DSS INC

Previous wording

Our divisions, their business lines, subsidiaries, and operating territories: (1) Our Product Packaging line is led by Premier Packaging Corporation, Inc. (“Premier”), a New York corporation. Premier operates in the paper board and fiber based folding carton, consumer product packaging, and document security printing markets. It markets, manufactures, and sells sophisticated custom folding cartons, mailers, photo sleeves and complex 3-dimensional direct mail solutions. Premier is currently located in its new facility in Rochester, NY, and primarily serves the US market. (2) The Biotechnology business line was created to invest in or acquire companies in the BioHealth and BioMedical fields, including businesses focused on the advancement of drug discovery and prevention, inhibition, and treatment of neurological, oncological, and immune related diseases. This division is also targeting unmet, urgent medical needs, and is developing open-air defense initiatives, which curb transmission of air-borne infectious diseases, such as tuberculosis and influenza. (3) Direct Marketing, led by the holding corporation, Decentralized Sharing Systems, Inc. (“Decentralized”) provides services to assist companies in the emerging growth “Gig” business model of peer-to-peer decentralized sharing marketplaces. Direct Marketing’s products include, among other things, nutritional and personal care products sold throughout North America, Asia Pacific, Middle East, and Eastern Europe. (4) Our Commercial Lending business division, driven by American Pacific Bancorp (“APB”), is organized for the purposes of being a financial network holding company, focused on acquiring equity positions in (i) undervalued commercial bank(s), bank holding companies and nonbanking licensed financial companies operating in the United States, South East Asia, Taiwan, Japan and South Korea, and (ii) companies engaged in—nonbanking activities closely related to banking, including loan syndication services, mortgage banking, trust and escrow services, banking technology, loan servicing, equipment leasing, problem asset management, SPAC (special purpose acquisition company) consulting services, and advisory capital raising services. (5) Securities and Investment Management was established to develop and/or acquire assets in the securities trading or management arena, and to pursue, among other product and service lines, broker dealers, and mutual funds management. Also in this segment is the Company’s real estate investment trusts (“REIT”), organized for the purposes of acquiring hospitals and other acute or post-acute care centers from leading clinical operators with dominant market share in secondary and tertiary markets, and leasing each property to a single operator under a triple-net lease. the REIT was formed to originate, acquire, and lease a credit-centric portfolio of licensed medical real estate. (6) Alternative Trading was established to develop and/or acquire assets and investments in …

Excerpt shortened here; the source contains the full paragraph.

Current wording

Our divisions, their business lines, subsidiaries, and operating territories: (1) Our Product Packaging line is led by Premier Packaging Corporation, Inc. (“Premier”), a New York corporation. Premier operates in the paper board and fiber based folding carton, consumer product packaging, and document security printing markets. It markets, manufactures, and sells sophisticated custom folding cartons, mailers, photo sleeves and complex 3-dimensional direct mail solutions. Premier is currently located in its new facility in Rochester, NY, and primarily serves the US market. (2) The Biotechnology business line was created to invest in or acquire companies in the BioHealth and BioMedical fields, including businesses focused on the advancement of drug discovery and prevention, inhibition, and treatment of neurological, oncological, and immune related diseases. This division is also targeting unmet, urgent medical needs, and is developing open-air defense initiatives, which curb transmission of air-borne infectious diseases, such as tuberculosis and influenza. (3) Direct Marketing, led by the holding corporation, Decentralized Sharing Systems, Inc. (“Decentralized”) provides services to assist companies in the emerging growth “Gig” business model of peer-to-peer decentralized sharing marketplaces. Direct Marketing’s products include, among other things, nutritional and personal care products sold throughout North America, Asia Pacific, Middle East, and Eastern Europe. (4) Our Commercial Lending business division, driven by American Pacific Financial, Inc. (“APF”, formally American Pacific Bancorp, Inc. “APB”), is organized for the purposes of being a financial network holding company, focused on acquiring equity positions in (i) undervalued commercial bank(s), bank holding companies and nonbanking licensed financial companies operating in the United States, South East Asia, Taiwan, Japan and South Korea, and (ii) companies engaged in—nonbanking activities closely related to banking, including loan syndication services, mortgage banking, trust and escrow services, banking technology, loan servicing, equipment leasing, problem asset management, SPAC (special purpose acquisition company) consulting services, and advisory capital raising services. (5) Securities and Investment Management was established to develop and/or acquire assets in the securities trading or management arena, and to pursue, among other product and service lines, broker dealers, and mutual funds management. Also in this segment is the Company’s real estate investment trusts (“REIT”), organized for the purposes of acquiring hospitals and other acute or post-acute care centers from leading clinical operators with dominant market share in secondary and tertiary markets, and leasing each property to a single operator under a triple-net lease. the REIT was formed to originate, acquire, and lease a credit-centric portfolio of licensed medical real estate. (6) Alternative Trading was establish…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

