Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. YES ~~[ ]~~ ☐ NO ~~[X]~~ ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES ~~[ ]~~ ☐ NO ~~[X]~~ ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ~~[X]~~ ☒ NO ~~[ ]~~☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). YES ~~[X]~~ ☒ NO ~~[ ]~~☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange ~~Act.~~Act

~~Large Accelerated Filer [ ] Accelerated Filer [ ] Non-Accelerated Filer (Do not check if a smaller reporting company) [ ] Smaller Reporting Company [X] Emerging growth company [ ]~~

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any ~~news~~new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ~~[ ]~~☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☐ No ☒

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act). Yes ~~[ ] No[X]~~☐ No ☒

The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant computed by reference to the ~~closing~~ price ~~of such~~at which the common stock was last sold, as reported on the NYSE American LLC exchange on June 30, ~~2017,~~2020 was ~~$9,498,688~~$18,119,034.

The number of shares of the registrant’s common stock outstanding as of March ~~1, 2018,~~14, 2022, was ~~16,599,327.~~83,732,763.

Portions of the registrant’s Proxy Statement relating to the registrant’s 2018 Annual Meeting of Stockholders, which is expected to be filed with the Securities and Exchange Commission within 120 days after December 31, 2017, are incorporated by reference into Part III of this Annual Report on Form 10-K.None.

DSS, Inc. (referred to in this report as “Document Security Systems”, “DSS”, “we”, “us”, “our” or “Company”) was formed in New York in 1984 and, in 2002, chose to strategically focus on becoming a developer and marketer of secure technologies. We specialize in fraud and counterfeit protection for all forms of printed documents and digital information. The Company holds numerous patents for optical deterrent technologies that provide protection of printed information from unauthorized scanning and copying. We operate two production facilities, consisting of a combined security printing and packaging facility and a plastic card facility where we produce secure and non-secure documents for our customers. We license our anti-counterfeiting technologies to printers and brand-owners. In addition, we have a digital division which provides cloud computing services for(together with its ~~customers, including disaster recovery, back-up and data security services. In 2013,~~consolidated subsidiaries (unless the ~~Company expanded its business focus by merging with DSS Technology Management, Inc.~~context otherwise requires), formerly known as Lexington Technology Group, Inc. (as described in greater detail below), which acquires intellectual property assets and interests in companies owning intellectual property assets for the purpose of monetizing these assets through a variety of value-enhancing initiatives, including, but not limited to, investments in the development and commercialization of patented technologies, licensing, strategic partnerships and litigation.

Each of these business lines are in various stages of development, growth, and income generation. Because of these varying degrees of business cycle growth, including the size of the revenues and assets acquired, the Company currently financially reports only on five of these operating segments.

As the other divisions grow and start generating material operations and revenue, those operating segments will be added to our financial segmental reporting.

The following is a summary of the DSS reported transactions and investments since January 2021 that reflect the active advancements and investments in these business lines:

On January 14, 2021, DSS announced its wholly owned subsidiary Impact BioMedical, Inc. (“Impact BioMedical”) received notice of allowance from the U.S. Patent and Trademark Office (“USPTO”) for a [method/composition] patent for its proprietary 3F Biofragrance. 3F Biofragrance is a unique formulation of specialized ingredients (e.g. terpenes) from botanical sources with demonstrated effect as an insect repellent and an antimicrobial. The latest patent allowance (U.S. Patent Application No.: 16/593,693) provides intellectual property protection for the method of use of 3F Biofragrance as an insect repellent. 3F Biofragrance repellent contains botanical ingredients that mosquitoes avoid. This can be utilized as a stand-alone repellent or as an additive in detergents, lotions, shampoo, and other substances to provide mosquito protection.

On January 19, 2021, Impact BioMedical entered into an investment and distribution agreement with Nano9 Labs, LLC (“Nano9”), an R&D and contract manufacturing company specializing in the development of nano-sized nutraceutical products and ingredients. Nano9’s proprietary three-stage process enables the creation of nano particles out of ingredients that traditionally have low to no bioavailability. Founded in 2018, and after two years of improving its technology, Nano9 launched its first product to market in the spring of 2020. Currently Nano9 produces products for 16 companies in four countries.

On January 19, 2021, DSS announced the pricing of an upsized underwritten public offering with gross proceeds to the Company expected to be approximately $24.0 million, before deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company. The public offering equates to 6,666,666 shares of the Company’s common stock at a price of $3.60 per share. The Company intends to use the net proceeds from this offering, together with their existing cash, to fund the development and growth of new business lines, acquisition opportunities, and general corporate and working capital needs.

On January 28, 2021, DSS announced the underwriter of its previously announced public offering of 6,666,666 common shares, has exercised its full over-allotment option to purchase an additional 1,000,000 common shares of the Company. The price to the public in the offering was $3.60 per share and the gross proceeds to the Company from the exercise of the over-allotment option were $3,600,000 before deducting underwriting discounts and commissions and other estimated offering expenses. The total gross proceeds, including the full exercise of the over-allotment option, will be approximately $27.6 million from the public offering.

On February 04, 2021, DSS announced the pricing of an upsized underwritten public offering with gross proceeds to the Company expected to be approximately $34.5 million, before deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company. The public offering equates to 12,319,346 shares of the Company’s common stock at a price of $2.80 per share. The Company intends to use the net proceeds from this offering, together with their existing cash, to fund the development and growth of new business lines, acquisition opportunities, and general corporate and working capital needs. The Company has also granted the underwriters a 45-day option to purchase up to an additional 15% of shares of common stock offered in the public offering to cover over-allotments, if any, which would increase the total gross proceeds of the offering to approximately $39.7 million, if exercised in full.

On February 08, 2021, DSS announced it entered a joint venture (“JV”) with Coinstreet Partners (“Coinstreet”), a global decentralized digital investment banking group and digital asset financial service firm, and GSX Group (“GSX”), a global digital exchange ecosystem for the issuance, trading, and settlement of tokenized securities, using its proprietary blockchain solution. This JV collaboration forms a unique partnership of three key leaders in their field, combining traditional capital market experience, Fintech innovations, and business networks from three continents, North America, Europe, and Asia, to capitalize on unique digital asset opportunities. The newly formed JV will first pursue a digital securities exchange license in the US. Moving forward, this JV will be the key operational company building and operating a digital securities exchange that utilizes the GSX STACS blockchain technology, serving corporate issuers and investors in the sector. This JV is currently in the planning stages.

On February 09, 2021, DSS announced the closing of an upsized underwritten public offering with gross proceeds to the Company of approximately $34.5 million as well as the simultaneous exercise of the underwriter’s over-allotment option for additional gross proceeds of approximately $5.2 million. The Company expects to receive total gross proceeds of approximately $39.7 million, before deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company. The Company issued 14,167,247 shares of common stock at a price of $2.80 per share. The Company intends to use the net proceeds from this offering, together with existing cash, to fund the development and growth of new business lines, acquisition opportunities, and general corporate and working capital needs.

On February 25, 2021, DSS announced the expansion of its DSS Securities, Inc. business through an equity interest in WestPark Capital, Inc.(“WestPark”) and an investment in BMI Capital International LLC (“BMI”). ~~In 2008, we~~DSS executed two separate transactions designed to grow its DSS Securities division, signing a binding note and stock exchange letter of intent to own 7.5% of the issued and outstanding shares of WestPark and acquiring 24.9% of BMI through a purchase agreement. WestPark is a full-service investment banking and securities brokerage firm which serves the needs of both private and public companies worldwide, as well as individual and institutional investors. BMI is a private investment bank specializing in corporate finance advising, raising equity, and venture services, providing a global “one-stop” corporate consultancy to listed companies. From corporate finance to professional valuation, corporate communications to event management, BMI services companies in the US, Hong Kong, Singapore, Taiwan, Japan, Canada, and Australia.

On March 01, 2021, DSS announced an increased investment in Sharing Services Global Corporation (OTCQB: SHRG) (“Sharing Services”), a publicly traded company dedicated to maximizing shareholder value through the acquisition and development of innovative companies, products, and technologies in the direct selling industry, through a $30 million convertible promissory note. Prior to this convertible promissory note investment, DSS owned 37% of the outstanding shares of Sharing Services. Sharing Services generated $98.4 million in revenue and $5.6 million net income in the trailing 12-month period ended September 30, 2020.

On March 16, 2021, American Medical REIT, Inc. received loan proceeds in the amount of approximately $110,000 under the Paycheck Protection Program (“PPP”) with a fixed rate of 1% and a 60-month maturity term. The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. These funds were used for payroll, benefits, rent, mortgage interest, and utilities.

On April 1, 2021, the Company entered into an additional stock purchase agreement with Vivacitas (“Vivacitas Agreement #2”), whereas Vivacities wished to employee the service of the Chief Business Officer of Impact BioMedical, and in return for the services of this individual, Vivacitas shall issue to the Company, the aggregate purchase price for the Class A Common Shares of Vivacitas at the value of $1.00 per share shall be $120,000 to be paid in twelve (12) equal monthly installments for the period between April 1, 2021 and March 31, 2022. As of December 31, 2021, the Company has received 90,000 Common A Shares of Vivacitas.

On April 5, 2021, Decentralized Sharing Systems, Inc., a subsidiary of the Company entered into a convertible promissory note (“SHRG Note”) with Sharing Services Global Corporation (“SHRG”), a company registered in the state of Nevada. The Company loaned the principal sum of $30,000,000, with interest at a rate of 8%, and shall be due and payable in full on demand by the Company, or if the demand is not sooner made, April 5, 2024. The interest shall be prepaid annually in cash or Class A Common Shares.

On April 07, 2021, DSS announced the launch of Alset Solar, Inc. (“Alset Solar”). Alset Solar was formed to pursue development of utility-scale solar farms, providing a clean energy future to polluted or underutilized properties to supplement the power grid or provide small microgrids for independent energy. Alset Solar is a wholly owned subsidiary of Alset Energy, Inc. (“Alset Energy”), the Company’s holding company for its energy group projects. Alset Energy is headquartered in Houston, Texas and is initially seeking market opportunities in the US sunbelt areas, including Texas, Arizona, New Mexico, and Florida.

On April 08, 2021, DSS announced DSS BioMedical International, Inc. (“DSS BioMedical”), a subsidiary of Impact BioMedical, Inc., a wholly owned subsidiary of the Company, completed an equity investment in Vivacitas Oncology, Inc. (“Vivacitas”), a clinical-stage company focused on difficult to treat cancers. Vivacitas was co-founded in 2015 by Dr. Joseph Rubinfeld and Infusion51a with an eye toward redesigning well-known chemotherapies that have already been demonstrated to have beneficial effects, but which may also possess potency, toxicity, stability, and/or pharmacokinetic issues that limit their use. Contributing to the impressive asset acquisition track record is Vivacitas’ partnership with International Infusion Advisors, LLC via its investment arm, Infusion 51A, a relationship that is anchored in a common mission - to develop disruptive technologies aimed at improving the quality of life of cancer patients. As part of its equity investment in Vivacitas, DSS Biomedical received the right to appoint two members to the board of directors of Vivacitas. Separately, DSS BioMedical acquired ~~DPI~~Impact Oncology Pte Ltd (“Impact Oncology”) from Alset EHome International Limited, Inc. The principal assets of ~~Rochester, LLC, a privately held commercial printer located~~Impact Oncology consist of equity in ~~Rochester, New York, referred to herein as “Secuprint” or “DSS Printing Group”. In 2010, we acquired~~Vivacitas.

On April 21, 2021, DSS announced its wholly owned subsidiary, Premier Packaging Corporation (“Premier”), would move its operations into a ~~privately held packaging company~~new 105,000 square-foot facility to meet growing customer demand. Premier expects to be operational in the new space, located in the Town of Henrietta, NY, approximately 15 miles from its current operations in Victor, ~~New York.~~NY, by the end of 2021 (Premier relocated to this location in March 2022). Empire State Development is assisting Premier by providing up to $700,000 in Excelsior Tax Credits in exchange for job creation commitments, with additional assistance commitments to support continued growth from Monroe County and Greater Rochester Enterprise.

On May 7, 2021, the Company completed the sale of 100% of the capital stock of DSS Digital Inc. (“DSS Digital”), the Company’s wholly owned subsidiary, which researched, developed, marketed, and sold the Company’s digital products worldwide. Based on the magnitude of DSS Digital’s historical revenue to the Company and because the Company has exited the brand authentication services, functional anti-counterfeiting technology and technologies to satisfy commercial and consumer product needs for branding, intelligent packaging, and marketing, this sale represented a significant strategic shift that has a material effect on the Company’s operations and financial results.

On May 11, 2021, DSS announced Proof Authentication Corporation (“Proof”) signed a purchase agreement pursuant to which Proof acquired 100% of the outstanding shares of DSS Digital, Inc., a wholly owned subsidiary of the Company and a leader in innovative anti-counterfeit, authentication, and brand protection solutions. Under the terms of the agreement, DSS will retain and sell to certain key customers through a non-exclusive license granted by Proof to DSS, while continuing to use the innovative anti-counterfeiting technology on consumer packaging for authentication and consumer engagement purposes under the Company’s Premier Packaging Corp. division. The terms of the deal with Proof include upfront cash and an earn-out provision that provides for potential payments to DSS based on the achievement of certain revenue targets.

On May 19, 2021, DSS announced the launch of DSS PureAir, Inc. (“DSS PureAir”), the Company’s new wholly owned subsidiary targeting commercial and residential air purification markets, following a significant investment into Puradigm LLC, a manufacturer of proactive air and surface purification solutions that have proven to be safe, scalable and provide 24/7 protection to all indoor environments. Puradigm’s patented, scalable purification products actively and safely purify both air and surfaces in any room. They can be customized for indoor spaces of all sizes, including homes, offices, schools, restaurants, gyms, hospitals, assisted living facilities, food processing facilities and more, and include free standing, wall mounted, HVAC and personal protection devices. Puradigm’s proactive technology has been shown to be effective against a wide variety of pathogens, including SARS-CoV-2, H1N1, E. coli, MRSA, Listeria, C. difficile, staph, and many more. It is the most validated purifier on the market.

On May 20, 2021, Premier Packaging entered into master loan and security agreement (“BOA Note”) with Bank of America, N.A. (��BOA”) to secure financing in an amount not to exceed $3,700,000 to purchase a new Heidelberg XL 106-7+L printing press. The aggregate principal balance outstanding under the BOA Note shall bear interest at a variable rate on or before the loan closing. At closing, the interest rate shall be fixed for the duration of the Loan. As of December 31, 2021, the outstanding principal on the BOA Note was $3,339,000 and had an interest rate of 3.35%.

On May 24, 2021, DSS announced the further expansion of its DSS Securities, Inc. business through an acquisition of 24.9% of Sentinel Brokers Company, Inc. (“Sentinel”), a FINRA-registered broker-dealer. Terms of the agreement include the option to acquire an additional 50.1% of Sentinel. Sentinel primarily operates as a financial intermediary, facilitating institutional trading of municipal and corporate bonds as well as preferred stock. DSS Securities completed its acquisition of 24.9% of Sentinel through its wholly owned subsidiary, Sentinel Brokers, LLC.

On June 14, 2021, DSS announced the pricing of an underwritten public offering with gross proceeds to the Company expected to be approximately $43.5 million, before deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company. The public offering equates to 29,000,000 shares of the Company’s common stock at a price of $1.50 per share. The Company intends to use the net proceeds from this offering, together with their existing cash, to fund the development and growth of new business lines, acquisition opportunities, and general corporate and working capital needs. The Company has also granted the underwriters a 45-day option to purchase up to an additional 15% of shares of common stock offered in the public offering to cover over-allotments, if any, which would increase the total gross proceeds of the offering to approximately $50.0 million, if exercised in full.

On June 16, 2021, DSS announced its wholly owned subsidiary Impact BioMedical, Inc. (“Impact BioMedical”) received notice of issuance (US 10,966,424) from the U.S. Patent and Trademark Office (“USPTO”) for 3FDB, a Functional Fragrance Formulation (3F) technology that increases the effectiveness of current mosquito repellants through a delightfully fragrant compound derived from botanical oils. 3FDB is an efficacy booster for existing mosquito repellants such as DEET, Picaridin, and IR3535, among others. The booster incapacitates two of the three receptors that mosquitos use to find sources of nutrition, in this case, that source is humans.

On June 17, 2021, DSS announced the closing of an underwritten public offering as well as the simultaneous exercise of the underwriter’s over-allotment option for total gross proceeds to the Company of $50.025 million, before deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company. The Company issued 29,000,000 shares of the Company’s common stock and 4,350,000 additional shares from the exercise of the underwriter’s option at the public offering price of $1.50 per share. The Company intends to use the net proceeds from this offering, together with their existing cash, to fund the development and growth of new business lines, acquisition opportunities, and general corporate and working capital needs.

On June 18, 2021, DSS Securities, entered into a stock purchase agreement with AMRE to acquire 264,525 Class A Common Shares of AMRE at a per share price of $10, for a total consideration of $2,645,250. The additional 264,525 Class A Common Shares acquired increases the Company’s total equity interest in AMRE to approximately 93%.

On June 18, 2021, AMRE Shelton, LLC., (“AMRE Shelton”) a subsidiary of AMRE, financed the purchase of a 40,000 square foot, 2.0 story, Class A+ multi-tenant medical office building located on a 13.62-acre site in Shelton, Connecticut for the purchase price of $7,150,000.

On June 30, 2021, DSS announced the further expansion of its DSS Securities, Inc. business through its wholly owned subsidiary DSS Financial Management Inc.’s launch of Liquid Value Asset Management Limited (“LVAM”), a fund management company domiciled in Hong Kong. LVAM’s algorithmic trading includes short- and long-term trades while offering the unique attribute of being able to liquidate the portfolio into cash within 5 to 10 minutes under normal market conditions. Together with the strong performance track record of the team, these attributes position LVAM as a prime vehicle for private and institutional investors seeking a highly liquid investment fund with extremely attractive risk adjusted returns relative to the volatility and unpredictability of the markets.

