and Analysis
ITEM
7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING
STATEMENTS
Certain
statements contained herein this report constitute “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995 (the “1995 Reform Act”). Except for the historical information contained herein, this report
contains forward-looking statements (identified by words such as “estimate”, “project”, “anticipate”,
“plan”, “expect”, “intend”, “believe”, “hope”, “strategy” and
similar expressions), which are based on our current expectations and speak only as of the date made. These forward-looking statements
are subject to various risks, uncertainties, and factors, that could cause actual results to differ materially from the results anticipated
in the forward-looking statements.
Overview
The
Company, which was incorporated in the state of New York in May 1984, previously conducted its business under the name of Document Security
Systems, Inc On September 16, 2021, our board of directors approved an agreement and plan of merger with a wholly owned subsidiary, DSS,
Inc. This subsidiary, incorporated in August 2020, was created for the sole purpose of facilitating a transformational name change from
Document Security Systems, Inc. to DSS, Inc. This significant shift in our identity became official on September 30, 2021. With the name
change, DSS, Inc. retained its trading symbol, “DSS,” and is currently trading under its CUSIP number to 26253C 201. This
change reflects not only our evolution as a company but also our commitment to adapting and growing in an ever-changing business landscape.
DSS, Inc. (referred to herein as “DSS,” “we,” “us,” or “our”) now operates across five
distinct business lines, each with its own unique scope and presence on a global scale. These business lines encompass a wide range of
industries and sectors, including:
Product
Packaging: Our involvement in product packaging represents our dedication to delivering innovative and sustainable packaging solutions
that meet the evolving needs of various markets.
Biotechnology:
In the field of biotechnology, we are focused on pioneering scientific advancements and technologies that have the potential to transform
human healthcare and wellness.
Direct
Marketing: Our direct marketing endeavors involve strategic efforts to engage with customers and clients, providing tailored solutions
and services that enhance their experiences.
Commercial
Lending: We are actively engaged in commercial lending, offering a suite of financial services that cater to the unique needs of businesses,
ranging from commercial lines of credit to land development financing.
Securities
and Investment Management: In the world of securities and investment management, we aim to provide expertise and guidance to help our
clients navigate the complexities of the financial markets and achieve their investment goals.
23
Each
of these business lines is at a different stage of development, growth, and income generation, reflecting the diversity of our operations.
This multi-faceted approach allows us to adapt to changing market conditions and explore new opportunities for expansion and success.
We are committed to our continued evolution and to delivering value to our stakeholders across these diverse business lines.
The
Company, initially incorporated in the state of New York in May 1984, had historically conducted its business under the name Document
Security Systems, Inc. However, on September 16, 2021, our board of directors approved an agreement and plan of merger with a wholly
owned subsidiary, DSS, Inc. (incorporated in August 2020). The primary purpose of this merger was to affect a name change from Document
Security Systems, Inc. to DSS, Inc., which officially took effect on September 30, 2021. This change did not affect our trading symbol,
which remained as “DSS,” and is currently trading under its CUSIP number to 26253C 201.
Diverse
Business Lines and Global Presence:
Under
the banner of DSS, Inc., we have diversified our operations into five distinct business lines, each with its own unique scope and geographical
footprint. These business lines include:
Product
Packaging: Led by Premier Packaging Corporation, Inc. (“Premier”), a New York corporation, this segment specializes in paperboard
and fiber-based folding carton manufacturing, consumer product packaging, and document security printing. Premier is headquartered in
its newly established facility in Rochester, NY, primarily serving the US market.
Biotechnology:
This business line is dedicated to investing in or acquiring companies in the BioHealth and BioMedical fields, focusing on drug discovery,
prevention, treatment of various diseases, and open-air defense initiatives against infectious diseases.
Direct
Marketing: Operating under the umbrella of Decentralized Sharing Systems, Inc. (“Decentralized”), this division provides
services to companies in the emerging growth “Gig” business model of peer-to-peer decentralized sharing marketplaces. It
specializes in marketing and distributing products and services across North America, Asia Pacific, Middle East, and Eastern Europe.