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

Current wording

Results of operations for the three and nine months ended September 30, 2024, as compared to the three and nine months ended September 30, 2023.

Previous wording

This discussion should be read in conjunction with the financial statements and footnotes contained in this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

This discussion should be read in conjunction with the financial statements and footnotes contained in this Quarterly Report and in our Annual Report on Form 10-K/A for the year ended December 31, 2023.

Previous wording

For the three months ended June 30, 2024, total revenue decreased 42% as compared to the three months ended June 30, 2023. The decreases in Rental income of 72% is driven by the tenants at AMRE LifeCare being unable to make rental payments in 2024. The decreases in Net investment income approximating 79% is due to a number of loans made going on non-accrual as borrowers have struggled to make expect payments. The Company’s Direct Marketing revenues decreased 100% is due to the Deconsolidation of SHRG as described in Note 1.

Current wording

For the three months ended September 30, 2024, total revenue increased 34% as compared to the three months ended September 30, 2023. The increase in Printed Product revenue of approximately 46% is driven by new customer orders. The increases in Rental income of 110% is driven by new tenants at AMRE LifeCare Pittsburg facility being making rental payments in 2024. The decreases in Net investment income approximating 58% is due to a number of loans made going on non-accrual as borrowers have struggled to make expect payments. The Company’s Direct Marketing revenues decreased 100% as the change in business plan from maintaining its own sales force to licensing its products has been slow to generate revenue.

Previous wording

For the six months ended June 30, 2024, total revenue decreased 58% as compared to the six months ended June 30, 2023. Revenues from the sale of Printed products decreased 32% due primarily to orders expected to ship during the 4 th quarter 2022 being pushed to the 1st quarter 2023. The decreases in Rental income of 74% is driven by the tenants at AMRE LifeCare being unable to make rental payments in 2024. The decreases in Net investment income approximating 57% is due to a number of loans made going on non-accrual as borrowers have struggled to make expect payments. The Company’s Direct Marketing revenues decreased 100% is due to the Deconsolidation of SHRG as described in Note 1.

Current wording

For the nine months ended September 30, 2024, total revenue decreased 28% as compared to the nine months ended September 30, 2023. Revenues from the sale of Printed products decreased 12% 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. The decreases in Rental income of 61% is driven by the tenants at AMRE LifeCare being unable to make rental payments in 2024. The decreases in Net investment income approximating 57% is due to a number of loans made going on non-accrual as borrowers have struggled to make expect payments. The Company’s Direct Marketing revenues decreased 100% as the change in business plan from maintaining its own sales force to licensing its products has been slow to generate revenue.

Previous wording

Costs of revenue include 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 Securities operating segments is comprised mainly of our REIT line of business and 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 20% for six months ended June 30, 2024 as compared to 2023 is primarily related to the Deconsolidation of SHRG as described in Note 1. Also, cost of revenue decreased at Premier for the same time period due to the decrease in product shipped.

Current wording

Costs of revenue include 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 Securities operating segments is comprised mainly of our REIT line of business and includes all direct cost associated with the maintenance and upkeep of the related facilities, depreciation, amortization, and the costs to acquire the facilities.

Previous wording

Sales, general and administrative compensation costs, excluding stock-based compensation, decreased 62% for six months ended June 30, 2024 as compared to 2023 is primarily related to the Deconsolidation of SHRG as described in Note 1.

Current wording

Sales, general and administrative compensation costs, excluding stock-based compensation, decreased 18% for nine months ended September 30, 2024 as compared to 2023 is 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.