On July 06, 2021, Impact BioMedical Inc., a wholly owned subsidiary of DSS, Inc., announced updates to several of its key research projects, including key collaborations, breakthroughs in treatment protocols and potential global licensing opportunities as a way to begin planning the next phase of its research agenda and position itself as a global leader in the future of biotech.

On July 12, 2021, Impact BioMedical Inc., a wholly owned subsidiary of DSS, Inc., announced it was issued a patent (Patent # 11,033,528) on June 15, 2021, from the U.S. Patent and Trademark Office for its proprietary compound Equivir. This is a follow-up to the release on April 6, 2021, for the allowance of this patent. The compound has displayed positive pre-clinical results that reduce the risk and/or severity attributable to viral infections, specifically Ebola and Rhinovirus. This patent is the second issued to Impact BioMedical for Equivir; the first (Patent # 10,383,842) was issued August 20, 2019, with claims directed to a method of limiting the occurrence of, reducing the risk or severity of, or treating influenza infection. Equivir is believed to function by impeding a virus’s ability to infect and replicate in host cells. Taken much like a multivitamin, Equivir was specifically designed for ease of rapid accessibility and deployment. Pre-clinical in-vitro success showed Equivir is potentially useful for pandemics and viral outbreaks against SARS-COV2, Influenza, Ebola, Cholera, and Rhinovirus.

On July 22, 2021, the Company exercised 1,000,000 of the available options under the Vivacitas Agreement #1 for $1,000,000. This, along with the shares received as part Vivacitas Agreement #2 increased the Company’s equity position in Vivacitas, which as of December 31, 2021 approximates 16%.

On July 27, 2021, Impact BioMedical, Inc., a wholly owned subsidiary of DSS, Inc. announced with its scientific research partner Global Research and Discovery Group Sciences, GRDG, a collaboration with Thomas Swan Co., to research its plant-based preservation booster, Procombin was developed as a plant-derived preservation booster in an ongoing attempt to use plant-based solutions to increase the effectiveness of antibiotics and antimicrobial agents. The new collaborative research will study Procombin for use in multiple different applications, including household, institutional and personal care products. The research will focus on use in a wide range of consumer products, ranging from household cleaning products to shampoos and conditioners.

On August 02, 2021, DSS announced that its subsidiary, DSS BioMedical International, Inc. (“DSS BioMedical”), completed a $1 million equity investment in Vivacitas Oncology, Inc. (“Vivacitas”), a clinical-stage company focused on difficult-to-treat cancers. Vivacitas Oncology Inc. focuses on developing new treatment options to treat cancers resistant to currently available therapies.

On August 17, 2021, DSS promotes Todd D. Macko to Chief Financial Officer effective August 16, 2021.

On August 23, 2021, Impact BioMedical, Inc., a wholly owned subsidiary of DSS, Inc., along with its scientific research partner Global Research and Discovery Group Sciences, GRDG, announced encouraging results from clinical tests of its 3FDB (“DEET Booster”) technology. These results suggest that 3FDB can boost the effectiveness of mosquito repellants, specifically DEET.

On September 07, 2021, Impact BioMedical, Inc., a wholly owned subsidiary of DSS, Inc. and GRDG Sciences initiated the research project called Quantum in Summer 2020. The purpose of the project was two-fold: to forge a new frontier by exploring new methods for developing medicinal protocols that work more efficiently, thereby encouraging further research and development across the pharmaceutical industry, while at the same time mitigating a projected patent cliff crisis. The Quantum technology is designed to enhance existing therapeutics by looking beyond current molecular enhancement techniques such as molecular substitution, halogenation, prenylation and other biological enhancement methods typical of present therapeutic development schema. This marriage of quantum and molecular mechanics essentially created a classic example of bionics that theoretically increases the efficacy against a variety of diseases.

On September 08, 2021, DSS announced a $15 million investment in the Company by Alset EHome International, Inc. (“Alset EHome”) (Nasdaq: AEI). DSS will issue 12,155,591 shares of its common stock for a purchase price of $1.234 per share for an aggregate amount of approximately $15 million.

On September 09, 2021, DSS announced it signed a subscription agreement for a $40 million investment in American Pacific Bancorp (“APB”). Pursuant to the subscription agreement, APB will issue 6,666,700 shares of its common stock to DSS at $6.00 per share. As a result of this investment, DSS has acquired over 50% of APB’s outstanding shares of common stock, making DSS the majority-owner of APB. As APB acquires equity positions of commercial banks in the US, it targets to inject digital banking capabilities into the banks to provide global banking services to global clients and increase efficiency.

On September 20, 2021, DSS announced it is changing its name from Document Security Systems to DSS, Inc., reflecting sweeping organizational changes and ongoing business expansion The name change will become effective on September 30, 2021.

On October 20, 2021, DSS announced an update on the launch and funding of Liquid Value Asset Management Limited (“LVAM”), a Hong Kong-based investment management company engaging in proprietary algorithmic trading and majority owned by the Company’s wholly owned DSS Financial Management, Inc. (“DFMI”) subsidiary. Under the terms of a shareholders’ agreement between DFMI and HR1 Holdings Limited (“HR1”), DFMI owns 60% of the shares of LVAM and has appointed three of the five directors of LVAM. The remaining two directors have been appointed by HR1, which owns the other 40% of LVAM.

On November 04, 2021, DSS announced its majority-owned subsidiary, American Medical REIT Inc. (“AMRE”), has acquired three hospitals (the “Hospitals”) located in Fort Worth, Texas, Plano, Texas and Pittsburgh, Pennsylvania. The aggregate purchase price for the Hospitals was $62 million. The Hospitals are currently tenanted and operated by LifeCare Hospitals (together with its affiliates, “LifeCare Hospitals”), a specialty hospital operator with a focus on long-term acute and critical care.

On November 30, 2021, DSS announced the launch of DSS AmericaFirst Quantitative Funds. DSS AmericaFirst Quantitative Funds is a suite of mutual funds managed by DSS Wealth Management, Inc. that expects to expand into numerous investment platforms including additional mutual funds, exchange-traded funds, unit investment trusts, and closed-end funds. DSS AmericaFirst Quantitative Funds currently consists of four mutual funds: The DSS AmericaFirst Income Trends Fund (Nasdaq: AFPAX; AFPUX; AFPIX), DSS AmericaFirst Defensive Growth Fund (Nasdaq: DGQAX; DGQUX; DGQIX), DSS AmericaFirst Risk-On Risk-Off Fund (Nasdaq: ABRFX; ABRUX; ABRWX), and DSS AmericaFirst Large Cap Buyback Fund (Nasdaq: SBQAX; SBQUX; SBQIX). The funds seek to outperform their respective benchmark indices by applying a quantitative rules-based approach to security selection. DSS American Quantitative Funds was established through the shareholder approval of DSS Wealth Management as the registered investment advisor (“RIA”) to all the funds within the AmericaFirst Quantitative Funds Trust (“Trust”). In September of 2021, with the approval of the Trust’s Board of Trustees and its shareholders DSS Securities. Inc. (“DSSS”) became the new RIA to the Trust. Upon the completion of the transfer, the Trust was renamed the DSS AmericaFirst Quantitative Trust. DSSS, in its role as RIA, earns fees for each fund calculated as a percentage of the average daily net assets.

On December 15, 2021, DSS announced the opening of a new office in Sacramento, California to serve as the home office for DSS Wealth Management Inc. (“DSS Wealth Management”) and DSS AmericaFirst Quantitative Funds (“DSS AmericaFirst”).

On December 20, 2021, DSS announced its American Pacific Bancorp, Inc. (“APB”) subsidiary has issued nearly $20 million in new loans since September 2021. DSS is the majority-owner of APB, holding more than 50% of its outstanding shares of common stock. APB intends to continue to develop and expand its lending platform to serve the small to mid-size commercial borrower and to continue to acquire equity positions of commercial banks in the US to develop its lending network and to provide global banking services to clients worldwide, including servicing markets with limited access to traditional US banking services. APB’s target customers are businesses with annual revenues of $5 million to $50+ million, including manufacturers, wholesalers, retailers, distributors, importers, and service companies. APB has expertise in, and services tailored for, specific industries, including beverage, food and agribusiness, technology, healthcare, government, higher education, clean technology, and environmental services.

When we began executing on our current strategy of restructuring and recapitalization, the Company had approximately $16.2 million in assets and only a handful of struggling or undercapitalized businesses. In just over two years, we divested underperforming assets, added eight distinct business lines, and grew assets to more than $285 million, which includes a significant amount of cash to leverage our ongoing business plan. We believe 2022 will be a breakout year for DSS. The tireless work of our dedicated team since embarking on our strategy to transform the Company in late 2019 has led to significant value creation and placed us on a solid trajectory for accelerated growth.

We continue to revitalize the company by focusing on strengthening the organization by (i) exiting unprofitable business lines, (ii) investing in and reviving the Company’s core businesses, (iii) improving top line revenues and net margins, (iv) controlling costs and (v) creating new long-term scalable, recurring revenue streams.

In 2020, we made the decision to divest the DSS Plastics Group and sold the primary assets of DSS Plastics Group to a subsidiary of Bristol Graphics for $683,000 at closing, and a contingency payment (earnout) of $517,000 that may be earned over the following 12-month period, $390,000 of which was recognized in 2020. The remaining asset and liability of this division is its lease space located in Brisbane, California. In April 2021, the Company terminated this lease with the landlord effective March 31, 2021. Early in 2021, the company was formally dissolved.

In May 2021, DSS, Inc. and Proof Authentication Corporation (“Proof”) signed a purchase agreement pursuant to which Proof acquired 100% of the outstanding shares of DSS Digital, Inc., a wholly owned subsidiary of DSS and the Company’s anti-counterfeit, authentication, and brand protection technology. DSS retained certain key customers through a non-exclusive licensing agreement while continuing to use the innovative anti-counterfeiting technology on consumer packaging for authentication and consumer engagement purposes under the Company’s Premier Packaging Corp. division.

In 2020, management made substantial adjustments to revive and improve the productivity and operating revenue of our Premier Packaging Corporation, Inc. (Premier) subsidiary. We have invested in operations, state-of-the-art manufacturing equipment, people, and processes to increase its capacity, improve quality and delivery, and to ensure it has the resources to support its growing customer base and their evolving supply chain demands. We have completed its facility expansion with operations beginning at the new 105,000 sq. ft. facility in early March 2022, where DSS, Inc.’s Headquarters will also be located.

We will continue to add capabilities in key areas that increase operational efficiencies to strengthen our foundation and offerings to our customers, while continuing to provide world-class customer service to the customers we serve.

One of the most important objectives of our strategic business plan is ~~also referred~~the commitment to ~~herein as “Premier Packaging”~~diversify the Company’s operating revenue. Management believes it imperative to transition the Company’s revenue into new business lines which generate scalable and reoccurring revenue, preferably in contemporary and emerging growth business opportunities. To achieve this goal, we continue to acquire, invest in, or start-up new business lines that meet this criterion. Adding additional products and assets to existing business lines is essential so that current operations can continue on their growth trajectory and further transition toward scalable, recurring revenue streams.

Within the ~~“DSS Packaging Group.”~~ past year, we have had three successful public offerings and have put this capital to work in several ways. Our diverse book of clients and investments has given us strong competitive advantages globally in many industries; we intend to aggressively capitalize on these advantages moving forward.

In ~~May 2011, we acquired ExtraDev, Inc. a privately held information technology~~2021, the Company made substantial investments in the following new and ~~cloud computing company located in Rochester, New York. In 2016, ExtraDev, Inc. changed its name to DSS Digital Inc. DSS Digital Inc. is also referred to herein as the “DSS Digital Group”.~~existing business lines:

~~On July 1, 2013, we merged with DSS Technology Management, Inc. (formerly known as Lexington Technology Group, Inc.)~~REAL ESTATE INVESTMENT TRUST (REIT) - A portion of this capital has been deployed into American Medical REIT (AMRE), a ~~private intellectual~~subsidiary of DSS Securities, Inc., which acquired its first four medical facilities in 2021, totaling approximately 360,000 sq. ft. of quality healthcare assets across the US and more than $74 million in assets. This division is now generating average yields of approximately eight percent, and we have a massive pipeline of opportunities to further grow AMRE in the quarters ahead – including an LOI for a property ~~monetization company.~~ that could more than double its total assets.

While other areas within commercial real estate have been impacted by the ongoing pandemic, medical real estate has demonstrated considerable resiliency and demand. With a now formidable foundation in place, we are in a great position to further pursue opportunities to expand AMRE as we continue to execute on our strategic growth plans. Ultimately, this is a business we intend to spinoff in an IPO at an optimal time, enabling us to further share our success with our shareholders.

COMMERCIAL LENDING - The expansion of our medical real estate holdings is in part supported by our lending and financing business line, primarily through our majority-owned American Pacific Bancorp, Inc. (APB) subsidiary. APB issued nearly $20 million in new loans since September 2021 and has assembled a diversified portfolio of strong credit quality. In addition to commercially licensed medical real estate financing, APB’s portfolio includes governmental bond anticipation note financing, C&I inventory and equipment financing, and land development loans.

Our $40 million 2021 third quarter investment in APB has been extremely successful, driving the expansion of our reoccurring scalable business income model in multiple ways. We now have nearly half of the fresh funds we injected generating interest and fee income, and we expect to have another $15 million loaned out in the near-term as we build our portfolio of high-quality commercial loans.

DSS ~~Technology Management, Inc. is also referred~~BIOHEALTH SECURITY, INC. -

Impact BioMedical progressed on multiple fronts in 2021, including key patent awards, the advancement of key programs, the release of positive study results, and furthering of global manufacturing and pharmaceutical licensing discussions. We anticipate announcing our first licensing deal in the near future.

In July 2021, Impact BioMedical entered a collaboration to ~~herein~~research its plant-based preservation booster, Procombin. Personal care as ~~“DSS Technology Management” or “DSSTM”. DSS Technology Management~~well as household and institutional cleaning formulators are dealing with a dwindling set of options for safe and effective preservatives and preservation boosters. Procombin was developed to address this challenge by using plant-based solutions to increase the effectiveness of antibiotics and antimicrobial agents. Major contract negotiations are underway for the potential use of Procombin in a wide range of consumer products, ranging from household cleaning products to shampoos and conditioners.

During the past year, Impact BioMedical has laid the groundwork for a future that is focused on ~~extracting~~scientifically tested, high-impact solutions to global problems that humans are facing from food preservation to antibiotics to creating new ways to develop medicines.

In addition to Impact BioMedical, we expanded our BioHealth business in 2021 through investments in Vivacitas Oncology, Inc. (Vivacitas) and Puradigm, LLC. (Puradigm). These investments give us positions in both the ~~economic benefits~~oncology space as well as the air purification and pathogen prevention market.

Our March 2021 investment in Vivacitas, a clinical-stage company focused on difficult-to-treat cancers, further demonstrated our commitment to addressing unmet needs in healthcare. With a rich pipeline of ~~intellectual property~~promising assets, Vivacitas provides significant upside potential.

In May 2021, we launched DSS PureAir, Inc. concurrently with our investment in Puradigm, the developer of innovative proactive air and surface purifications solutions. Even before COVID-19, the market for air purifiers was strong, and now growth is accelerating even more. Our partnership with Puradigm enables us to rapidly enter this growing global market with best-in-class products and distribution rights in North America, as well as exclusive distribution rights in Singapore, Hong Kong, Taiwan, Korea, Malaysia, and other Asian markets.

DECENTRALIZED SHARING SYSTEMS - The Direct Marketing / Online Sales industry is a market that will help us diversify and meet our scalable reoccurring revenue target in an exponential growth industry with high profit margins. The direct marketing, network marketing, or online sales is designed to sell products or services directly to the public through ~~acquiring~~independent distributors, rather than selling through the traditional retail market. We believed that with the transition of a significant sector of retail sales now converting to the now popular “gig economy”, an investment in this business model would meet our strategic business plan objective and vision.

On March 1, 2021, Decentralized Sharing Systems, Inc. (“Decentralized”) announced that it increased its investment in Sharing Services Global Corporation (“Sharing Services” or ~~internally developing patents or other intellectual property assets (or interests therein)~~“SHRG”), a publicly traded company dedicated to maximizing shareholder value through the acquisition and ~~then monetizing such assets~~development of innovative companies, products, and technologies in the direct selling industry, through a ~~variety~~$30 million convertible promissory note dated April 5, 2021. Through this investment in Sharing Services Global, we gained controlling interest with nearly 60 percent ownership. The SHRG platform leverages the capabilities and expertise of ~~value enhancing initiatives.~~various companies that market and sell products direct to the consumer and generated nearly $28 million in revenue in the nine months ended December 31, 2021.

With SHRG now officially part of the DSS family, we believe we are in a great position to accelerate its customer acquisition, new product development, and portfolio of offerings as we capitalize on a wealth of growth opportunities and potential synergies in this exciting, multi-billion-dollar industry. Building upon the success already achieved by the SHRG team, we plan to explore opportunities to enter new markets while continuing to expand SHRG’s independent representative network, both domestically and globally, which currently stands at more than 14,000 active distributors. In addition to capitalizing on organic growth opportunities, we are actively exploring some very exciting potential acquisitions to further accelerate our growth in this attractive and sizeable global market.

With our increased position and majority ownership of SHRG, its financials will be consolidated moving forward. Based on historical performance, this alone places DSS on a solid trajectory to generate potential revenue in excess of $50 million in 2022, representing potentially more than a 150 percent increase in revenue growth year-over-year.

SECURITIES AND INVESTMENT MANAGEMENT GROUP - The Securities business line was organized in 2019 as part of the strategic business plan to establish or acquire assets positioned for long-term and scalable, recurring fee income. These targeted investments include REITs, broker/dealers, mutual funds management, ETFs, and other fund management platforms.