Commercial
Lending: American Pacific Financial, Inc. (“APF”) represents our banking and financing business line. Looking ahead, to
better meet the needs of the current financial market, the company is looking to transition away form certain industries like direct
marketing and focus more on growing its inventory / equipment loan portfolio as well as engaging in more specialized areas of
lending like broker/dealer loans. We will continue to monitor our managed loan portfolio, which earns 1.25%
annually in service charges, and explore future opportunities. Importantly, the equity portfolio as a bank holding company is
anticipated to remain relatively stable, regardless of stock market fluctuations.
Securities
and Investment Management: This division focuses on acquiring assets in the securities trading and management arena, including broker-dealers
and mutual funds management. It also oversees a real estate investment trust (REIT) that acquires hospitals and care centers.
RESULTS
OF OPERATIONS FOR THE FISCAL YEARS ENDED DECEMBER 31,
Revenue
2024
2023
%
Change
Printed
products
$
16,107,000
$
18,497,000
-13
%
Securities
2,764,000
5,288,000
-48
%
Commercial lending
226,000
385,000
-41
%
Direct marketing
-
1,763,000
-100
%
Total
Revenue
$
19,097,000
$
25,933,000
-26
%
24
Revenue
- For the year ended December 31, 2024, revenue decreased 26% to approximately $19.1 million as compared to revenues of
approximately $25.9 million for the year ended December 31, 2023. Printed products sales, which include sales of packaging and
printing products, decreased 13% in 2024 as compared to 2023. The decrease is due primarily to orders expected to ship during the
4 th quarter 2022 being pushed to the 1st quarter 2023 as well as decrease in orders from two existing customers during
2024. Rental income decreased 51% due a tenant at our AMRE LifeCare subsidiary not making rent payments. Net investment income of
$226,000 as of December 31, 2024 decreased 41% from $385,000 as of December 31, 2023 due to a number of notes receivable deemed
uncollectible and impaired during 2024. The Company’s Direct Marketing revenues decreased 100% in 2024 as compared to 2023 as
the change in business plan from maintaining its own sales force to licensing its products at our subsidiary HWH World has been slow
to generate revenue. Commission revenue, associated with Sentinel Brokers Company subsidiary, decrease 41% due to decreases in
commissions on equity trading resulting from a change in clearing houses which required such transactions to be put on hold during
the transition.
Costs
and Expenses
2024
2023
%
Change
Cost
of revenue
Printed
products
$
15,230,000
$
15,282,000
0
%
Securities
7,550,000
8,074,000
-6
%
Biotechnology
42,000
77,000
-45
%
Commercial
lending
712,000
1,139,000
-37
%
Direct
marketing
5,000
818,000
-99
%
Sales,
general and administrative compensation
4,574,000
5,662,000
-19
%
Professional
fees
2,668,000
3,170,000
-16
%
Stock
based compensation
19,000
-
N/A
Sales
and marketing
2,427,000
2,356,000
3
%
Rent
and utilities
682,000
790,000
-14
%
Research
and development
278,000
1,685,000
-84
%
Impairment
of goodwill
25,093,000
30,978,000
-19
%
Impairment
of fixed assets
264,000
-
NA
Other
operating expenses
2,149,000
6,680,000
-68
%
Total
costs and expenses
$
61,693,000
$
76,711,000
-20
%
Costs
of revenue includes all direct costs of the Company’s printed products, including its packaging and printing sales and its
direct marketing sales, materials, direct labor, transportation, and manufacturing facility costs. In addition, this category includes
all direct costs associated with the Company’s technology sales, services and licensing including hardware and software that are
resold, third-party fees, and fees paid to inventors or others because of technology licenses or settlements, if any. Cost of revenue
for our REIT line of business includes all direct cost associated with the maintenance and upkeep of the related facilities, depreciation,
amortization and the costs to acquire the facilities. Our Commercial Lending operating segment has costs of revenue associated with the
impairment of notes receivable for those amounts at risk of collection. Total costs of revenue decreased 7% in 2024 as compared to 2023,
primarily due to the decrease in revenue associate with the change in the Direct marketing business plan that has been slow to generate
revenue as well as decrease in revenues from our Printed product business line.