Previous wording

Professional fees decreased 26% for six months ended June 30, 2024 as compared to 2023 due primarily to primarily due to efforts taken to decrease these cost primarily at the Company’s Impact Bio subsidiary in anticipation of its IPO.

Current wording

Professional fees decreased 32% for nine months ended September 30, 2024 as compared to 2023 due primarily to primarily due to efforts taken to decrease these cost primarily at the Company’s Impact Bio subsidiary in anticipation of its IPO.

Previous wording

Sales and marketing which include internet and trade publication advertising, travel and entertainment costs, sales-broker commissions, and trade show participation expenses. Sales and marketing decreased 69% during the six months ended June 30, 2024 as compared to 2023 due primarily to the Deconsolidation of SHRG as described in Note 1.

Current wording

Sales and marketing which include internet and trade publication advertising, travel and entertainment costs, sales-broker commissions, and trade show participation expenses. Sales and marketing remained flat during the nine months ended September 30, 2024 as compared to 2023 due as the decrease in such cost associated with our Direct marketing business segment were offset by increases in our Printed Products and Biotechnology business segments.

Previous wording

Rent and utilities decreased 15% during the six months ended June 30, 2024 as compared to 2023 primarily due to end of the lease in Tennessee for AMRE office space and California for the Company’s DSS Wealth Management subsidiary as well as the deconsolidation of SHRG.

Current wording

Rent and utilities decreased 15% during the nine months ended September 30, 2024 as compared to 2023 primarily due to end of the lease in Tennessee for AMRE office space and California for the Company’s DSS Wealth Management subsidiary.

Previous wording

Research and development costs represent costs consisting primarily of independent, third-party testing of the various properties of each technology the Company owns possesses as well as research on new technologies. These costs decreased 89% the six months ended June 30, 2024 as compared to June 30, 2023, due primarily to the cessation of the Company’s research and development contract with GRDG at the end of 2023.

Current wording

Research and development costs represent costs consisting primarily of independent, third-party testing of the various properties of each technology the Company owns possesses as well as research on new technologies. These costs decreased 93% the nine months ended September 30, 2024 as compared to September 30, 2023, due primarily to the cessation of the Company’s research and development contract with GRDG at the end of 2023.

Previous wording

Other operating expenses consist primarily of equipment maintenance and repairs, office supplies, IT support, and insurance costs. During the six months ended June 30, 2024 as compared to June 30, 2023, the fluctuation is due primarily to the Deconsolidation of SHRG as described in Note 1.

Current wording

Other operating expenses consist primarily of equipment maintenance and repairs, office supplies, IT support, and insurance costs. These costs decrease approximately 56% during the nine months ended September 30, 2024 as compared to September 30, 2023, due primarily to the write-off of accounts receivable associated with our AMRE LifeCare facilities of approximately $3,023,000 in 2023 as the tenant was unable to pay rent.

Previous wording

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

Current wording

Interest incomeis recognized on the Company’s money markets, and a portion of notes receivable, identified in Note 4. The decrease in interest income is driven by several notes being put on non-accrual as the related borrowers have shown an inability to pay timely.

Previous wording

Other incomefor the six months ended June 30, 2024 as compared to 2023 decreased 78% due primarily to income incurred in 2023 regarding the Company’s distribution agreement with BioMed Technologies.

Current wording

Other income (expense) for the nine months ended September 30, 2024 as compared to 2023 decreased 72% due primarily to income incurred in 2023 regarding the Company’s distribution agreement with BioMed Technologies.

Previous wording

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

Current wording

Interest expenses decreased 45% during the nine months ended September 30, 2024, as compared to the same period in 2023, due to decreasing debt balances.

Previous wording

Loss on equity method investmentis the Company’s prorated portion of earnings on its investments treated under the equity method of account for the six months ended June 30, 2024 as compared to 2023.

Current wording

(Loss) gain on equity method investmentis the Company’s prorated portion of earnings on its investments treated under the equity method of account for the six months ended September 30, 2024 as compared to 2023.

Previous wording

Loss on investments consists of net realized losses on marketable securities which are recognized as the difference between the purchase price and sale price of the common stock investment, and net unrealized losses on marketable securities which are recognized on the change in fair market value on our common stock investment. The decrease in loss on investment for the six months ended June 30, 2024 as compared to 2023 is driven by the deconsolidation of SHRG which resulted in a loss of approximately $29,196,000. See Note 1.