Our rapidly growing securities business line achieved strong footholds achieved in 2021 – including strategic investments in broker dealers WestPark Capital and Sentinel Brokers; the formation of Liquid Value Asset Management Limited (LVAM), and the launch of our DSS AmericaFirst Quantitative Funds (DSS AmericaFirst) family.

LVAM is a proprietary algorithmic trading firm majority owned by our wholly owned subsidiary, DSS Financial Management, Inc. Led by Wilson Lee, former co-head of Societe Generale’s equity derivatives in Asia, and Jackson Kwan, a former portfolio manager at Citadel in Chicago, LVAM aims to include short- and long-term trades while offering the unique attribute of being able to liquidate the portfolio into cash within five to ten minutes under normal market conditions. Together with the strong performance track record of the team, these attributes position LVAM as a prime vehicle for private and institutional investors seeking a highly liquid investment fund with extremely attractive risk adjusted returns relative to the volatility and unpredictability of the markets.

DSS AmericaFirst, launched in the fourth quarter of 2021, is a suite of mutual funds managed by DSS Wealth Management, Inc. DSS AmericaFirst currently consists of four mutual funds and expects to expand into numerous investment platforms including additional mutual funds, exchange-traded funds, unit investment trusts, and closed-end funds.

As we have reported above, we financially report business operating results on only five operating segments, which we believe will certainly increase and transition as the newer lines of business develop and mature. However, the five business segments that we are reporting on in 2021 are as follows:

~~DSS Packaging and Printing Group~~Premier Packaging: ~~- Produces~~(“Premier”) Premier Packaging Corporation provides custom ~~paperboard~~ packaging ~~serving~~services and serves clients in the pharmaceutical, nutraceutical, consumer goods, beverage, specialty foods, confections, photo packaging ~~toy, specialty foods~~ and direct marketing industries, among others. The group also provides ~~secure~~active and ~~commercial~~intelligent packaging and document security printing services for end-user ~~customers along with technical support for our technology licensees. The~~customers. In addition, the division produces a wide array of printed materials, such as folding cartons and paperboard packaging, security paper, vital records, prescription paper, birth certificates, receipts, ~~manuals,~~ identification materials, entertainment tickets, secure coupons and parts tracking ~~forms, brochures, direct mailing pieces, catalogs, business cards, etc.~~forms. The division also provides resources and production equipment ~~resources~~ for our ongoing research and development of security printing, brand protection, consumer engagement and related technologies. Premier is nearing completion of its facility expansion with operations expected to begin at the new 105,000 sq. ft. facility in early March 2022.

~~DSS Plastics Group~~ - Manufactures laminated and surface printed cards which can include magnetic stripes, bar codes, holograms, signature panels, invisible ink, micro fine printing, guilloche patterns, biometric, radio frequency identification (RFID) and watermarks for printed plastic documents such as ID cards, event badges, and driver’s licenses.

~~DSS Digital Group~~ - Provides data center centric solutions to businesses and governments delivered via the “cloud”. This division developed an iPhone based application that integrates some of our traditional optical deterrent technologies into proprietary digital data security basedFor over 25 years, Premier has been a market leader in providing solutions for ~~brand protection~~paperboard packaging from consumer retail packaging and ~~product diversion prevention.~~heavy mailing envelopes, to sophisticated custom folding cartons and complex three-dimensional direct mail solutions. Premier’s innovative products and design team delivers packaging that provides functionality, marketability, and sustainability, with its fiber-based packing solutions providing an alternative to traditional plastic packaging.

Since 2019, we have accelerated the transformation of Premier’s operations, investing in state-of-the-art manufacturing equipment, people, and processes to increase its capacity, improve quality and delivery, and to ensure it has the resources to support its growing customer base and their evolving supply chain demands.

We will continue to add capabilities in key areas that increasing operational efficiencies to strengthen our foundation and offerings to our customers while continuing to provide world-class customer service to the customers we serve.

~~DSS Technology Management~~Commercial Lending: ~~- Acquires or internally develops patented~~(“Commercial Lending”) through its operating company, American Pacific Bancorp (“APB”) provides an integrated suite of financial services for businesses that include commercial business lines of credit, land development financing, inventory financing, third party loan, servicing, and services that address the financial needs of the world Gig Economy. APB intends to continue to develop and expand its lending platform to serve the small to mid-size commercial borrower and to continue to acquire equity positions of commercial banks in the US to develop its lending network and to provide global banking services to clients worldwide, including servicing markets with limited access to traditional US banking services. APB’s target customers are businesses with annual revenues of $5 million to $50+ million, including manufacturers, wholesalers, retailers, distributors, importers, and service companies. APB has expertise in, and services tailored for, specific industries, including beverage, food and agribusiness, technology, ~~or intellectual property assets (or interests therein), with~~healthcare, government, higher education, clean technology, and environmental services

Biotechnology: (“Biotech”) This sector, through its subsidiary Impact BioMedical, Inc. targets unmet, urgent medical needs and expands the ~~purpose~~borders of ~~monetizing these assets through a variety of value-enhancing initiatives, including, but not limited to, investments in the~~medical and pharmaceutical science. Impact drives mission-oriented research, development, and commercialization of solutions for medical advances in human wellness and healthcare. By leveraging technology and new science with strategic partnerships, Impact Bio provides advances in drug discovery for the prevention, inhibition, and treatment of neurological, oncology and immuno-related diseases. Other exciting technologies include a breakthrough alternative sugar aimed to combat diabetes and functional fragrance formulations aimed at the industrial and medical industry.

Biotech and Impact BioMedical have several important and valuable products, technology or compounds that are in continuing development and/or licensing stages:

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

1) Impact develops valuable and unique patented technologies ~~licensing, strategic partnerships~~which will be licensed to pharmaceutical, large consumer package goods companies and ~~commercial litigation.~~

Since its acquisition by the Company in 2013, DSS Technology Management’s primary mission has been the attempted monetization of its various patent portfolios through commercial litigation. The status of pending patent infringement lawsuits which have been filed by DSS Technology Management and the Company are more particularly described in Part 1, Item 3 of this Report.

~~DSS Technology Management and the Company have partnered with various third-party funding groups in connection with patent monetization programs and may continue to do so in the future.~~

~~In February 2014, DSS Technology Management entered into an agreement with certain investors to receive a series of advances up to $4,500,000~~venture capitalists in exchange for ~~promissory notes, fixed return interests~~usage licensing and ~~contingent interests collateralized by~~royalties.

2) Impact utilizes the DSS ecosystem to leverage its sister companies that have in place distribution networks on a global scale. Impact will engage in branded and private labelling of certain products for sales generation through these channels. This global distribution model will give direct access to end users of ~~DSS Technology Management’s intellectual property. On February 13, 2014, we received $2,000,000 under the agreement~~Impact’s nutraceutical and on March 27, 2014, we received an additional $1,000,000 under the agreement. On September 5, 2014, we received the remaining $1,500,000 under the agreement. As of February 13, 2016, DSS Technology Management had failedhealth related products.

Securities and Investment Management: (“Securities”) Securities was established to ~~repay a portion of the $4,500,000 of advances as called for~~develop and/or acquire assets in the ~~agreement,~~securities trading or management arena, and ~~therefore was in default for non-payment under~~to pursue, among other product and service lines, real estate investment funds, broker dealers, and mutual funds management. This business sector has already established the ~~agreement. On December 2, 2016, the parties amended the February 2014 agreement for the purposes of vacating DSS Technology Management’s ongoing default~~following business lines and amending certain provisions of the original agreement (the “Amendment”). Under the Amendment, DSS Technology Management had until February 13, 2018 to satisfy the required payment terms under the February 2014 agreement, as amended. As additional consideration for this extension, DSS Technology Management agreed to (i) pay the investors an amount equal to 25% of any amounts it receives for monetization activities related to certain patents covering systemsassociated products and ~~methods of using low power peripheral devices (collectively, the “BlueTooth Patents”~~services:

Direct Marketing: (“Direct”) ~~until the investors have received payments totaling $4,500,000 plus additional capitalized expenses of $150,000, (ii)~~Through its holding company, Decentralized Sharing Systems, Inc. and its subsidiaries and partners, including Sharing Services Global Corporation provide the investors with additional security interests in certain of its semiconductor patents, and (iii) deposit the sum of $600,000 over a two-year period into a separate cash collateral account to be utilized for pursuing related patent monetization activities and for payment of certain qualifying business expenses of DSS Technology Management. On February 13, 2018, the Maturity Date, DSS Technology Management failed to pay the Investors an amount equal to (x) two times the aggregate amount of all Advances made by the Investors as of such date plus (y) the Capitalized Expenses, which was an Event of Default under the February 2014 agreement, as amended. The sole recourse available to the Investors under the February 2014 agreement, as amended, is the establishment of a special purpose entity controlled by the Investors which would take ownership of the Collateral consisting of the patents covered under the February 2014 agreement, as amended. Each of the Investors and the Collateral Agent have contractually agreed that they will not, individually or collectively, seek to enforce any monetary judgment with respect to or against any assets of the Company other than the Patents and the Monetization Payments and the remaining Deposit. The Investors and the Collateral Agent have not taken any action as of the date of this Report to take ownership of the Collateral.

On November 14, 2016, the Company entered into a Proceeds Investment Agreement (the “Agreement”) with Brickell Key Investments LP (“BKI”). Pursuant to the Agreement, BKI financed an aggregate of $13,500,000 in a patent purchase and monetization program to be implemented and managed by the Company (the “Financing”). Pursuant to the Agreement, $3,000,000 of the Financing was used to cover the Company’s purchase of a portfolio of U.S. and foreign LED patents and a license from Intellectual Discovery Co., Ltd., a Korean company (collectively, the “LED Patent Portfolio”), and $6,000,000 of the Financing was directed by BKI to attorneys to cover those attorneys’ fees and out-of-pocket expenses for legal proceedings that may transpire relating to enforcement of the LED Patent Portfolio. In addition, the Company received $4,500,000 of the Financing which is required to be used by the Company to pay for the defense of~~Inter Partes Review~~ or other similar proceedings that may be filed from time to time by defendants with the U.S. Patent & Trademark Office relating to the LED Patent Portfolio, with excess amounts available for general working capital needs.

In consideration of its portion of the Financing, the Company assigned to BKI its rights to the Patent Asset Proceeds, defined as any and all monetary recoveries (whether through damages, recoveries, royalties, monies, lump-sum payments, up-front payments, settlement amounts, distribution of property, cash value of equities, license fees or other revenues or other assets or amounts) paid by a defendant or defendants or a third-party to the Company as a result of or in connection with the LED Patent Portfolio, in an amount equal to the Minimum Return and the Additional Return as hereinafter defined (the “Assigned Rights”). Under the Assigned Rights, in addition to repayment in full of the Financing, the Company will pay BKI, solely from realized Patent Asset Proceeds, a return equal to the sum of (A) a certain multiple of the Financing or a designated annualized IRR Return on the Financing, whichever is greater (the “Minimum Return”), plus (B) and additional designated percentage of the Patent Asset Proceeds net of the Minimum Return (the “Additional Return”). Once the Minimum Return and Additional return to BKI are satisfied, Intellectual Discovery Co., Ltd. will be entitled to a payment of a certain percentage of the Patent Asset Proceeds with the remaining balance of Patent Asset Proceeds to be retained by the Company. In addition to the above consideration, the Company also issued to BKI a five-year warrant to purchase up to 750,000 shares of the Company’s common stock at an exercise price of $1.00 per share.

Our core business is counterfeit prevention, brand protection and validation of authentic print media, including government-issued documents, packaging, ID cards and licenses. We believe we are a leader in the research and development of optical deterrent technologies and have commercialized these technologies with a suite of products that offer our customers an array of ~~document security solutions. We provide document security technology~~products and services, through an independent contractor network.

For example, Decentralized’s wholly owned subsidiary, HWH World, Inc. promotes products and services that fulfill its corporate position of health, wealth, and happiness. The HWH Marketplace through its brands desires to ~~security printers, corporations, consumer product companies,~~help its customers become the healthiest, happiest versions of themselves. For the health component, the company offers herbal alternatives of nutraceutical, consumables and ~~governments for protection of vital records~~topicals, dietary supplements, beauty and ~~documents, certifications,~~skin care products, personal care, gut health products, aloe vera based supplements, and other wellness products. As to the wealth component, the company is developing educational tools to its users to better manage individual finances and savings programs to help its consumers find each consumer’s individual financial goal. As to the happiness component, the company is working with other partners to either acquire or partner in products and/or services to allow its consumers to enjoy and healthy living, including a global travel ~~documents, consumer~~membership network.

Further, Sharing Services, through its subsidiary Elevacity, markets and distributes health and wellness products ~~pharmaceutical packaging and school transcripts.~~

~~Optical deterrent features such as ours are utilized mainly by large security printers for~~under the protection of important printed documents, such as vital records, and identification documents. Many of these features, such as micro-printing, were developed pre-1980 as they were designed to be effective on the imaging devices of the day which were mainly photography mechanisms. With the advent of modern day scanners, digital copiers, digital cameras and easy to use imaging software such as Adobe Photoshop many of the pre-1980 optical deterrents such as micro-printing are no longer used or are much less effective“Elevate” brand, primarily in the ~~prevention~~United States and Canada. Sharing Services markets its products and services through its independent contractor distribution system and using its proprietary website: www.elevacity.com. In February 2021, the Company launched its new business brand, “The Happy Co.,” at its Elevacity division. Elevacity as several well-known and signature products, including its top product lines of ~~counterfeiting.~~“Happy Coffees” and “Nootropic Beverages”. Elevacity also sells a “healthy shake”, a “Keto Coffee Booster”, “Energy Caps”, “XanthoMax© Happy Caps”, “Wellness Vitamin Patches”, various beauty and skin care products, and other wellness products.

Related to our Impact BioMedical Division we have key patents that we will use as the foundation for foster product development and licensing. We have 5 patents for some of our ~~competitors, our technologies are developed~~key products including Linebacker, Equivir/Nemovir, Laetose and 3F. Our intellectual property will enable us to ~~defeat today’s modern imaging systems. Almost all of our products and processes are built to thwart scanners and digital copiers and~~be protected as we believe that our products are the most effective in doing so in the market today. In addition, our technologies do not require expensive hardware or software add-ons to authenticate a document, but instead require simple, inexpensive hand-held readers which can be calibrated to particular hidden design features. Our technologies are literally ink on paper that is printed with a particular method to hide selected things from a scanner’s “eye” or distort what a scanner “sees.” These attributes make our anti-scanning technologies very cost effective versus other current offerings on the market since our technologies are imbedded during the normal printing process, thereby significantly reducing the costs to implement the technologies.

~~The Company’s primary anti-counterfeiting products and technologies are marketed under its AuthentiGuard® registered trademark.~~

In October 2012, the Company introduced AuthentiGuard®, an iPhone application for authentication, targeted to major Fortune 500 companies worldwide. The application is a cloud-enabled solution that permits efficient and cost-effective authentication for packaging, documents and credentials. The solution embeds customizable, covert AuthentiGuard® Prism technology that resists duplication on copiers and scanners in a product’s packaging. Product verification using a smartphone application creates real-time, accurate authentication results for brand owners that can be integrated into existing information systems.

Our ability to compete effectively depends largely upon our ability to maintain the proprietary nature of our technology, products and manufacturing processes. We principally rely upon patent, trademark, trade secrets and contract law to establish and protect our proprietary rights. During our development, we have expended significant resources on research and development in an effort to become a market leader with the ability to provide our customers effective solutions against an ever- changing array of counterfeit risks. Our position in the security print market is based on ourfurther these technologies and ~~products. We dedicate two staff members~~pave the road to research and development of print technologies, digital graphic files, and printing techniques to allow us to expand our ability to combat a wide variety of counterfeiting and brand protection issues. In 2017 and 2016, we spent approximately $106,000 and $435,000 respectively, on research and development which is comprised mainly of compensation costs, materials and consultants, including stock-based payments to consultants. Research and development costs decreased during 2017 as compared to 2016 as the Company moved some personnel from research and development to program support to meet the requirements of current and prospective customers of the Company’s AuthentiGuard® product line.commercialization.

We own patents covering semiconductor, light emitting diode, ~~anti-counterfeiting and document authentication,~~ and wireless peripheral technologies, respectively. We also have several patent applications in process, including provisional and Patent Cooperation Treaty (“PCT”) patent applications in various jurisdictions including the United States, Canada, and Europe. These applications cover our anti-counterfeiting technologies, including our AuthentiGuard® On-Demand and ADX, AuthentiGuard® Prism™, AuthentiGuard® Phantom™, AuthentiGuard® Survivor 21™, AuthentiGuard® VeriGlow™ products, and several other anti-counterfeiting and authentication technologies in development. Our issued patents have remaining durations ranging from 1 to 1716 years.

We ~~have registered~~several trademarks related to our ~~“AuthentiGuard®” mark, as well as~~related to our ~~“Survivor 21®” electronic check icon~~HWH, SHRG, Impact BioMedical, and “VeriGlow®” with the U.S. Patent and Trademark Office. A trademark application is pending in Canada for “AuthentiGuard.” AuthentiGuard® is registered in several European countries including the United Kingdom. We have also applied to register AuthentiSite TM, AuthentiShare TM, AuthentiSuiteTM, AuthentiBlockTM, and AuthentiChainTM in the U.S.DSS, Inc. businesses.

The primary corporate website we maintain is ~~www.dsssecure.com,~~ www.dssworld.com, which describes our ~~company,~~Company, our ~~company history,~~

American Pacific Bancorp (“APB”):https://www.ampacbancorp.com – Our commercial lending company.

American Medical REIT, Inc: http://www.americanmedreit.com – our ~~patented document security solutions,~~medical real estate investment trust company.