Sales,
general and administrative compensation costs, decreased 19% in 2024 as compared to 2023, primarily related the decrease in head
count as the change in business plan from maintaining our own sales force for the Direct marketing business segment to licensing its
products.
Professional
fees decreased 16% in 2024 as compared to 2023, primarily due to a decrease in legal fees associated with the direct marketing segment,
accounting fees, and due diligence fees related to potential acquisitions.
Stock
based compensation includes expense charges for all stock-based awards to employees, directors, and consultants. Such awards include
option grants, warrant grants, and restricted stock awards. Stock based compensation during the year ended December 31, 2024, is associated
with such awards given to officers, directors and consultants of Impact BioMedical.
Sales
and marketing costs, which includes internet and trade publication advertising, travel and entertainment costs, sales-broker commissions,
and trade show participation expenses, increased 3% during 2024 as compared to 2023, primarily due to increases in our Printed Products
and Biotechnology business segments offset by the decrease in such cost associated with our Direct marketing business segment,
25
Rent
and utilities decreased 14% during the year ended December 31, 2024, as compared to the same period in 2023 respectively, primarily
due to end of the lease in Tennessee for AMRE office space and California for the Company’s DSS Wealth Management subsidiary.
Research
and development costs consist primarily of third-party research costs and consulting costs. During the year ended December 31, 2024,
Research and development costs decreased 84% as compared to the same period in 2023 primarily due to decrease in such activities at our
Impact Biomedical, Inc. subsidiary.
Impairment
of goodwill during the 4 th quarter of 2023, the Company performed qualitative and quantitative assessments of the goodwill
value associated with its APF and Sentinel subsidiaries and determined that as of December 31, 2023 both assets required impairment.
At December 31, 2023, the Company fully impaired the value of APF and Sentinel goodwill of approximately $29,744,000 and $1,234,000,
respectively. Similarly, the Company performed a similar evaluation during the year ended December 31, 2024 and deemed an full
impairment of the Impact BioMedical goodwill was necessary in the amount of $25,093,000.
Impairment
of fixed assets is the impairment of marketing assets in development that the Company decided to forego completion.
Other
operating expenses consist primarily of equipment maintenance and repairs, office supplies, IT support, and insurance costs. During
the year ended December 31, 2024, other operating expenses decreased 68% compared to the same period in 2023, due primarily to the reserves
put against rent receivables at our AMRE subsidiary approximating $3.0 million in 2023 as the tenant was unable to pay rent.
Other
Income and Expense
2024
2023
%
Change
Interest
income
$
238,000
$
1,118,000
-79
%
Interest
income on notes receivable, related party
102,000
171,000
-40
%
Dividend
income
-
16,000
-100
%
Other
income
218,000
532,000
-59
%
Interest
expense
(283,000
)
(553,000
)
-49
%
Foreign
currency translation adjustment
(6,000
)
-
N/A
Gain/(loss)
on equity method investment
1,000
(34,000
)
-103
%
Gain/(loss) on investments
224,000
(4,967,000
)
-105
%
Impairment
of intangible assets
-
(7,418,000
)
-100
%
Impairment
of real estate assets
(7,288,000
)
(812,000
)
798
%
Impairment
of assets upon deconsolidation of SHRG
-
(6,220,000
)
-100
%
Impairment of investments
(782,000
)
-
N/A
Provision
for loan losses
(3,691,000
)
(3,794,000
)
-3
%
Loss
on sale of assets
165,000
(1,300,000
)
-113
%
Total
other expense
$
(11,102,000
)
$
(23,261,000
)
52
%
Interest
income is recognized on the Company’s money markets, and notes receivable identified in Note 5. The decrease of 79% year
over year in interest income is driven by several notes being put on non-accrual as the related borrowers have shown an inability to
pay timely.
Interest
income on notes receivable, related party is recognized on the Company’s notes receivable with related parties identified in
Note 5. The decrease of 40% year over year in interest income is driven by several notes being put on non-accrual as the related borrowers
have shown an inability to pay timely.