Current wording

(Loss) gain on investments consists of net realized losses on marketable securities which are recognized as the difference between the purchase price and sale price of the common stock investment, and net unrealized losses on marketable securities which are recognized on the change in fair market value on our common stock investment. The decrease in loss on investment for the nine months ended September 30, 2024 as compared to 2023 is driven by better performance of our stock portfolio.

Previous wording

For the six months ended June 30, 2024 the Company recorded net losses of $46,357,000 as compared to net losses of $10,063,000 for the same period in 2023. The decrease in net loss is driven by the Deconsolidation of SHRG as described in Note 1.

Current wording

For the nine months ended September 30, 2024 the Company recorded net losses of $15,762,000 as compared to net losses of $33,061,000 for the same period in 2023. The decrease in net loss is driven by decreases in the Provision for loan losses, impairment of assets upon deconsolidation, the improved performance of our stock portfolio as well as the deconsolidation of SHRG.

Previous wording

The Company has historically met its liquidity and capital requirements primarily through the sale of its equity securities and debt financing. As of June 30, 2024 the Company had cash of approximately $10.7 million. As of June 30, 2024, the Company believes that it has sufficient cash to meet its cash requirements for at least the next 12 months from the filing date of this Annual Report. In addition, the Company believes that it will have access to sources of capital from the sale of its equity securities and debt financing. The deconsolidation of SHRG and sale of HWH Holdings, Inc, two companies with historical losses, also is expected to improve future cash flows.

Current wording

The Company has historically met its liquidity and capital requirements primarily through the sale of its equity securities and debt financing. As of September 30, 2024 the Company had cash of approximately $11.6 million. As of September 30, 2024, the Company believes that it has sufficient cash to meet its cash requirements for at least the next 12 months from the filing date of this Quarterly 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. The deconsolidation of SHRG and sale of HWH Holdings, Inc, two companies with historical losses, also is expected to improve future cash flows.

Previous wording

Net cash used by operating activities was $5,574,000 for the six months ended June 30, 2024 as compared to $19,715,000 for six months ended June, 2023. This fluctuation is driven by decreases in net loss, after reconciling items, approximating $756,000. Also, the Company paid litigation losses during the 1 st quarter of 2023 of approximately $8,750,000.

Current wording

Net cash used by operating activities was $9,181,000 for the nine months ended September 30, 2024 as compared to $21,035,000 for nine months ended September, 2023. This fluctuation is driven by decreases in net loss, after reconciling items, approximating $371,000. Also, the Company paid litigation losses during the 1 st quarter of 2023 of approximately $8,750,000.

Previous wording

Net cash provided by investing activities was $8,776,000 for the six months ended June 30, 2024 as compared to net cash provided by investing activities of $13,376,000 for the six months ended June 30, 2023. This fluctuation is driven by the sale of marketable securities approximating $11,330,000 during 2023 versus purchases of $379,000 during 2024. This is offset by receipts on Notes receivable of $4,044,000 in 2024 versus $2,327,000 in 2023.

Current wording

Net cash provided by investing activities was $9,916,000 for the nine months ended September 30, 2024 as compared to net cash provided by investing activities of $11,885,000 for the nine months ended September 30, 2023. This fluctuation is driven by the sale of marketable securities approximating $11,330,000 during 2023 versus a sale of $3,029,000 during 2024. This is offset by receipts on Notes receivable of $4,039,000 in 2024 versus $1,419,000 in 2023.

Previous wording

Net cash provided by financing activities was $902,000 for the six months ended June 30, 2024 as compared to net cash used by financing activities of $2,918,000 for the six months ended June 30, 2023. This variance is driven by payments toward long term debt of $1,269,000 in 2024 versus $5,519,000 in 2023.

Current wording

Net cash provided by financing activities was $4,281,000 for the nine months ended September 30, 2024 as compared to net cash used by financing activities of $3,243,000 for the nine months ended September 30, 2023. This variance is driven by payments toward long term debt of $1,492,000 in 2024 versus $4,056,000 in 2023.