Impact Biomedical: https://www.impactbiomedinc.com - our ~~major product offerings,~~human wellness and ~~our targeted vertical markets. The website provides detailed product offerings of each of our divisions – Printing/ Packaging, Plastics~~healthcare company.

SHRG: https://www.shrginc.com - Our majority owned technology, eCommerce, and ~~Digital. In addition, we maintain the website www.protectedpaper.com,~~gig economy opportunities company.

HWH (Health, Wealth & Happiness) Marketplace: https://www.hwhmarketplace.com - an ~~e-commerce~~online retail site that ~~markets~~is centered around our health and ~~sells~~wellness nutraceutical products.

DSS AmericaFirst: https://www.afcm-quant.com - a suite of mutual funds managed by DSS Wealth Management, Inc.

Premier Packaging: https://www.premiercustompkg.com - our ~~patented security paper, hand-held security verifiers~~printing and ~~custom security documents to end users worldwide.~~ packaging company.

In addition to the active websites, the Company is building multiple new sites and owns several other domain names reserved for future use or for strategic competitive reasons. Information on our websites or any other website does not constitute a part of this annual report.

The security print market is comprised of a few very large companies and an increasing number of small companies with specific technology niches. The expansion of this market is primarily due to the fact that counterfeiting has expanded significantly as advancing technologies in digital duplication and scanning combined with increasingly sophisticated design software has enabled easier reproduction of original documents, vital records and IDs, packaging, and labels. Our competitors include Standard Register Company, which specializes in printing security technologies for the check and forms and medical industries; and De La Rue Plc, that specializes in printing secure currency, tickets, labels, lottery tickets and vital records for governments and Fortune 500 companies. Large office equipment manufacturers, called OEMs, such as Sharp, Xerox, Canon, Ricoh, Hewlett Packard and Eastman Kodak are developing “smart copier” technology that recognizes particular graphical images and produces warning words or distorted copies. Some of the OEMs are also developing user assigned and variable pantograph “hidden word” technologies in which users can assign a particular hidden word in copy, such as “void” that is displayed when a copy of such document is made. In addition, other competing hidden word technologies are being marketed by competitors such as NoCopi Technologies which sells and markets secure paper products, and Graphic Security Systems Corporation, which markets Scrambled Indicia.

Product Packaging: Our packaging division competes with a significant number of national, regional ~~and local~~ companies, many of which are independent and ~~privately-held.~~privately held. The largest competitors in this market are primarily focused on the long-run ~~print order market.~~consumer package goods and health and beauty markets. They include large integrated paper companies such as ~~Rock-Tenn~~West Rock Company, ~~Caraustar Industries, Inc.,~~and Graphic Packaging Holding ~~Company~~Company.

Commercial Lending: Our commercial lending company, American Pacific Bancorp (“APB”) provides an integrated suite of financial services for businesses that include commercial business lines of credit, land development financing, inventory financing, third party loan, servicing, and ~~Mead Westvaco.~~services that address the financial needs of a variety of diversified businesses lines. These efforts compete with a wide variety of traditional commercial banks and investment banking companies including.

Biotechnology: Our ~~printing division competes primarily~~biotechnology companies including Impact Biomedical Inc., are focused on the discovery, development, and commercialization of products and technologies to address unmet needs in human healthcare and wellness. Specific areas of focus include specialty biopharmaceuticals, antivirals, antimicrobials, and consumer healthcare and wellness products, often derived from naturally sourced elements. These efforts compete with ~~locally-based printing~~established and start-up companies, university research and development efforts, and individual inventors and scientists. Examples of competitors include Ipsen Pharmaceuticals, Conagen Inc., Mylan Consumer Healthcare, Klaire Labs, Vertex Pharmaceuticals, and the National Center of Natural Product Development at the University of Mississippi.

Direct Marketing: The network marketing or direct marketing industry is a very competitive marketplace. While not directly competing with HWH and SHRG, the following companies are significant players in the ~~Rochester~~global network marketing business and ~~Western~~as a result an indirect competitor of HWH and SHRG: Amway, Avon, Herbalife, Natura, Vorwerk, Mary Kay, Perfect, Forever Living, Nu Skin, Young Living, and New ~~York markets. Most of our competitors in these markets are privately-held, single location operations.~~Era, among others.

~~Our plastics division competes with several companies including Bristol ID, AbNote (formerly Arthur Blanks), LaserCard Corporation~~Securities and ~~L-1 Identity Solutions. The plastics division primarily delivers its products through a dealer network, but also provides products~~Investment Management: Was established to ~~end-user customers. Competition~~develop and/or acquire assets in the ~~plastic card industry is primarily based on production capabilities based on specialized equipment, geographic location, quality~~securities trading or management arena. These efforts and ~~service. In addition, competition is increasingly influenced by proprietary~~established business lines compete with individual money managers, companies or ~~niche offerings provided by competitors, such as RFID, biometric, read-write, and security features built-into the plastic card.~~

~~Our technology division also faces competition~~organizations that engage in the ~~area~~business of ~~patent acquisitions~~trading securities and ~~enforcement. Entities such as Acacia, RPX, AST, Intellectual Ventures, Wi-LAN, MOSAID, Round Rock Research LLC, IPvalue Management Inc., Vringo Inc.~~derivatives for the benefit of their customers. Traditional RIA’s, Brokers Dealers, REIT’s and ~~Pendrell Corporation compete in acquiring rights to patents.~~other personal investment companies would also be considered competition.

Product Packaging: During ~~2017,~~2021, two customers accounted for ~~46%~~approximately 41% of ~~the Company’s~~our consolidated revenue. As of December 31, ~~2017~~2021, these two customers accounted for approximately 48% of our consolidated trade accounts receivable balance. As of December 31, 2020, these two customers accounted for 38% of our consolidated revenue and 60% of the Company’s consolidated trade accounts receivable balance. This customer diversification improvement was driven by addition of several new customers to our overall customer base.

Commercial Lending: During ~~2016, these same two~~2021, American Pacific Bancorp, Inc. has issued nearly $26 million in new loans since September 2021 to customers ~~accounted for 38%~~with strong credit quality across a diverse portfolio of businesses. We anticipate another 15M + of new commercial loans in the ~~Company’s consolidated revenue. As of December 31, 2016, these two~~near term. Top customers ~~accounted for 31% of the Company’s trade accounts receivable balance.~~

~~Raw Materials~~include Harris-Montgomery Counties Management District, American Medical REIT, Inc., and ASILI, LLC.

Direct Marketing: During 2021 our direct marketing companies HWH World, SHRG and its subsidiary, The Happy Co. continued to build their customer bases and brand recognition on a global basis. These businesses utilize person-to-person sales by independent representatives through direct communication and distribution to individual consumers and their networks. Mail, email, social media, influencers or affiliates, and texting campaigns are among the delivery systems used to communicate and sell to our thousands of customers.

Securities and Investment Management: Since October of 2021, our Securities and Investment Management division has a mixture of retail and institutional investors.

Product Packaging: The primary raw materials the Company uses in its businesses are paper, paperboard, corrugated ~~paperboard, plastic sheets,~~board and ink. The Company negotiates with leading suppliers to maximize its purchasing efficiencies and uses a wide variety of paper grades, formats, ink formulations and colors. Paper and paperboard prices continued to increase in ~~2017,~~2022, and we believe increases in future years are expected. Except for certain packaging customers where the Company enters into annual contracts, for which changes in paperboard pricing is absorbed by the Company, the Company has historically passed substantially all increases and decreases to its customers, although there can be no assurances that the Company will continue to do so in the future.

Direct Marketing: Sources its products from 3^rd party suppliers for nutritional, performance, and health and beauty product ingredients. We rely on our extensive supplier network for availability of an extensive range of vitamins, minerals, botanicals, plant and herb extracts, as well as nutritional supplements. We are expecting continue price pressure and supply chain issues into 2022 and have put significant risk mitigation strategies in place to avoid dramatic P&L effects based on this anticipated and continued volatility. The company passes any substantial increase of its raw materials or finished goods on to its customers to limit any significant margin impact.

It is the Company’s policy to conduct its operations in accordance with all applicable laws, regulations, and other requirements. While it is not possible to quantify with certainty the potential impact of actions regarding environmental matters, particularly remediation and other compliance efforts that the Company may undertake in the future, in the opinion of management, compliance with the present environmental protection laws, before taking into account estimated recoveries from third parties, itwill not ~~expected to~~ have a material adverse effect on the Company’s consolidated annual results of operations, financial position or cash flows.

In light of the events of September 11, 2001 and the subsequent ongoing war on terrorism, governments, private entities and individuals have become more aware of, and concerned with, the problems related to counterfeit documents. Homeland security remains a high priority in the United States. For example, in 2007, federal legislation was enacted that required hospitals, physicians and pharmacies to use tamperproof paper to fill all Medicaid prescriptions. The requirement, which was part 7002(b) of the “U.S. Troop Readiness, Veterans’ Care, Katrina Recovery and Iraq Accountability Appropriations Act of 2007”, was effective April 1, 2008.

We play an active role with the Document Security Alliance group, as one of our research and development management members sits on various committees of that group and has been involved in design recommendations for important U.S. documents. This group of security industry specialists was formed by the U.S. Secret Service to evaluate and recommend security solutions to the federal government for the protection of credentials and vital records.

~~Future legislation regarding anti-terrorism, counterfeiting or related areas could impact, possibly adversely, our counterfeit prevention, brand protection and validation business.~~

Our ~~patent monetization~~biotechnology business is ~~also~~ faced with potential government regulations. If new legislation, regulations, or rules are implemented either by Congress, the U.S. Patent and Trademark Office (the “USPTO”), or the courts that impact the patent application process, the patent enforcement process or the rights of patent holders, these changes could negatively affect our patent monetization efforts and, in turn, our assets, expenses and revenue. United States patent laws have been amended by the Leahy-Smith America Invents ~~Act (“The America Invents Act”).~~Act. The America Invents Act includes ~~a number of~~several significant changes to U.S. patent law. In general, the legislation attempts to address issues surrounding the enforceability of patents and the increase in patent litigation by, among other things, establishing new procedures for patent litigation. For example, the America Invents Act changes the way that parties may be joined in patent infringement actions, increasing the likelihood that such actions will need to be brought against individual parties allegedly infringing by their respective individual actions or activities. In addition, the U.S. Department of Justice (“DOJ”) has conducted reviews of the patent system to evaluate the impact of patent assertion entities, such as our Company, on industries in which those patents relate. It is possible that the findings and recommendations of the DOJ could adversely impact our ability to effectively license and enforce standards-essential patents and could increase the uncertainties and costs surrounding the enforcement of any such patented technologies.

Moreover, new rules regarding the burden of proof in patent enforcement actions could significantly increase the cost of our enforcement actions, and new standards or limitations on liability for patent infringement could negatively impact our revenue derived from such enforcement actions.

The Company, ~~was~~ incorporated in the state of New York in May 1984 ~~and changed its~~has formally conducted business in the name toof Document Security Systems, Inc. On September 16, 2021, the board of directors approved an agreement and plan of merger with a wholly owned subsidiary, DSS, Inc. (a New York corporation, incorporated in ~~2002. Since then,~~August 2020), for the ~~Company has acquired~~sole purpose of effecting a ~~plastics card manufacturer, a printing company, a packaging company, an IT services company,~~rebranding from Document Security Systems, Inc. to DSS, Inc. This change became effective on September 30, 2021. DSS, Inc. maintained the same trading symbol “DSS” and ~~an intellectual property monetization company.~~updated its CUSIP number to 26253C-102. See the “Overview” section above for further details about our acquisitions.

As of ~~March 1, 2018, we~~December 31, 2021, all DSS, Inc. had ~~a total of 98 full-time employees. It is important that we~~113 employees worldwide. We continue to retain and attract qualified management and technical personnel. Our employees are not covered by any collective bargaining agreement, and we believe that our relations with our employees are ~~generally good.~~in good standing.

Our website address is ~~www.dsssecure.com.~~www.dssworld.com. Information on our website is not incorporated herein by reference. We make available free of charge through our website our press releases, Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after electronically filed with or furnished to the Securities and Exchange Commission.

We believe 2022 will be a breakout year for DSS. Spurred by innovation, industry needs, and timely acquisitions, in 2022 we will focus on improving top line revenue and top line revenue diversification and profitability. Through our expertly cultivated processes and industry research, we can ensure the success of our projects across diverse sectors and business environments. The opportunities within our business lines and high-growth markets have unlimited potential, and our entities within these sectors are contemporary, scalable, and offer recurring revenue opportunities.

When we began executing on our current strategy of restructuring and recapitalization, the Company had approximately $16.2 million in assets and only a handful of struggling or undercapitalized businesses. In just two years, we divested underperforming assets, added eight distinct business lines, and grew assets to more than $285 million, which includes $57 million in cash as of our December 31, 2021 filing with the SEC. Today, we have approximately 40 subsidiaries operating across nine attractive market business lines, with five of those business lines now with significant operations and generating revenue.

We have been fortunate to have attracted tremendous talent to lead each of our business units. When building out our businesses, we look for established, industry leaders with long track records and the expertise to add meaningful value to our DSS ecosystem and create a foundation for success.

Our diverse book of clients and investments has given us strong competitive advantages globally in many industries; we intend to aggressively capitalize on these advantages moving forward. We believe the momentum of our success and ongoing evolution will continue to be unabated in 2022 based on the multitude of major successes in 2021 that are key drivers and the catalyst of new value creation in the coming year and beyond.

Investing in our common stock involves risk. Before deciding whether to invest in our common stock, you should carefully consider ~~carefully~~ the risks and uncertainties described below. There may be other unknown or unpredictable economic, business, competitive, regulatory or other factors that could have material adverse effects on our future results. If any of these risks actually ~~occurs,~~occur, our business, business prospects, financial condition or results of operations could be seriously harmed. This could cause the trading price of our common stock to decline, resulting in a loss of all or part of your investment. Please also read carefully the section contained in Part II, Item 7, below, entitled “Cautionary Statement Regarding Forward-Looking Statements.”

We have identified the following risks and uncertainties that may have a material adverse effect on our business, financial condition or results of operations in the future. Additional risks not presently known to us or that we currently believe are immaterial may also significantly impair our business operations. If any of these risks occur, our business, results of operations or financial condition could suffer, the market price of our common stock could decline, and you could lose all or part of your investment in our common stock.

The COVID-19 pandemic has created global economic turmoil and has potentially permanently impacted how many businesses operate and how individuals will socialize and shop in the future. The effect of the economic shutdown has impacted our business lines differently, some more severely than others. In most cases, we believe the negative economic trends and reduced sales will recover over time. Additionally, it is reasonably possible that estimates made in the financial statements have been, or will be, materially and adversely impacted in the near term as a result of these conditions, including losses on inventory; impairment losses related to goodwill and other long-lived assets and current obligations.

We have a history of losses, including net losses for the fiscal years 2017, 2016, and 2015 of approximately $578,000, $950,000 and $14.3 million, respectively. Our results of operations in the future will depend on many factors, but largely on our ability to successfully market our anti-counterfeiting products, technologies and services and successfully monetize our IP assets. Failure to achieve profitability in the future could adversely affect the trading price of our common stock and our ability to raise additional capital and, accordingly, our ability to continue to grow our business. There can be no assurance that we will succeed in addressing any or all of these risks, and the failure to do so could have a material adverse effect on our business, financial condition and operating results.

We have a significant amount of indebtedness, some of which is secured by our assets, and we may be unable to satisfy our obligations to pay interest and principal thereon when due or negotiate acceptable extensions or settlements.

We have outstanding indebtedness (described below), some of which is secured by our assets. Given our history of operating losses and our cash position, we may not be able to repay indebtedness when due. If we were to default on any of our other indebtedness that require payments of cash to settle such default and not receive an extension or a waiver from the creditor and the creditor were to foreclose on secured assets, it could have a material adverse effect on our business, financial condition and operating results.

~~As of December 31, 2017, we had the following significant amounts of outstanding indebtedness:~~

The Citizens Bank obligations are secured by all of the assets of Premier Packaging and are also secured through cross guarantees by us and our other wholly-owned subsidiaries, P3 and Secuprint. Under the Citizens Bank credit facilities, our subsidiary, Premier Packaging Corporation is subject to various covenants including fixed charge coverage ratio, tangible net worth and current ratio covenants. For the years ended December 31, 2017 and December 31, 2016, Premier Packaging was in compliance with the covenants.

The Fortress agreement defines certain events of default, one of which was the failure by DSS Technology Management, on or before the second anniversary of the effective date, to make payments to the investors equal to the outstanding advances. On February 13, 2016, DSS Technology Management had failed to make these payments. Under the Agreement, upon an event of default, the collateral agent and the investors have a number of remedies, including rights related to foreclosure or direct monetization of the patents that secure the loan. On December 2, 2016, DSS Technology Management, the Company, the Collateral Agent and the Investors entered into a First Amendment to Investment Agreement which, among other amendments, vacated the Company’s ongoing non-payment default under that agreement. On February 13, 2018, the Maturity Date, DSS Technology Management again defaulted by failing to pay the investors an amount equal to (x) two times the aggregate amount of all advances made by the investors as of such date plus (y) the Capitalized Expenses. The sole recourse available to the investors under the agreement is the establishment of a special purpose entity controlled by the investors which would take ownership of the collateral consisting of the patents covered under the agreement, as amended. Each of the investors and the collateral agent have contractually agreed that they will not, individually or collectively, seek to enforce any monetary judgment with respect to or against any assets of the Company other than the patents and the monetization payments and the remaining deposit. The Investors and the Collateral Agent have not taken any action as of the date of this Report to take ownership of the Collateral.