Dividend
income for the year ended December 31, 2023 represent dividends received on certain marketable securities owned by the Company. No
such dividends were received in 2024.
Other
income decreased 59% during the year 2024 as compared to 2023 due primarily to income incurred in 2023 regarding the Company’s
distribution agreement with BioMed Technologies.
Interest
expense decreased 49% year-over-year primarily due to the increase in debt at Premier Packaging and LVAM during 2024.
Gain
(loss) from equity method investment represents the Company’s prorated portion of earnings for its investments accounted for
under the equity method for the year ended December 31, 2024, and 2023. The transition from a loss of $34,000 in 2023 to a gain of $1,000 in 2024 is indicative of the related companies
financial performance improving year over year.
Gain/(loss) on investments consists of net realized and unrealized losses on marketable securities which are recognized as the difference
between the purchase price and sale price of the common stock investment, and net unrealized losses on marketable securities which are
recognized on the change in fair market value on our common stock investment. The improvement in our marketable securities year over year is driven by an improved performance in our True Partners
Capital Holdings Limited investment which incurred an approximate loss in fair value of $3,224,000 in 2023 as compared to gain in fair
value of approximately $591,000 in 2024.
Impairment
of intangible assets represents the impairment of certain intangible assets associated with our AMRE LifeCare properties that during
2023 were deemed unrecoverable.
Impairment
of real estate represents a write-down of real estate assets associated with our AMRE LifeCare properties during 2023 based on a
fair value analysis performed as of December 31, 2023. A fair value analysis was performed during 2024 which resulted in a $2,973,000
impairment of the AMRE LifeCare Pittsburgh and Fort Worth locations. Further, the Company executed a purchase agreement for its AMRE
LifeCare Plano location with a sale price at approximately $4,250,000 below its 2023 fair value. This transaction closed on March 26,
2025.
Impairment
of investments the Company determined an impairment of
its investments in Nano9 and BioMed Technologies was necessary in the amounts of $150,000 and $632,000, respectively, at December 31,
2024.
Impairment
of assets upon deconsolidation is driven by the Company’s distribution of approximately 280 million shares of SHRG in May 2023
which resulted in a decrease in its ownership percentage of SHRG’s common stock from approximately 81% to 7%.
26
Provision
for loan losses represents a reserve put against certain notes receivable deemed uncollectible. During the year ended December
31, 2024, the Company reviewed the entire loan portfolio and determined specific loans required an allowance for credit losses. See
Note 6.
Gain/(loss)
on sale of assets the gain in 2024 is driven by the sale of its Linden, Ut facility while, the loss in 2023 is driven by the
Company’s loss on the sale of equity of HWH Holdings Inc and loss on sale of assets of HWH World as identified in Note 8.
Liquidity
and Capital Resources
The
Company has historically met its liquidity and capital requirements primarily through the sale of its equity securities and debt financing.
As of December 31, 2024, the Company had cash of approximately $11.4 million. As of December 31, 2024, the Company believes that it has
sufficient cash to meet its cash requirements for at least the next 12 months from the filing date of this Annual Report. In addition,
the Company believes that it will have access to sources of capital from the sale of its equity securities and debt financing.
Cash
Flow from Operating Activities
Net
cash used by operating activities was approximately $9.1 million for the year ended December 31, 2024 as compared to approximately $19.2
million for the year ended December 31, 2023. This decrease is driven by a decrease in payments of accrued expenses of approximately
$15.8 million, accounts payable of $1.4 million year over year as well as an increase other liabilities incurred, not paid of approximately $3.2 million.
Cash
Flow from Investing Activities
Net
cash provided by investing activities was approximately $8.8 million for the year ended December 31, 2024 and $8.9 million for year ended
December 31, 2023. The year ended December 31, 2024 included $5.6 million in cash provided by the sale of our Lindon, UT
facility, $3.0 million of cash provided by the sale of marketable securities, as well as $4.2 million received from notes receivable
offset by the $3.3 million purchases of investments. In comparison, the Company sold $9.5 million in marketable securities and
issued $1.0 million in new notes receivable for the year ended December 31, 2023.