~~We cannot predict our future capital needs and we may not be able to secure additional financing.~~

We may need to raise additional funds in the future to fund our working capital needs and to continue our business. We also may need additional funds to complete development, testing and marketing of our products and technologies, or to make strategic acquisitions or investments. We may seek equity or debt financings, collaborative arrangements with corporate partners or funds from other sources for these purposes. No assurance can be given that necessary funds will be available for us to finance our development on acceptable terms, if at all. Furthermore, such additional financings may involve substantial dilution of our stockholders or may require that we relinquish rights to certain of our technologies or products. In addition, we may experience operational difficulties and delays due to working capital restrictions. If adequate funds are not available from operations or additional sources of financing, we may have to delay or scale back our growth plans or reduce or refocus our operations.

The value of our intangible assets and investments may not be equal to their carrying ~~values.~~values.

As of December 31, ~~2017~~2021, we had approximately ~~$3.7~~$38.6 million of net intangible assets. Approximately $22.3 million is associated with the acquisition of Impact Biomedical, Inc. The Company has completed valuations for certain developed technology assets ~~including goodwill. Approximately $1.2 million~~acquired in the transaction as well the non-controlling interest portion of this amount are intangible assets which derive their value from patents or patent rights, some of which are involved in litigation in order to derive licensing revenues, damages awards or settlements from infringers of the patents.Impact BioMedical, Inc. and its subsidiaries. If licensing efforts ~~and litigation~~ are not successful, the values of these assets could be reduced. We are required to evaluate the carrying value of such intangibles and goodwill and the fair value of investments whenever events or changes in circumstances indicate that the carrying value of an intangible asset, including goodwill, and investment may not be recoverable. ~~In the past, we have had to write down certain investments, some of which were significant.~~ If any of our ~~existing or future~~ intangible assets, goodwill or investments are deemed to be impaired then it will result in a significant reduction of ~~our~~the operating results in such period.

~~We rely on two significant customers, the loss of which could materially and adversely affect our results of operations.~~

During 2017, two customers accounted for 46% of our consolidated revenue. As of December 31, 2017, these two customers accounted for 38% of our trade accounts receivable balance. During 2016, these same two customers accounted for 38% of our consolidated revenue. As of December 31, 2016, these two customers accounted for 31% of our trade accounts receivable balance. The loss of either of these customers could have a material adverse effect on our results of operations.

We have ~~pending legal proceedings against numerous companies,~~secured indebtedness, and a potential risk exists that we ~~expect such litigation~~may be unable to ~~continue~~satisfy our obligations to ~~be time-consuming~~pay interest and ~~costly,~~principal thereon when due or negotiate acceptable extensions or settlements.

We have outstanding indebtedness (described below), most of which ~~may adversely affect~~is secured by assets of various DSS subsidiaries and guaranteed by the Company. Given our ~~financial condition~~history of operating losses and our ~~ability to operate our business.~~

To monetize and protect our patent assets, we have commenced legal proceedings against numerous companies alleging infringement of our patents. Our viability as an operating company is partially dependent on the outcome of this litigation, andcash position, there is a risk that we may not be ~~unable~~able to ~~achieve~~repay indebtedness when due. If we were to default on any of our other indebtedness that require payments of cash to settle such default and we do not receive an extension or a waiver from the ~~results we desire from such litigation, which failure could significantly harm our business. In addition,~~creditor and the ~~defendants in this litigation are much larger than us and have substantially more resources than us, which could make our litigation efforts more difficult.~~

These legal proceedings may continue for several years and may require significant expenditures for legal fees and other expenses. Disputes regarding the assertion of patents and other intellectual property rights are highly complex and technical. Once initiated, we may be forcedcreditor were to litigate against others to enforce or defend our intellectual property rights or to determine the validity and scope of other parties’ proprietary rights. The defendants or other third parties involved in the lawsuits in which we are involved may allege defenses and/or file counterclaims in an effort to avoid or limit liability and damages for patent infringement. If such defenses or counterclaims are successful, they may have a great impactforeclose on the value of the patents and preclude our ability to derive licensing revenue from the patents. Therefore, a negative outcome of any such litigation, or one or more claims contained within any such litigation, could materially and adversely impact our business. The defendants may also seek reimbursement of court costs, legal fees and other expenses, which, if awarded, could be substantial and materially and adversely impact our cash positions.

In addition, certain of our patents are subject to security agreements with third parties that could cause the ownership of the patents to be transferred to such third-party in the event of default, which could result in the loss of value to the Company. As an example, our proceeds investment agreement with BKI is secured ~~by certain of our LED patents.~~

While we believe that certain of our patents are being infringed by the defendants named in our various litigation matters, there is a risk that a court will find the patents invalid, not infringed or unenforceable and/or that the U.S. Patent and Trademark Office, or USPTO, will either invalidate the patents or materially narrow the scope of their claims during the course of a re-examination or Inter Partes Review. In addition, even with a positive trial court verdict, the patents may be invalidated, found not infringed or rendered unenforceable on appeal. This risk may occur either presently in our current litigation or from time to time in connection with future litigation we may bring. If this were to occur,assets, it ~~would have a material adverse effect on our viability and operations.~~

Patent litigation is inherently risky and the outcome is uncertain. Some of the parties we believe are infringing on our patents are large and well-financed companies with substantially greater resources than ours. We believe that parties will devote a substantial amount of resources in an attempt to avoid or limit a finding that they are liable for infringing our patents or, in the event liability is found, to avoid or limit the amount of associated damages. In addition, there is a risk that these parties may file re-examinations or other proceedings with the USPTO or other government agencies in an attempt to invalidate, narrow the scope or render unenforceable our patents. It is also possible that a court may rule that we have violated statutory authority, regulatory authority, federal rules, local court rules, or governing standards relating to the substantive or procedural aspects of such enforcement actions. In such event, a court may issue monetary sanctions against us or award attorneys’ fees and/or expenses to one or more defendants, which could be material, and if we are required to pay such monetary sanctions, attorneys’ fees and/or expenses, such payment could materially harm our operating results and our financial position.

In addition, it is difficult in general to predict the outcome of patent enforcement litigation at the trial level. There is a higher rate of appeals in patent enforcement litigation than more standard business litigation. Such appeals are expensive and time-consuming, and the outcomes of such appeals are sometimes unpredictable, resulting in increased costs and reduced or delayed revenue. We would expect any defendant in our patient enforcement litigation to appeal a trial court ruling against them, which would add to the expense and duration of the litigation and could result in a reversal of the trial court ruling.

~~New legislation, regulations or rules related to obtaining patents or enforcing patents could significantly increase our operating costs and decrease our revenue.~~

We expect to spend a significant amount of resources to enforce our patent assets. If new legislation, regulations or rules are implemented either by Congress, the USPTO, any state or the courts that impact the patent application process, the patent enforcement process or the rights of patent holders, these changes could negatively affect our expenses and revenue and any reductions in the funding of the USPTO could negatively impact the value of our assets. United States patent laws have been amended by the Leahy-Smith America Invents Act. The America Invents Act includes a number of significant changes to U.S. patent law. In general, the legislation attempts to address issues surrounding the enforceability of patents and the increase in patent litigation by, among other things, establishing new procedures for patent litigation. For example, the America Invents Act changes the way that parties may be joined in patent infringement actions, increasing the likelihood that such actions will need to be brought against individual parties allegedly infringing by their respective individual actions or activities. The America Invents Act and its implementation could increase the uncertainties and costs surrounding the enforcement of our patented technologies, which could have a material adverse effect on our business and financial condition.

A number of states have adopted or are considering legislation to make the patent enforcement process more difficult for non-practicing entities, such as allowing such entities to be sued in state court and setting higher standards of proof for infringement claims. We cannot predict what, if any, impact these state initiatives will have on the operation of our enforcement business. However, such legislation could increase the uncertainties and costs surrounding the enforcement of our patented technologies, which could have a material adverse effect on our business and financial condition.

In addition, the U.S. Department of Justice, or DOJ, has conducted reviews of the patent system to evaluate the impact of patent assertion entities on industries in which those patents relate. It is possible that the findings and recommendations of the DOJ could impact the ability to effectively license and enforce standards-essential patents and could increase the uncertainties and costs surrounding the enforcement of any such patented technologies.

Finally, new rules regarding the burden of proof in patent enforcement actions could significantly increase the cost of our enforcement actions, and new standards or limitations on liability for patent infringement could negatively impact any revenue we might derive from such enforcement actions.

~~If we are unable to adequately protect our intellectual property, our competitive advantage may disappear.~~

Our success will be determined in part by our ability to obtain United States and foreign patent protection for our technology and to preserve our trade secrets. Because of the substantial length of time and expense associated with developing new document security technology, we place considerable importance on patent and trade secret protection. We intend to continue to rely primarily on a combination of patent protection, trade secrets, technical measures, and nondisclosure agreements with our employees and customers to establish and protect the ideas, concepts and documentation of software and trade secrets developed by us. Our ability to compete and the ability of our business to grow could suffer if these intellectual property rights are not adequately protected. There can be no assurance that our patent applications will result in patents being issued or that current or additional patents will afford protection against competitors. Failure of our patents, trademarks and trade secret protection, non-disclosure agreements and other measures to provide protection of our technology and our intellectual property rights could enable our competitors to more effectively compete with us and have an adverse effect on our business, financial condition and results of operations. In addition, our trade secrets and proprietary know-how may otherwise become known or be independently discovered by others. No guarantee can be given that others will not independently develop substantially equivalent proprietary information or techniques, or otherwise gain access to our proprietary technology.

In addition, we may be required to litigate in the future to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others, or to defend against claims of infringement or invalidity. Any such litigation could result in substantial costs and diversion of resources and could have a material adverse effect on our business, financial condition and operating results.

As of December 31, 2021, we had the following significant amounts of outstanding indebtedness:

Both the Shelton and LifeCare agreements contain various covenants which are tested annually as of December 31. For the year ended December 31, 2021, AMRE Shelton and LifeCare were in compliance with the annual covenants.

During 2021, two customers accounted for approximately 41% of our consolidated revenue. As of December 31, 2021, these two customers accounted for approximately 48% of our trade accounts receivable balance. During 2020, these two customers accounted for approximately 38% of our consolidated revenue. As of December 31, 2020, these two customers accounted for 60% of our trade accounts receivable balance. If we were to lose these customers or ~~results~~if the amount of ~~operations, and there can~~business we do with these two customers declines significantly, our business would be ~~no assurances of the success of any such litigation.~~adversely affected.

We may face intellectual property infringement or other claims against us, our customers or our intellectual property that could be costly to defend and result in our loss of significant rights.

Although we have received patents with respect to certain of our core business technologies, there can be no assurance that these patents will afford us any meaningful protection. Although we believe that our use of the technology and products we have developed, and other trade secrets used in our operations do not infringe upon the rights of others, our use of the technology and trade secrets we developed may infringe upon the patents or intellectual property rights of others. In the event of infringement, we could, under certain circumstances, be required to obtain a license or modify aspects of the technology and trade secrets we developed or refrain from using the same. We may not ~~have the necessary financial resources to defend an infringement claim made against us or~~ be able to successfully terminate any infringement in a timely manner, upon acceptable terms and conditions or at all. Failure to do any of the foregoing could have a material adverse effect on our operations and our financial condition. Moreover, if the patents, technology, or trade secrets we developed or use in our business are deemed to infringe upon the rights of others, we could, under certain circumstances, become liable for damages, which could have a material adverse effect on our operations and our financial condition. As we continue to market our products, we could encounter patent barriers that are not known today. A patent search may not disclose all related applications that are currently pending in the United States Patent Office, and there may be one or more such pending applications that would take precedence over any or all of our applications.

Furthermore, third parties may assert that our intellectual property rights are invalid, which could result in significant expenditures by us to refute such assertions. If we become involved in litigation, we could lose our proprietary rights, be subject to damages and incur substantial unexpected operating expenses. Intellectual property litigation is expensive and time-consuming, even if the claims are subsequently proven unfounded, and could divert management’s attention from our business. If there is a successful claim of infringement, we may not be able to develop non-infringing technology or enter into royalty or license agreements on acceptable terms, if at all. If we are unsuccessful in defending claims that our intellectual property rights are invalid, we may not be able to enter into royalty or license agreements on acceptable terms, if at all. Moreover, if we are unsuccessful in our pending patent infringement litigation, we could lose certain patents that have been collateralized by third party funding partners. This could prohibit us from providing our products and services to customers, which could have a material adverse effect on our operations and our financial condition.

Certain of our recently developed products are not yet commercially accepted and there can be no assurance that those products will be accepted, which would adversely affect our financial results.

~~Over~~We’ve acquired several patents in the ~~past several years, we have spent significant funds and time to create new products by applying its technologies onto media other than paper, including plastic and cardboard packaging, and delivery of~~bio-health field through our ~~technologies digitally. We have had limited success to date in selling our products that are on cardboard packaging and those that are delivered digitally.~~acquisition if Impact Biomedical, Inc. Our business plan includes plans to incur significant marketing, intellectual property development and sales costs for ~~these newer products, particularly~~ the ~~digitally delivered~~bio-health related products. If we are not able to develop and sell these new products, our financial results will be adversely affected.

The results of our research and development efforts are uncertain and there can be no assurance of the commercial success of our products.

We believe that we will need to continue to incur research and development expenditures to remain competitive. The products we are currently developing or may develop in the future may not be technologically successful. In addition, the length of our product development cycle may be greater than we originally expected, and we may experience delays in future product development. If our resulting products are not technologically successful, they may not achieve market acceptance or compete effectively with our competitors’ products.

~~Changes in document security technology and standards could render our applications and services obsolete.~~

The market for document security products, applications, and services is fast moving and evolving. Identification and authentication technology is constantly changing as we and our competitors introduce new products, applications, and services, and retire old ones as customer requirements quickly develop and change. In addition, the standards for document security are continuing to evolve. If any segments of our market adopt technologies or standards that are inconsistent with our applications and technology, sales to that market segments could decline, which could have a material adverse effect on our operations and our financial condition.

The ~~market~~markets in which we operate is highly competitive, and we may not be able to compete effectively, especially against established industry competitors with greater market presence and financial resources.

Our ~~market is~~markets are highly competitive and characterized by rapid technological change and product innovations. Our competitors may have advantages over us because of their longer operating histories, more established products, greater name recognition, larger customer bases, and greater financial, technical and marketing resources. As a result, they may be able to adapt more quickly to new or emerging technologies and changes in customer requirements and devote greater resources to the promotion and sale of their products. Competition may also force us to decrease the price of our products and services. We cannot assure you that we will be successful in developing and introducing new technology on a timely basis, new products with enhanced features, or that these products, if introduced, will enable us to establish selling prices and gross margins at profitable levels.

If we are unable to respond to regulatory or industry standards effectively, our growth and development could be delayed or limited.

Our future success will depend in part on our ability to enhance and improve the functionality and features of our products and services in accordance with regulatory or industry standards. Our ability to compete effectively will depend in part on our ability to influence and respond to emerging industry governmental standards in a timely and cost-effective manner. If we are unable to influence these or other standards or respond to these or other standards effectively, our growth and development of various products and services could be delayed or limited.

~~If we do not successfully expand~~Breaches in security, whether cyber or physical, and other disruptions and/or our ~~sales force, we may be unable~~inability to ~~increase our revenues.~~

~~We must expand the size of our marketing activities and sales force~~prevent or respond to increase revenues. We continue to evaluate various methods of expanding our marketing activities, including the use of outside marketing consultants and representatives and expanding our in-house marketing capabilities. If we are unable to hire or retain qualified sales personnel or if newly hired personnel fail to develop the necessary skills to be productive, or if they reach productivity more slowly than anticipated,such breeches, could diminish our ability to generate revenues or contain costs, compromise our assets, and negatively impact our business in other ways.

We face certain security threats, including threats to our information technology infrastructure, attempts to gain access to our proprietary or classified information, and threats to physical and cyber security. Our information technology networks and related systems are critical to the operation of our business and essential to our ability to successfully perform day-to-day operations. The risks of a security breach, cyber-attack, cyber intrusion, or disruption, particularly through actions taken by computer hackers, foreign governments and cyber terrorists, have increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Although we have acquired and developed systems and processes designed to protect our proprietary and/or classified information, they may not be sufficient and the failure to prevent these types of events could disrupt our operations, require significant management attention and resources, and could negatively impact our reputation among our customers and the public, which could have a negative impact on our financial condition, and weaken our results of operations and liquidity.

Our operations in Asia are subject to unique risks and uncertainties, including tariffs and trade restrictions.

Our operating facility in Asia, in addition to our investment in Alset International Limited, presents risks including, but not limited to, changes in share price of investments, changes in local regulatory requirements, changes in labor laws, local wage laws, environmental regulations, taxes and operating licenses, compliance with U.S. regulatory requirements, including the Foreign Corrupt Practices Act, uncertainties as to application and interpretation of local laws and enforcement of contract and intellectual property rights, currency restrictions, currency exchange controls, fluctuations of currency, and currency revaluations, eminent domain claims, civil unrest, power outages, water shortages, labor shortages, labor disputes, increase in labor costs, rapid changes in government, economic and political policies, political or civil unrest, acts of terrorism, or the threat of boycotts, other civil disturbances and the possible impact of the imposition of tariffs as a result of the tariff dispute between the U.S. and China as well as any retaliating trade policies or restrictions. Any such disruptions could depress our ~~revenues~~earnings and ~~grow~~have other material adverse effects on our business, financial condition and results of operations.

Future growth in our business could ~~be compromised. The challenge of attracting, training and retaining qualified candidates may~~ make it difficult to ~~meet~~manage our ~~sales~~resources.

Future business expansion could place a significant strain on our management, administrative and financial resources. Significant growth ~~targets. Further,~~in our business may require us to implement additional operating, product development and financial controls, improve coordination among marketing, product development and finance functions, increase capital expenditures and hire additional personnel. There can be no assurance that we ~~may not generate sufficient sales~~will be able to ~~offset the increased expense resulting from expanding~~successfully manage any substantial expansion of our ~~sales force or we may be unable~~business, including attracting and retaining qualified personnel. Any failure to properly manage ~~a larger sales force.~~our future growth could negatively impact our business and operating results.

If we fail to retain certain of our key personnel and attract and retain additional qualified personnel, we might not be able to remain competitive, continue to expand our technology or pursue growth.

Our future success depends upon the continued service of certain of our executive officers and other key sales and research personnel who possess longstanding industry relationships and technical knowledge of our products and operations. Although we believe that our relationship with these individuals is positive, there can be no assurance that the services of these individuals will continue to be available to us in the future. There can be no assurance that these persons will agree to continue to be employed by us after the expiration dates of their current contracts.

~~We may be unable to retain experts and legal counsel on a favorable basis to represent us in our patent infringement litigation.~~

Our Direct Marketing business lines ability to attract and retain independent distributors; the ability of a distributor to successfully perform his or her role; and the potential adverse impact of the loss of a high-level distributor or a significant number of distributors for causes out of our control.

We depend on the skills and marketability of our independent distributors to promote our brand and to market and distribute our products and services. The direct selling industry generally experiences a relatively high rate of salesforce turnover and is very competitive. The success of our ~~pending legal proceedings~~efforts to recruit and ~~future legal proceedings depends~~retain distributors may be affected by the competitive environment among direct-to-consumer companies, the conditions of the general labor market, including levels of employment, the occurrence of demographic and cultural changes in ~~part upon~~the workforce, and the extent to which our ~~ability to retain experts and legal counsel on a favorable basis to represent us~~brand is recognized in ~~such litigation. The retention of such experts and legal counsel is expensive and~~the geographies in which we ~~may not be able to retain such experts and legal counsel on favorable economic terms. Therefore, an~~operate. Our inability to attract and retain ~~experts~~qualified distributors in the future, the inability or failure of a distributor to fulfill his or her role, including his or her role to comply with all laws and ~~legal counsel~~regulations applicable to ~~represent us in~~direct-to-consumer sales activities, the ineffectiveness of a distributor as a spokesperson for our ~~litigation~~brand and products, or the loss of a high-level distributor or a significant number of distributors for causes out of our control may adversely affect future sales of our products and services. This could have a material adverse effect on our ~~business.~~financial condition, results of operations and cash flows.

~~Future growth in our business could make it difficult to manage our resources.~~

Future business expansion could place a significant strain on our management, administrative and financial resources. Significant growth in our business may require us to implement additional operating, product development and financial controls, improve coordination among marketing, product development and finance functions, increase capital expenditures and hire additional personnel. There can be no assurance that we will be able to successfully manage any substantial expansion of our business, including attracting and retaining qualified personnel. Any failure to properly manage our future growth could negatively impact our business and operating results.

We have identified weaknesses in our internal control over financial reporting structure; any material weaknesses may cause errors in our financial statements that could require restatements of our financial statements and investors may lose confidence in our reported financial information, which could lead to a decline in our stock price.

Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate the effectiveness of our internal control over financial reporting as of the end of each year, and to include a management report assessing the effectiveness of our internal control over financial reporting in each Annual Report on Form 10-K. We have ~~and~~ had previously identified weaknesses in our internal control over financial reporting following management’s annual assessment of internal controls over financial reporting and, as a result of that assessment, management ~~has~~had concluded ~~this year that we did not maintain a sufficient complement of qualified accounting personnel and~~our controls associated ~~with segregation~~may not prevent or detect misstatements. Projections of ~~duties, and~~any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the ~~foregoing represented material weakness in our~~degree of compliance with the policies or procedures may deteriorate. All internal control ~~over~~systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial ~~reporting. If our internal control over financial reporting or disclosure controls~~statement preparation and procedures are not effective in the future, there may be errors in our financial statements and in our disclosure that could require restatements. Investors may lose confidence in our reported financial information and in our disclosure, which could lead to a decline in our stock price.presentation.

We have a large number of authorized but unissued shares of common stock, which our management may issue without further stockholder approval, thereby causing dilution of your holdings of our common stock.

As of December 31, 2017, we had approximately 183 million authorized but unissued shares of our common stock. Our management continues to have broad discretion to issue shares of our common stock in a range of transactions, including capital-raising transactions, mergers, acquisitions, for anti-takeover purposes, and in other transactions, without obtaining stockholder approval, unless stockholder approval is required for a particular transaction under the rules of the NYSE American LLC Exchange (“NYSE American”), state and federal law, or other applicable laws. If our board of directors determines to issue additional shares of our common stock from the large pool of authorized but unissued shares for any purpose in the future with or without obtaining stockholder approval, your ownership position would be diluted without your ability to vote on such transaction.

~~The exercise of our outstanding options and warrants, vesting of restricted stock awards and conversion of debt securities may depress our stock price.~~

As of December 31, 2017, there were 3,177,759 of common stock share equivalents potentially issuable under convertible debt agreements, employment agreements, options, warrants, and restricted stock agreements that could potentially dilute basic earnings per share in the future. The prospect of the issuance of shares of common stock upon the conversion, exercise or vesting of these securities in the public market, or the perception that future sales of the common stock underlying these securities could occur, could have the effect of lowering the market price of our common stock below current levels and make it more difficult for us and our stockholders to sell our equity securities in the future. Sales or the availability for sale of shares of common stock by stockholders, including upon conversion, exercise or vesting of any outstanding derivative or restricted securities, could cause the market price of our common stock to decline and could impair our ability to raise capital through an offering of additional equity securities.

We do not intend to declare or pay cash dividends on our common stock in the foreseeable future. We anticipate that we will retain any earnings and other cash resources for investment in our business. The payment of dividends on our common stock is subject to the discretion of our board of directors and will depend on our operations, financial position, financial requirements, general business conditions, restrictions imposed by financing arrangements, if any, legal restrictions on the payment of dividends and other factors that our board of directors deems relevant.

We may seek to ~~internally~~ develop additional new inventions and intellectual property, which would take time and would be costly. Moreover, the failure to obtain or maintain intellectual property rights for such inventions would lead to the loss of our investments in such activities.

~~Members of our management team have significant experience as inventors. As such, part~~Part of our business may include the ~~internal~~ development of new inventions and intellectual property that we would seek to monetize. However, this aspect of our business would likely require significant capital and would take time to achieve. Such activities could also distract our management team from our present business initiatives, which could have a material and adverse effect on our business. There is also the risk that these initiatives would not yield any viable new inventions or technology, which would lead to a loss our investments in time and resources in such activities.

In addition, even if we are able to ~~internally~~ develop new inventions, in order for those inventions to be viable and to compete effectively, we would need to develop and maintain, and we would heavily rely on, a proprietary position with respect to such inventions and intellectual property. However, there are significant risks associated with any such intellectual property we may develop principally including the following:

We cannot be certain that patents will be issued as a result of any future applications, or that any of our patents, once issued, will provide us with adequate protection from competing products. For example, issued patents may be circumvented or challenged, declared invalid or unenforceable, or narrowed in scope. In addition, since publication of discoveries in scientific or patent literature often lags behind actual discoveries, we cannot be certain that it will be the first to make our additional new inventions or to file patent applications covering those inventions. It is also possible that others may have or may obtain issued patents that could prevent us from commercializing our products or require us to obtain licenses requiring the payment of significant fees or royalties in order to enable us to conduct our business. As to those patents that we may license or otherwise monetize, our rights will depend on maintaining our obligations to the licensor under the applicable license agreement, and we may be unable to do so. Our failure to obtain or maintain intellectual property rights for our inventions would lead to the loss of our investments in such activities, which would have a material and adverse effect on our business.

Moreover, patent application delays could cause delays in recognizing revenue from our internally generated patents and could cause us to miss opportunities to license patents before other competing technologies are developed or introduced into the market.

Changes in the laws and regulations to which we are subject may increase our costs.

We are subject to numerous laws and regulations, including, but not limited to, environmental and health and welfare benefit regulations, as well as those associated with being a public company. These rules and regulations may be changed by local, state, provincial, national or foreign governments or agencies. Such changes may result in significant increases in our compliance costs. Compliance with changes in rules and regulations could require increases to our workforce, and could result in increased costs for services, compensation and benefits, and investment in new or upgraded equipment.

~~Our acquisitions of patent assets may be time consuming, complex and costly, which could adversely affect our operating results.~~

Acquisitions of patent or other intellectual property assets, which may continue to be part of our business plan, are often-times consuming, complex and costly to consummate. We may utilize many different transaction structures in our acquisitions and the terms of such acquisition agreements tend to be heavily negotiated. As a result, we would expect to incur significant operating expenses and would likely be required to raise capital during the negotiations even if the acquisition were ultimately not consummated. Even if we were able to acquire particular patent assets, there is no guarantee that we would generate sufficient revenue related to those patent assets to offset the acquisition costs. While we would seek to conduct confirmatory due diligence on any patent assets we consider for acquisition, we may acquire patent assets from a seller who does not have proper title to those assets. In those cases, we could be required to spend significant resources to defend our interest in the patent assets and, if we were not successful, our acquisition may be invalid, in which case we could lose part or all of our investment in the assets.

In addition, we may acquire patents and technologies that are in the early stages of adoption in the commercial, industrial and consumer markets. Demand for some of these technologies will likely be untested and may be subject to fluctuation based upon the rate at which licensees will adopt these patents and technologies in their products and services. As a result, there can be no assurance as to whether technologies we acquire or develop will have value that we can monetize.

In certain acquisitions of patent assets, we may seek to defer payment or finance a portion of the acquisition price. This approach may put us at a competitive disadvantage and could result in harm to our business.

We have limited capital and may seek to negotiate acquisitions of patent or other intellectual property assets where we can defer payments or finance a portion of the acquisition price. These types of debt financing or deferred payment arrangements may not be as attractive to sellers of patent assets as receiving the full purchase price for those assets in cash at the closing of the acquisition. Moreover, funding by third parties for patent acquisitions may not be available to us in the future. As a result, we might not compete effectively against other companies in the market for acquiring patent assets, many of whom have greater cash resources than we have.

~~We may not be able to capitalize on potential market opportunities related to our licensing strategy or patent portfolio for our core business.~~

In order to capitalize on our core business patent portfolio, we intend to enter into licensing relationships. However, there can be no assurance that we will be able to capitalize on our patent portfolio or any potential market opportunity in the foreseeable future. Our inability to generate licensing revenues associated with potential market opportunities could result from a number of factors, including, but not limited to:

Weak global economic conditions may cause infringing parties to delay entering into licensing agreements, which could prolong our litigation and adversely affect our financial condition and operating results.

Our business plan may be affected by worldwide economic conditions, and the United States and world economies have recently experienced and in some areas continue to experience prolonged weak economic conditions. Uncertainty about global economic conditions poses a risk as businesses may postpone spending in response to tighter credit, negative financial news and declines in income or asset values. This response could have a material negative effect on the willingness of parties infringing on our assets to enter into licensing or other revenue generating agreements voluntarily. Entering into such agreements is critical to our business plan, and failure to do so could cause material harm to our business.

Declines in general economic conditions or acts of war and terrorism may adversely impact our business.

Demand for printing services is typically correlated with general economic conditions. The prolonged decline in United States economic conditions associated with the great recession adversely impacted our business and results of operations and may do so again. The overall business climate of our industry may also be impacted by domestic and foreign wars or acts of terrorism, which events may have sudden and unpredictable adverse impacts on demand for our products and services.

If we fail to comply with the continued listing standards of the NYSE American LLC Exchange, it may result in a delisting of our common stock from the exchange.

Our common stock is currently listed for trading on the NYSE American LLC Exchange ~~(formerly~~ (“NYSE ~~MKT LLC)~~American”), and the continued listing of our common stock on the NYSE American ~~LLC Exchange (“NYSE American”)~~ is subject to our compliance with a number of listing standards. On March 15, 2016, we were notified by the NYSE American that we were not in compliance with the continued listing standards set forth in Section 1003(f)(v) of the NYSE American LLC Company Guide (the “Company Guide”), which addresses~~Low Selling Price Issues.~~ The NYSE American stated in its notice that the most recent 30-day average selling price per share of $0.16 fell below the acceptable minimum required average share price for continued listing under Section 1003(f)(v) of the Company Guide, and that

If our stock had been closing at or below $0.20 per share since December 11, 2015. The NYSE American does not provide a specific minimum average price per share in its rules for purposes of compliance with Section 1003(f)(v) of the Company Guide, but instead makes those determinations in its discretion, on a case by case basis. Under NYSE American’s rules, we had six months following receipt of notification to regain compliance with the minimum share price requirement. At the suggestion of NYSE Regulation, we affected a 1-for-4 reverse stock split on August 26, 2016. Thereafter, on September 15, 2016, we received a letter from NYSE Regulation notifying us that we were back in compliance with respect to Section 1003(f)(v) of the Company Guide. On April 1, 2016, we were notified by the NYSE American that we were not in compliance with the stockholders’ equity continued listing standards set forth in Section 1003(a)(ii) of the Company Guide. In order to maintain our NYSE American listing, we were required to submit a plan of compliance by May 2, 2016 addressing how we intend to regain compliance with Section 1003(a)(ii) of the Company Guide by October 2, 2017. We complied with this request, and on May 19, 2016, we received notification from the NYSE American that NYSE Regulation had accepted our plan to regain compliance with the exchange’s continued listing standards set forth in Section 1003(a)(ii) of the Company Guide by October 2, 2017, subject to periodic review by NYSE American for compliance with the initiatives set forth in the plan. On October 2, 2017, the Company was formally notified by the NYSE American that the Company had regained compliance with the stockholders’ equity continued listing standards set forth in Section 1003(a)(ii) of the Company Guide and will be permitted to continue to list its common stock ~~for trading~~were no longer listed on the NYSE American, ~~exchange under~~investors might only be able to trade our shares on the ~~symbol “DSS”. However, there can be no assurance that we will continue to meet the continued listing standards of the NYSE American~~OTC Bulletin Board ® or in the ~~future.~~Pink Sheets ® (a quotation medium operated by Pink Sheets LLC). This would impair the liquidity of our common stock not only in the number of shares that could be bought and sold at a given price, which might be depressed by the relative illiquidity, but also through delays in the timing of transactions and reduction in media coverage.

If we are delisted from the NYSE American, your ability to sell your shares of our common stock may be limited by the penny stock restrictions, which could further limit the marketability of your shares.

If our common stock is delisted from the NYSE American, it could come within the definition of a “penny stock” as defined in the Exchange Act and could be covered by Rule 15g-9 of the Exchange Act. That rule imposes additional sales practice requirements on broker-dealers who sell securities to persons other than established customers and accredited investors. For transactions covered by Rule 15g-9, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser’s written agreement to the transaction prior to the sale. Consequently, Rule 15g-9, if it were to become applicable, would affect the ability or willingness of broker-dealers to sell our securities, and accordingly would affect the ability of stockholders to sell their securities in the public market. These additional procedures could also limit our ability to raise additional capital in the future.

If our common stock is not listed on a national securities exchange, compliance with applicable state securities laws may be required for certain offers, transfers and sales of the shares of our common stock.

Because our common stock is listed on the NYSE American, we are not required to register or qualify in any state the offer, transfer or sale of the common stock. If our common stock is delisted from the NYSE American and is not eligible to be listed on another national securities exchange, sales of stock pursuant to the exercise of warrants and transfers of the shares of our common stock sold by us in private placements to U.S. holders may not be exempt from state securities laws. In such event, it will be the responsibility of us in the case of warrant exercises or the holder of privately placed shares to register or qualify the shares for any offer, transfer or sale in the United States or to determine that any such offer, transfer or sale is exempt under applicable state securities laws.

~~There is no public market for the warrants we issued in the Fall of 2015.~~If securities or industry analysts do not publish research or reports about our business, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline.

~~There is no established public~~The trading market for our common stock will be influenced by the ~~warrants~~research and reports that industry or securities analysts publish about us or our business. Our research coverage by industry and financial analysts is currently limited. Even if our analyst coverage increases, if one or more of the analysts who cover us downgrade our stock, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we ~~issued~~could lose visibility in the ~~Fall~~financial markets, which in turn could cause our stock price or trading volume to decline.

Because certain of ~~2015,~~our stockholders control a significant number of shares of our common stock, they may have effective control over actions requiring stockholder approval.

As of March 14, 2022, our directors, executive officers and principal stockholders (those beneficially owning in excess of 5%), and their respective affiliates, beneficially own approximately 34% of our outstanding shares of common stock. As a result, these stockholders, acting together, could have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially all of our assets. As such, these stockholders, acting together, could have the ability to exert influence over the management and affairs of our company. Accordingly, this concentration of ownership might harm the market price of our common stock by: • delaying, deferring or preventing a change in corporate control; • impeding a merger, consolidation, takeover or other business combination involving us; or • discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.

Additional financing or future equity issuances may result in future dilution to our shareholders.

We expect that we dowill need to raise additional funds in the future to finance our internal growth, our merger and acquisition plans, investment activities, continued research and product development, and for other reasons. Any required additional financing may not ~~expect a market~~be available on terms acceptable to ~~develop. In addition,~~us, or at all. If we ~~do not intend~~raise additional funds by issuing equity securities, you may experience significant dilution of your ownership interest and the newly issued securities may have rights senior to ~~apply for listing~~those of the holders of our common stock. The price per share at which we sell additional securities in future transactions may be higher or lower than the price per share in this offering. Alternatively, if we raise additional funds by obtaining loans from third parties, the terms of those ~~warrants on any national securities exchange~~financing arrangements may include negative covenants or other ~~nationally recognized trading system. Without an active market, the liquidity of those warrants will~~restrictions on our business that could impair our operational flexibility and would also require us to fund additional interest expense. If adequate additional financing is not available when required or is not available on acceptable terms, we may be ~~limited.~~unable to successfully execute our business plan.