Cash
Flow from Financing Activities
Net
cash provided by financing activities for the year ended December 31, 2024 was $5.1 million due to $4.5 million of additional
borrowings on long-term debt as well as $3.2 million of proceeds received from Impact BioMedical’s IPO offset by $2.6 million
of payments toward long-term debt. Net cash used by financing activities was approximately $2.4 million for the year ended December
31, 2023 driven by payments toward long-term debt of $4.2 million offset by borrowings of long-term debt of $1.8 million.
Continuing
Operations and Going Concern
The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. This basis
of accounting contemplates the recovery of our assets and the satisfaction of liabilities in the normal course of business. These consolidated
financial statements do not include any adjustments to the specific amounts and classifications of assets and liabilities, which might
be necessary should we be unable to continue as a going concern. While the Company has approximately $11.4 million in cash, the Company
has incurred operating losses as well as negative cash flows from operating activities over the past two years.
Aside
from its $11.4 million in cash as of December 31, 2024, the Company believes it can continue as a going concern, due to its ability to
generate operating cash through the sale of its $9.2 million of Marketable Securities. Between March 24, 2025 and March 27, 2025, the
Company sold a shares of Impact BioMedical, a subsidiary, for approximately $1,969,000. Further, the Company has approximately 1,052,000
shares of Impact BioMedical shares available to sell. In addition, the Company has taken steps, and will continue to take measures, to
materially reduce the expenses and cash burn at all corporate and business line levels. Although there are no assurances, we believe
the above would allow us to fund our nine business lines current and planned operations for the twelve months from the filing date of
this Annual Report. Based on this, the Company has concluded that substantial doubt of its ability to continue as a going concern has
been alleviated.
27
Off-Balance
Sheet Arrangements
We
do not have any off-balance sheet arrangements that have, or are reasonably likely to have, an effect on our financial condition, financial
statements, revenues or expenses.
Inflation
Although
our operations are influenced by general economic conditions, we do not believe that inflation had a material effect on our results of
operations during 2024 or 2023 as we are generally able to pass the increase in our material and labor costs to our customers or absorb
them as we improve the efficiency of our operations.
Critical
Accounting Policies
The
preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make judgments, assumptions
and estimates that affect the amounts reported in our financial statements and accompanying notes. The financial statements as of December
31, 2024, describe the significant accounting policies and methods used in the preparation of the financial statements. There have been
no material changes to such critical accounting policies as of the Annual Report on Form 10-K/A for the year ended December 31, 2023.
Allowance
For Loans and Lease Losses
The Company adopted amended accounting
guidance ASC Topic 326 which requires an allowance for credit losses to be deducted from the amortized cost basis of financial assets
to present the net carrying value at the amount that is expected to be collected over the contractual term of the asset considering relevant
information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported
amount. In estimating expected losses in the loan and lease portfolio, borrower-specific financial data and macro-economic assumptions
are utilized to project losses over a reasonable and supportable forecast period. Assumptions and judgment are applied to measure amounts
and timing of expected future cash flows, collateral values and other factors used to determine the borrowers’ abilities to repay
obligations. After the forecast period, the Company utilizes longer-term historical loss experience to estimate losses over the remaining
contractual life of the loans.
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Fair
Value of Financial Instruments
Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The Fair Value Measurement Topic of the Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) establishes a three-tier fair value hierarchy which prioritizes the inputs used
in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
●
Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets.
●
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted
prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;
and
●
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
The
carrying amounts reported in the consolidated balance sheet of cash and cash equivalents, accounts receivable, prepaids, accounts payable
and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments. Marketable
securities classify as a Level 1 fair value financial instrument. The fair value of notes receivable approximates their carrying value
as the stated or discounted rates of the notes do not reflect recent market conditions. The fair value of revolving credit lines notes
payable and long-term debt approximates their carrying value as the stated or discounted rates of the debt reflect recent market conditions.
The fair value of investments where the fair value is not considered readily determinable, are carried at cost.
Investments
Investments
in equity securities with a readily determinable fair value, not accounted for under the equity method, are recorded at that value with
unrealized gains and losses included in earnings. For equity securities without a readily determinable fair value, the investment is
recorded at cost, less any impairment, plus or minus adjustments related to observable transactions for the same or similar securities,
with unrealized gains and losses included in earnings.
For
equity method investments, the Company regularly reviews its investments to determine whether there is a decline in fair value below
book value. If there is a decline that is other-than-temporary, the investment is written down to fair value. See Note 9 for further
discussion on investments.
Revenue
The
Company recognizes its revenue based on when the title passes to the customer or when the service is completed and accepted by the customer.
Revenue is measured as the amount of consideration the Company expects to receive in exchange for shipped product or service provided.
Sales and other taxes billed and collected from customers are excluded from revenue. The Company recognizes rental income associated
with its REIT, net of amortization of favorable/unfavorable lease terms relative to market and includes rental abatements and contractual
fixed increases attributable to operating leases, where collection has been considered probable, on a straight-line basis over the term
of the related lease. The Company recognizes net investment income from its investment banking line of business as interest 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.
As
of December 31, 2024, the Company had no unsatisfied performance obligations for contracts with an original expected duration of greater
than one year. Pursuant to Topic 606, the Company has applied the practical expedient with respect to disclosure of the deferral and
future expected timing of revenue recognition for transaction price allocated to remaining performance obligations. The Company elected
the practical expedient allowing it to not recognize as a contract asset the commission paid to its salesforce on the sale of its products
as an incremental cost of obtaining a contract with a customer but rather recognize such commission as expense when incurred as the amortization
period of the asset that the Company would have otherwise recognized is one year or less.
Discontinued
Operations
On
May 4, 2023, the Company distributed approximately 280 million shares of Sharing Service Global Corporation (“SHRG”), beneficially
held by the Company, in the form of a dividend to the shareholders of the Company’s common stock. Upon completion of this distribution,
the Company retained an ownership interest in SHRG of approximately 7%. Effective May 1, 2023, SHRG was deconsolidated from the consolidated
financial statements (the “Deconsolidation”). The consolidated statement of operations does not include SHRG activity after
April 30, 2023 and the assets and liabilities of SHRG are no longer included within the Company’s consolidated balance sheet. The
deconsolidation of SHRG is a strategic shift, as a significant portion of the Direct Marketing line of business was eliminated. While
the Decentralized Sharing Systems part of the business will continue to provide these services, SHRG was a significant portion of this
segment as it made up approximately 47% and 20%, respectively, of the total DSS revenue in 2022 and 2023. Accordingly, the Company has
applied discontinued operations treatment for this deconsolidation as required by Accounting Standards Codification 205—Discontinued
Operations. The operating results of the discontinued operations is reflected on the Consolidated Statements of Operations as Loss from
Discontinued Operations. See Note 19.
Acquisitions
Business
combinations and non-controlling interests are recorded in accordance with FASB ASC 805 Business Combinations. Under the guidance, the
assets and liabilities of the acquired business are recorded at their fair values at the date of acquisition and all acquisition costs
are expensed as incurred. The excess of the purchase price over the estimated fair values is recorded as goodwill. If the fair value
of the assets acquired exceeds the purchase price and the liabilities assumed, then a gain on acquisition is recorded. The application
of business combination accounting requires the use of significant estimates and assumptions.
Acquisition
of assets are recorded at their relative fair value based on total accumulated costs of the acquisition. Direct acquisition-related costs
are expensed as incurred. This includes all costs related to finding, analyzing and negotiating a transaction. The allocation of the
purchase price is an area that requires judgment and significant estimates. Tangible and intangible assets include land, building and
improvements, furniture, fixtures and equipment, acquired above market and below market leases, in-place lease value (if applicable).
Acquisition-date fair values of assets and assumed liabilities are determined based on replacement costs, appraised values, and estimated
fair values using methods like those used by independent appraisers and that use appropriate discount and/or capitalization rates and
available market information.
Segment
reporting
In
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.
ITEM
7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not
applicable.
29