Our corporate group and ~~digital~~packaging division ~~together~~ occupy approximately 5,700 square feet of commercial office space located at 200 Canal View Boulevard, Rochester, New York under a lease that expires in December 2020, at a rental rate of approximately $6,100 per month. Our Plastics division leases approximately 15,000 square feet under a lease that expires December 31, 2018 for approximately $13,000 per month. In addition, the Company owns a 40,000 square foot packaging and printing plant owned by the Company in Victor, New York, a suburb of Rochester, New York. This building was sold in March 2022. The ~~Company’s Technology Management~~corporate group and the packaging division will be relocating to an approximate 105,000 square foot leased facility located at 275 Wiregrass Parkway, Henrietta, New York in March 2022. This lease expires twelve years and 3 months later. Base rents escalate from $61,000 per month in year one to $76,000 per month in year twelve. Our DSS Asia division leases ~~executive~~commercial office space in ~~Reston, Virginia,~~Hong Kong under a ~~month-to-month~~ lease that expires August 31, 2023 for approximately ~~$600~~$5,700 per month. ~~The Company’s Technology Management~~Our Multilevel Marketing or Direct Selling division ~~also~~ leases ~~a sales and research and development facility~~commercial office space in ~~Plano,~~Irving, Texas under a ~~renewable 12 month~~ lease that ~~expired in December 2017,~~expires January 1, 2022 for approximately ~~$1,200~~$12,000 per month. ~~The~~This lease will continue on a month to month basis until a new lease is signed. In March 2021, the Company ~~renewed the Plano lease for an additional 12 months until December 21, 2018,~~leased approximately 1,848 sq. ft. in Houston for approximately ~~$1,300~~$2,000 per ~~month. The~~month, Texas at 1400 Broadfield Blvd., Suite 100, for corporate offices and subsidiary expansion. In November 2021, the Company ~~believes that it can negotiate renewals or similar lease arrangements on acceptable terms when~~leased 2,279 sq. ft. in California for our ~~current leases expire.~~securities business line for approximately $2,800 per month. We believe that our facilities are adequate for our current operations.

~~On November 26, 2013, DSS Technology Management filed suit against Apple, Inc. (“Apple”)~~As disclosed in the United States District Court for the Eastern District of Texas, for patent infringement (the “Apple Litigation”). The complaint alleges infringement by Apple of DSS Technology Management’s patents that relate to systems and methods of using low power wireless peripheral devices. DSS Technology Management is seeking a judgment for infringement, injunctive relief, and compensatory damages from Apple. On October 28, 2014, the case was stayed by the District Court pending a determination of Apple’s motion to transfer the caseNote 15 to the ~~Northern District of California. On November 7, 2014, Apple’s motion to transfer~~Consolidated Financial Statements, the case to the Northern District of California was granted. On December 30, 2014, Apple filed two Inter Partes Review (“IPR”) petitions with the Patent Trial and Appeal Board (“PTAB”) for review of the patents at issueCompany is engaged in the case. The PTAB instituted the IPRs on June 25, 2015. The California District Court then stayed the case pending the outcome of those IPR proceedings. Oral arguments of the IPRs took place on March 15, 2016, and on June 17, 2016, PTAB ruled in favor of Apple on both IPR petitions. DSS Technology Management then filed an appeal with the U.S. Court of Appeals for the Federal Circuit (the “Federal Circuit”) seeking reversal of the PTAB decisions. Oral arguments for the appeal were held on August 9, 2017,certain legal matters, and the appeal is still pending as of the date of this Report. The patent assets underlying this matter had no carrying value as of the date of the PTAB decision and therefore, there were no impairment considerations as a result of the decision.

~~On February 16, 2015, DSS Technology Management filed suit~~disclosure set forth in the United States District Court, Eastern District of Texas, against defendants Intel Corporation, Dell, Inc., GameStop Corp., Conn’s Inc., Conn Appliances, Inc., NEC Corporation of America, Wal-Mart Stores, Inc., Wal-Mart Stores Texas, LLC, and AT&T, Inc. The complaint alleges patent infringement and seeks judgment for infringement of two of DSSTM’s patents, injunctive relief and money damages. On December 9, 2015, Intel filed IPR petitions with PTAB for review of the patents at issue in the case. Intel’s IPRs were instituted by PTAB on June 8, 2016. On June 1, 2017, the PTAB ruled in favor of Intel for all the challenged claims. On July 28, 2017, DSS Technology Management filed a notice of appeal of the PTAB’s decisionNote 15 relating to ~~U.S. Patent 6,784,552 with the Federal Circuit. The Intel litigation has been stayed~~certain legal matters is incorporated herein by ~~the District Court pending final determination of the IPR proceedings.~~reference.

On July 16, 2015, DSS Technology Management filed three separate lawsuits in the United States District Court for the Eastern District of Texas alleging infringement of certain of its semiconductor patents. The defendants are SK Hynix et al., Samsung Electronics et al., and Qualcomm Incorporated. Each respective complaint alleges patent infringement and seeks judgment for infringement, injunctive relief and money damages. On November 12, 2015, SK Hynix filed an IPR petition with PTAB for review of the patent at issue in their case. SK Hynix’s IPR was instituted by the PTAB on May 11, 2016. On August 16, 2016, DSS Technology Management and SK Hynix entered into a confidential settlement agreement ending the litigation between them. The pending SK Hynix IPR was then terminated by mutual agreement of the parties on August 31, 2016. On March 18, 2016, Samsung also filed an IPR petition, which was instituted by the PTAB. On September 20, 2017, PTAB ruled in favor of Samsung for all the challenged claims relating to U.S. Patent 6,784,552. DSS Technology Management then appealed this PTAB ruling to the Federal Circuit on November 17, 2017. The Federal Circuit joined this appeal with the Intel appeal effective on December 7, 2017. The appeal is still pending as of the date of this Report. Qualcomm filed its IPR proceeding on July 1, 2016, which was then later joined with Intel’s IPRs in August 2016 by PTAB. On June 1, 2017, the PTAB ruled in favor of Intel/Qualcomm for all the challenged claims. On July 28, 2017, DSS Technology Management filed a notice of appeal of the PTAB’s decision relating to U.S. Patent 6,784,552 with the Federal Circuit. As indicated above, this joint appeal is still pending as of the date of this Report.

On April 13, 2017, Document Security Systems, Inc. (“DSS”) filed a patent infringement lawsuit against Seoul Semiconductor Co., Ltd. and Seoul Semiconductor, Inc. (collectively, “Seoul Semiconductor”) in the United States District Court for the Eastern District of Texas, alleging infringement of certain of DSS’s Light-Emitting Diode (“LED”) patents. DSS is seeking a judgement for infringement of the patents along with other relief including, but not limited to, money damages, costs and disbursements. On June 7, 2017, DSS refiled its patent infringement complaint against Seoul Semiconductor in the United States District Court for the Central District of California, Southern Division. The case is currently pending. On December 3, 2017, Seoul Semiconductor filed an IPR challenging the validity of certain claims of U.S. Patent No. 6,949,771. On December 21, 2017, Seoul Semiconductor filed an IPR challenging the validity of certain claims of U.S. Patent No. 7,256,486. On January 25, 2018, Seoul Semiconductor filed an IPR challenging the validity of certain claims of U.S. Patent No. 7,524,087. These challenged patents are the patents that are the subject matter of the infringement lawsuit which is still pending as of the date of this Report.

On April 13, 2017, DSS filed a patent infringement lawsuit against Everlight Electronics Co., Ltd. and Everlight Americas, Inc. (collectively, “Everlight”) in the United States District Court for the Eastern District of Texas, alleging infringement of certain of DSS’s LED patents. DSS is seeking a judgement for infringement of the patents along with other relief including, but not limited to, money damages, costs and disbursements. On June 8, 2017, DSS refiled its patent infringement complaint against Everlight in the United States District Court for the Central District of California. The case is currently pending as of the date of this Report.

On April 13, 2017, DSS filed a patent infringement lawsuit against Cree, Inc. (“Cree” ) in the United States District Court for the Eastern District of Texas, alleging infringement of certain of DSS’s LED patents. DSS is seeking a judgement for infringement of the patents along with other relief including, but not limited to, money damages, costs and disbursements. On June 8, 2017, DSS refiled its patent infringement complaint against Cree in the United States District Court for the Central District of California, and thereafter filed a first amended complaint for patent infringement against Cree in that same court on July 14, 2017. The case is currently pending as of the date of this Report.

On July 13, 2017, DSS filed a patent infringement lawsuit against Osram GMBH, Osram OPTO Semiconductors GMBH & Co., and Osram Sylvania Inc. (collectively, “Osram” ) in the United States District Court for the Central District of California, alleging infringement of certain of DSS’s LED patents. DSS is seeking a judgment for infringement of the patents along with other relief including, but not limited to, money damages, costs and disbursements. On February 21, 2018, DSS and Osram executed a confidential settlement agreement ending the litigation between them.

On August 15, 2017, DSS filed a patent infringement lawsuit against Lite-On, Inc., and Lite-On Technology Corporation in the United States District Court for the Central District of California, alleging infringement of certain of DSS’s LED patents. DSS is seeking a judgement for infringement of the patents along with other relief including, but not limited to, money damages, costs and disbursements. The case is currently pending as of the date of this Report.

On December 7, 2017, DSS filed a patent infringement lawsuit against Nichia Corporation and Nichia America Corporation in the United States District Court for the Central District of California, alleging infringement of certain of DSS’s LED patents. DSS is seeking a judgement for infringement of the patents along with other relief including, but not limited to, money damages, costs and disbursements. The case is currently pending as of the date of this Report.

In addition to the foregoing, we may become subject to other legal proceedings that arise in the ordinary course of business and have not been finally adjudicated. Adverse decisions in any of the foregoing may have a material adverse effect on our results of operations, cash flows or our financial condition. The Company accrues for potential litigation losses when a loss is probable and estimable.

ITEM 5 - MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

On August 26, 2016, the Company affected a one-for-four reverse stock split of the Company’s common stock. No fractional shares of the Company’s common stock were issued as a result of the reverse stock split. Instead, stockholders of record who otherwise would have been entitled to receive fractional shares were entitled to a rounding up of their fractional share to the nearest whole share, except in the case of any stockholder that owned less than four shares of the Company’s common stock immediately preceding the reverse stock split. In such case, such stockholder received cash for such fractional share in an amount equal to the product obtained by multiplying: (x) the closing sale price of the common stock on August 25, 2016 as reported on the NYSE American LLC Exchange, by (y) the amount of the fractional share. As a result, the Company issued 1,166 common shares for shares due as a result of the rounding up feature and paid an aggregate of $92 to buy-out the fractional shares of holders with less than four shares immediately preceding the reverse stock split. All references in this report to the number of shares of our common stock and to related per-share prices (including references to periods prior to the effective date of the reverse stock split) reflect this reverse stock split.Market Information

Our common stock is listed on the NYSE American LLC Exchange, where it trades under the symbol “DSS”.

~~The following table sets forth the high and low closing prices for the shares~~Holders of ~~our Common Stock, for the periods indicated.~~Record

~~The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.~~

~~The last reported sales price of our common stock on the NYSE American LLC Exchange on March 5, 2018 was $1.12.~~

~~Our certificate of incorporation authorizes 200,000,000 shares of common stock, par value $0.02.~~ As of March ~~1, 2018,~~14, 2022, we had ~~16,599,327 shares of common stock issued and outstanding.~~

~~As of December 31, 2017, securities issued and securities available for future issuance under our 2013 Employee, Director and Consultant Equity Incentive Plan (the “2013 Plan”) is as follows:~~

~~The warrants listed in the table above were issued to third party service providers in partial or full payment for services rendered and in conjunction with third party funding agreements.~~

~~There were no issuances of unregistered securities sold by the Company that have not been previously reported in the Company’s Current Reports on Form 8-K.~~

~~As of March 1, 2018, we had 238~~256 record holders of our common stock. This number does not include the number of persons whose shares are in nominee or in “street name” accounts through brokers.

We did not pay dividends during ~~2017~~2021 or ~~2016.~~2020. We anticipate that we will retain any earnings and other cash resources for investment in our business. The payment of dividends on our common stock is subject to the discretion of our board of directors and will depend on our operations, financial position, financial requirements, general business conditions, restrictions imposed by financing arrangements, if any, legal restrictions on the payment of dividends and other factors that our board of directors deems relevant.

However, the Company has announced its decision to issue shares of Impact BioMedical, Inc. to its shareholders of record at a to be determined record date that will correspond with the registration of Impact BioMedical’s common stock. The Company announced that it intended to issue four (4) shares of Impact BioMedical stock for each share of DSS common stock held by DSS shareholders (with the exception of shares beneficially held by Alset International Ltd).

As of December 31, 2021, securities issued and securities available for future issuance under both our 2013 and 2020 Employee, Director and Consultant Equity Incentive Plan (the “Plans”) is as follows:

We did not purchase or repurchase any of our securities in the fiscal year ended December 31, ~~2017,~~2021, including the fourth quarter.

ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The SEC encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions.

Forward-looking statements that may appear in this Annual Report, including without limitation, statements related to the Company’s plans, strategies, objectives, expectations, intentions, and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act and contain the words “believes,” “anticipates,” “expects,” “plans,” “intends” and similar words and phrases. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected in any forward-looking statement. In addition to the factors specifically noted in the forward-looking statements, other important factors, risks and uncertainties that could result in those differences include, but are not limited to, those discussed under Part I, Item 1A “Risk Factors” in this Annual Report. The forward-looking statements are made as of the date of this Annual Report, and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth in this Annual Report and the other information set forth from time to time in our reports filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, including our reports on Forms 10-Q and 8-K.

The following discussion and analysis provides information that our management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read in conjunction with the financial statements and footnotes included in Item 8 of this Annual Report.

~~Document Security Systems,~~DSS, Inc. (referred to in this report as “Document Security Systems”, “DSS”, “we”, “us”, “our” or “Company”) was formed in New York in 1984. We specialize in fraud and counterfeit protection for all forms of printed documents and digital information. The Company holds numerous patents for optical deterrent technologies that provide protection of printed information from unauthorized scanning and copying. We operate two production facilities, consisting of a combined packaging and security printing facility, and a plastic card facility where we produce secure and non-secure documents for our customers. We license our anti-counterfeiting technologies to printers and brand-owners. In addition, we have a digital division which provides cloud computing services for our customers, including disaster recovery, back-up and data security services.

Prior to 2006, our primary revenue source in our document security division was derived from the licensing of our technology. In 2006, we began a series of acquisitions designed to expand our ability to produce products for end-user customers. In 2006, we acquired Plastic Printing Professionals, Inc. (“P3”), a privately held plastic cards manufacturer located in the San Francisco, California area. P3 is also(together with its consolidated subsidiaries, referred to herein as “DSS,” “we,” “us,” “our” or the ~~“DSS Plastics Group”. In 2008, we acquired DPI~~“Company”) currently operates nine (9) distinct business lines with operations and locations around the globe. These business lines are: (1) Product Packaging, (2) Biotechnology, (3) Direct, (4) Commercial Lending, (5) Securities and Investment Management, (6) Alternative Trading (7) Digital Transformation, (8) Secure Living, and (9) Alternative Energy. Each of ~~Rochester, LLC, a privately held commercial printer located~~these business lines are in ~~Rochester, New York, referred to herein as “Secuprint” or “DSS Printing Group”. In 2010, we acquired~~different stages of development, growth, and income generation.

Our divisions, their business lines, subsidiaries, and operating territories: (1) Our Product Packaging line is led by Premier Packaging Corporation, Inc. (“Premier”), a ~~privately held~~New York corporation. Premier operates in the paper board and fiber based folding carton, consumer product packaging, ~~company~~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 ~~Victor, New York. Premier Packaging Corporation~~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 ~~referred~~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, led by the holding corporation, Decentralized Sharing Systems, Inc. (“Decentralized”) provides services to ~~herein~~assist companies in the emerging growth “Gig” business model of peer-to-peer decentralized sharing marketplaces. Direct specializes in marketing and distributing its products and services through its subsidiary and partner network, using the popular gig economic marketing strategy as ~~“Premier Packaging”~~ a form of direct marketing. Direct’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 ~~“DSS Packaging Group.” In May 2011, we acquired ExtraDev, Inc.~~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 trust (“REIT”), organized for the purposes of acquiring hospitals and other acute or post-acute care centers from leading clinical operators with dominant market share in secondary and tertiary markets, and leasing each property to a ~~privately held information technology~~single operator under a triple-net lease. the REIT was formed to originate, acquire, and ~~cloud computing company located~~lease a credit-centric portfolio of licensed medical real estate. (6) Alternative Trading was established to develop and/or acquire assets and investments in ~~Rochester, New York. In 2016, ExtraDev, Inc. changed its name~~the securities trading and/or funds management arena. Alt. Trading, in partnership with recognized global leaders in alternative trading systems, intends to ~~DSS Digital Inc.~~own and operate in the US a single or multiple vertical digital asset exchanges for securities, tokenized assets, utility tokens, and cryptocurrency via an alternative trading platform using blockchain technology. The scope of services within this section is planned to include asset issuance and allocation (securities and cryptocurrency), FPO, IPO, ITO, PPO, and UTO listings on a primary market(s), asset digitization/tokenization (securities, currency, and cryptocurrency), and ~~is also referred~~the listing and trading of digital assets (securities and cryptocurrency) on a secondary market(s). (7) Digital Transformation was established to ~~herein as~~be a Preferred Technology Partner and Application Development Solution for mid cap brands in various industries including the ~~“DSS~~direct selling and affiliate marketing sector. Digital ~~Group”.~~improves marketing, communications and operations processes with custom software development and implementation. (8) The Secure Living division has developed a plan for fully sustainable, secure, connected, and healthy living communities with homes incorporating advanced technology, energy efficiency, and quality of life living environments both for new construction and renovations for single and multi-family residential housing. (9) The Alternative Energy group was established to help lead the Company’s future in the clean energy business that focuses on environmentally responsible and sustainable measures. Alset Energy, Inc, the holding company for this group, and its wholly owned subsidiary, Alset Solar, Inc., pursue utility-scale solar farms to serve US regional power grids and to provide underutilized properties with small microgrids for independent energy.

On ~~July 1, 2013, we merged~~March 3, 2020, the Company, via its subsidiary DSS Securities, entered into a share subscription agreement and loan arrangement with ~~DSS Technology~~LiquidValue Asset Management Pte Ltd., AMRE Asset Management, Inc. ~~(formerly known~~and American Medical REIT Inc. under which it acquired a 52.5% controlling ownership interest in AMRE Asset Management Inc. (“AAMI”) which currently has a 93% equity interest in American Medical REIT Inc. (“AMRE”). AAMI is a real estate investment trust (“REIT”) management company that sets the strategic vision and formulate investment strategy for AMRE. It manages the REIT’s assets and liabilities and provides recommendations to AMRE on acquisition and divestments in accordance with the investment strategies. AMRE is a Maryland corporation, 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. AMRE was formed to originate, acquire, and lease a credit-centric portfolio of licensed medical real estate. AMRE is planned to qualify as ~~Lexington Technology Group,~~a Real Estate Investment Trust for federal income tax purposes, which will provide. AMRE’s investors the opportunity for direct ownership of Class A licensed medical real estate. On June 18, 2021, DSS Securities, entered into a stock purchase agreement with AMRE to acquire 264,525 Class A Common Shares of AMRE at a per share price of $10, for a total consideration of $2,645,250. The additional 264,525 Class A Common Shares acquired increases the Company’s total equity interest in AMRE to approximately 93%.

On August 21, 2020, the Company, completed its acquisition of Impact BioMedical, Inc. (“Impact BioMedical”), pursuant to a ~~private~~Share Exchange Agreement by and among the Company, DSS BioHealth Security, Inc. (“DSS BioHealth”), Alset International Limited (formally Singapore eDevelopment Ltd.), and Global Biomedical Pte Ltd. (“GBM”), which was previously approved by the Company’s shareholders (the “Share Exchange”). Under the terms of the Share Exchange, the Company issued 483,334 shares of the Company’s common stock, par value $0.02 per share, nominally valued at $6.48 per share, and 46,868 newly issued shares of the Company’s Series A Convertible Preferred Stock (“Series A Preferred Stock”). As a result of the Share Exchange, Impact BioMedical is now a wholly owned subsidiary of DSS BioHealth, the Company’s wholly owned subsidiary.

Impact BioMedical strives to leverage its scientific know-how and intellectual property ~~monetization company.~~rights to provide solutions that have been plaguing the biomedical field for decades. By tapping into the scientific expertise of its partners, Impact BioMedical has undertook a concerted effort in the research and development (“R&D”), drug discovery and development for the prevention, inhibition, and treatment of neurological, oncological and immune related diseases.

In August 2020, the Company’s wholly owned subsidiary, DSS ~~Technology Management,~~Securities, Inc. ~~is also referred~~entered into a corporate venture to ~~in this report as “DSS Technology Management” or “DSSTM”~~form and operate a real estate title agency, under the name and flagging of Alset Title Company, Inc, a Texas corporation (“ATC”). DSS ~~Technology Management~~Securities, Inc. shall own 70% of this venture with the other two shareholders being attorneys necessary to the state application and permitting process.

Effective December 9, 2020, Impact BioMedical entered into an exclusive distribution agreement with BioMed Technologies Asia Pacific Holdings Limited (“BioMed”), which is focused on ~~extracting~~manufacturing natural probiotics. Under the terms of this distribution agreement, Impact BioMedical will directly market, advertise, promote, distribute and sell certain BioMed products to resellers. The products to be distributed by Impact BioMedical include BioMed’s PGut Premium ProbioticsTM, PGut Allergy ProbioticsTM, PGut SupremeSlim ProbioticsTM, PGut Kids ProbioticsTM, and PGut Baby ProbioticsTM. Under the terms of the ten-year distribution agreement, Impact BioMedical 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.

On February 8, 2021, DSS Securities announced that it entered into a joint venture (“JV”) with Coinstreet Partners (“Coinstreet”), a global decentralized digital investment banking group and digital asset financial service firm, and GSX Group (“GSX”), a global digital exchange ecosystem for the issuance, trading, and settlement of tokenized securities, using its proprietary blockchain solution. The JV leverages the operational strengths and assets of three key leaders in their field, combining traditional capital market experience, Fintech innovations, and business networks from three continents, North America, Europe, and Asia, to capitalize on unique digital asset opportunities. The JV reported that it intended to first pursue a digital securities exchange license in the US. Moving forward, this JV will be the key operational company building and operating a digital securities exchange that utilizes the GSX STACS blockchain technology, serving corporate issuers and investors in the sector. This JV is currently in the planning stages.

On February 25, 2021, DSS Securities announced its acquisition of an equity interest in WestPark Capital, Inc.(“WestPark”) and an investment in BMI Capital International LLC (“BMICI”). DSS Securities executed two separate transactions that were designed to grow the securities division by signing a binding note and stock exchange letter of intent to own 7.5% of the issued and outstanding shares of WestPark and acquiring 24.9% of BMICI through a purchase agreement. WestPark is a full-service investment banking and securities brokerage firm which serves the needs of both private and public companies worldwide, as well as individual and institutional investors. BMI is a private investment bank specializing in corporate finance advising, raising equity, and venture services, providing a global “one-stop” corporate consultancy to listed companies. From corporate finance to professional valuation, corporate communications to event management, BMICI services companies in the US, Hong Kong, Singapore, Taiwan, Japan, Canada, and Australia.

On March 1, 2021, Decentralized Sharing Systems, Inc. (“Decentralized”) announced that it increased its investment in Sharing Services Global Corporation (“Sharing Services” or “SHRG”), a publicly traded company dedicated to maximizing shareholder value through the acquisition and development of innovative companies, products, and technologies in the direct selling industry, through a $30 million convertible promissory note dated April 5, 2021. Decentralized’s financing was made as an investment that would help accelerate Sharing Services sales and growth, as well as international expansion, with the expectation that such capital reserves would help make Sharing Services a dominant player in the global marketplace over the next two years. It was reported that the new $30 million investment would have the potential to exponentially increase Sharing Services sales channels and substantially expand its product portfolio, and to position Sharing Services to capitalize on consolidation and roll up opportunities of other direct selling companies. In the joint announcement, Sharing Services reported that the additional funding would now allow it to accelerate its global expansion with a direct focus on the Asian markets, and specifically in countries such as South Korea, Japan, Hong Kong, China, Singapore, Taiwan, Thailand, Malaysia, and the Philippines. In accordance with the April 5, 2021, convertible promissory note, SHRG issued to the Company 27,000,000 shares of its Class A Common Stock, including 15,000,000 shares in payment of the loan origination fee and 12,000,000 shares in prepayment of interest for the first year. On December 23, 2021, a wholly owned subsidiary of DSS entered into a Stock Purchase and Share Subscription Agreement with SHRG, which provided for an investment of up to $3,000,000 by DSS into SHRG in exchange of an aggregate of 50,000,000 shares of Class A Common Stock and warrants to purchase up to 50,000,000 shares of Class A Common Stock. As of December 31, 2021, the Company held 141,450,978 class A common shares equating to a 57.7% ownership interest in SHRG with aggregate fair value of the Company’s investment in SHRG at December 31, 2021, of approximately $12,731,000. The Company, via three (3) of the Company’s existing board members, currently holds four (4) of the five (5) SHRG board of director seats. Mr. John “JT” Thatch, DSS’s Lead Independent Director and as well the CEO of SHRG is on the SHRG Board, along with Mr. Heng Fai Ambrose Chan, DSS’s Executive Chairman of the board of directors (joined the SHRG Board effective May 4, 2020), and Mr. Frank D. Heuszel, the CEO of the Company (joined the SHRG Board effective September 29, 2020).

On March 15, 2021, the Company, through one of its subsidiaries, DSS BioMedical International, Inc. entered into a Stock Purchase Agreement (the “Agreement”) with Vivacitas Oncology Inc. (“Vivacitas”), to purchase 500,000 shares of its common stock at the per share price of $1.00, with an option to purchase 1,500,000 additional shares at the per share price of $1.00. In addition, under the terms of the Agreement, the Company will be allocated two seats on the board of Vivacitas. On March 18, 2021, the Company entered into an agreement with Alset EHome International, Inc. (“Seller”) to acquire the Seller’s wholly owned subsidiary Impact Oncology PTE Ltd for the purchase price of $2,480,000 to effectively purchase ownership of 2,480,000 shares of common stock of Vivacitas. This agreement includes an option to purchase an additional 250,000 shares of common stock. As a result of these On April 21, 2021, the Company announced its wholly owned subsidiary, Premier Packaging Corporation’s intentions to relocate from its current 48,000 square-foot manufacturing facility from Victor, NY to a new 105,000 square-foot facility in the Town of Henrietta, NY approximately 15 miles from its Victor location by the end of 2021. In connection with this relocation, Premier Packaging has entered into an agreement to sell its current Victor location and closed on this transaction on March 18, 2022.

On May 13, 2021, Sentinel Brokers, LLC., a subsidiary of the Company entered into a stock purchase agreement (“Sentinel Agreement”) to acquire a 24.9% equity position of Sentinel Brokers Company, Inc. (“Sentinel”), a company registered in the state of New York, for the purchase price of $300,000. Under the terms of this agreement, the Company has the option to purchase an additional 50.1% of the outstanding Class A Common Shares. Upon the exercising of this option, but no earlier than one year following the effective date the Sentinel Agreement, Sentinel has the option to sell the remaining 25% to the Company. In consideration of purchase price investment in Sentinel, the Company is entitled to an additional 50.1% of the net profits of Sentinel

On May 19, 2021, the Company announced that its wholly owned subsidiary, DSS PureAir, Inc., a Texas corporation (“DSS PureAir”), closed on a Securities Purchase Agreement with Puradigm LLC, a Nevada limited liability corporation (“Puradigm”). Pursuant to the terms of the Securities Purchase Agreement, DSS PureAir agreed to provide Puradigm a secured convertible promissory note in the maximum principal amount of $5,000,000.00 (the “Puradigm Note”). The Puradigm Note has a two-year term with interest at 6.65% payable quarterly. All, or part of the Puradigm Note principal balance can be converted at the sole discretion of DSS PureAir for up to an 18% membership interest in Puradigm LLC. The Puradigm Note is secured by all the assets of Puradigm under a security agreement with Puradigm.

On June 18, 2021, AMRE Shelton, LLC., (“AMRE Shelton”) a subsidiary of AMRE financed the purchase of a 40,000 square foot, 2.0 story, Class A+ multi-tenant medical office building located on a 13.62-acre site in Shelton, Connecticut (See Note 7). This property was appraised at approximately $7,150,000, of which $4,965,000 and $1,600,000 was allocated to the facility and land respectively. Also include in the value of the property is $585,000 of intangible assets with an estimated useful life of approximately 4 years. Contained within the sale-purchase agreement for this facility, is a $1,500,000 earnout due to the seller if certain criteria are met. As of December 31, 2021, no liability has been recorded for this earnout as management determined it is currently remote. On November 4, 2021, AMRE LifeCare Portfolio, LLC. (“AMRE LifeCare”), a subsidiary of AMRE, acquired three medical facilities located in Fort Worth, Texas, Plano, Texas, and Pittsburgh, Pennsylvania for a purchase price of $62,000,000. These facilities are tenanted and operated by LifeCare Hospitals, a specialty hospital operator with a focus on long-term acute and critical care. The medical facilities acquired by AMRE are currently under an 18-year lease with eleven years remaining and an option to renew for an additional five years. These facilities have a total capacity of 195 hospital beds spanning a gross floor area of approximately 320,000 square feet. This property was appraised at approximately $61,601,000, of which $33,600,000 and $12,100,000 was allocated to the facility and land respectively. Also include in the value of the property is $15,901,000 of intangible assets with estimated useful lives ranging from 1 to 11 years. On December 21, 2021, AMRE Winter Haven, LLC. (“AMRE Winter Haven”), a subsidiary of AMRE, acquired a medical facility located in Winter Haven, Florida for a purchase price of $4,500,000. The purchase price has been allocated as $3,200,000, $1,000,000, and $222,000 for the facility, land and site and tenant improvements respectively. Also include in the value of the property is $29,000 of intangible assets with an estimated useful life of approximating 5 years. All assets were allocated on a relative fair value basis.

On September 9, 2021, the Company finalized a stock purchase agreement (the “SPA”) with American Pacific Bancorp (“APB”), which provided for an investment of $40,000,200 by the Company into APB for an aggregate of 6,666,700 shares of the APB’s Class A Common Stock, par value $0.01 per share. Subject to the terms and conditions contained in the SPA, the shares issued at a purchase price of $6.00 per share. As a result of this transaction, DSS became the majority owner of APB. APB is organized for the purposes of being a financial network holding company, focused providing commercial loans and on acquiring equity positions in (i) undervalued commercial bank(s), bank holding companies and nonbanking licensed financial companies operating in the United States, South East Asia, Taiwan, Japan and South Korea, and (ii) companies engaged in—nonbanking activities closely related to banking, including loan syndication services, mortgage banking, trust and escrow services, banking technology, loan servicing, equipment leasing, problem asset management, SPAC (special purpose acquisition company) consulting, and advisory capital raising services. From this financial platform, the Company shall provide an integrated suite of financial services for businesses that shall include commercial business lines of credit, land development financing, inventory financing, third party loan servicing, and services that address the financial needs of the world Gig Economy.

On September 13, 2021, the Company finalized a shareholder agreement between its subsidiary, DSS Financial Management, Inc. (“DFMI”) and HR1 Holdings Limited (“HR1”), a company incorporated in the British Virgin Islands, for the purpose to operate a vehicle for private and institutional investors seeking a highly liquid investment fund with attractive risk adjusted returns relative to market unpredictability and volatility. Under the terms of this agreement, 4000 shares or 40% of the Company’s subsidiary Liquid Asset Limited Management Limited (“LVAM”), a Hong Kong company was transferred to HR1 whereas at the conclusion of the transaction DFMI would own 60% of LVAM and HR1 would own 40%. LVAM executes within reliable platforms and broad market access and uses proprietary systems and algorithms to trade liquid exchange-traded funds (“ETFs”), stocks, futures or crypto. Aimed at providing consistent returns while offering the unique ability to liquidate the portfolio within 5 to 10 minutes under normal market conditions, LVAM provides an array of advanced tools and products enabling customers to explore multiple opportunities, strengthen and diversify their portfolios, and meet their individual investing goals.

On April 7th, 2021, the Company entered into a transfer and assignment agreement (“RIA Agreement”) between DSS Securities, Inc. (“DSSS”) and AmericaFirst Capital Management, LLC (“Advisor”), a California limited liability company and the registered investment advisor (“RIA”) to all the funds within the AmericaFirst Quantitative Funds Trust (“Trust”). In September of 2021, with the approval of the Trust’s Board of Trustees and its shareholders, and with the consideration of $600,000 paid, DSSS became the new registered investment advisor to the Trust. Upon the completion of the transfer, the Trust was renamed to the DSS AmericaFirst Quantitative Trust. The DSS AmericaFirst Quantitative Trust is a Delaware business trust established in 2012. The Trust currently consists of 4 mutual funds managed by DSS Wealth Management, Inc.: The DSS AmericaFirst Income Trends Fund, DSS AmericaFirst Defensive Growth Fund, DSS AmericaFirst Risk-On Risk-Off Fund, and DSS AmericaFirst Large Cap Buyback Fund. The funds seek to outperform their respective benchmark indices by applying a quantitative rules-based approach to security selection. The DSS AmericaFirst Quantitative Funds is a suite of mutual funds managed by DSS Wealth Management, Inc. that will expand into numerous investment platforms including additional mutual funds, exchange-traded funds, unit investment trusts and closed-end funds. We see substantial growth opportunities in each of these platforms as we are committed to building and expanding upon an experienced distribution infrastructure. For DSSS services rendered in its role as RIA, the Trust shall pay a fee for each fund calculated as a percentage of the average daily net assets. The $600,000 consideration given is recorded as an Other intangible asset, net on the Consolidated Balance Sheet at December 31, 2021. As the RIA Agreement has no defined period, this asset has been deemed an infinite life asset and no amortization has been taken.

On December 23, 2021, DSS purchased 50,000,000 shares at $0.06 per share of Sharing Services Global Corporation (“SHRG”) via a private placement. With this purchase, DSS increased its ownership of voting shares from approximately 47% of SHRG to approximately 58%. SHRG aims to build shareholder value by developing or acquiring businesses that increase the Company’s product and services portfolio, business competencies and geographic reach. Currently, the Company, through its subsidiaries, markets and distributes its health and wellness and other products primarily in the United States, Canada, and the Asia Pacific region using a direct selling business model. The Company markets its products and services through its independent sales force, using its proprietary websites, including: www.elevacity.com and www.thehappyco.com. The Company, headquartered in Plano, Texas, was incorporated in the State of Nevada on April 24, 2015, and is an emerging growth company. The Company’s Common Stock is traded, under the symbol “SHRG,” in the OTCQB Market, an over-the-counter trading platforms market operated by OTC Markets Group Inc.

The COVID-19 pandemic has created global economic turmoil and has potentially permanently impacted how many businesses operate and how individuals will socialize and shop in the future. The effect of the economic ~~benefits of intellectual property assets through acquiring~~shutdown has impacted our business lines differently, some more severely than others. In most cases, we believe the negative economic trends and reduced sales will recover over time. Additionally, it is reasonably possible that estimates made in the financial statements have been, or ~~internally developing patents or other intellectual property assets (or interests therein)~~will be, materially and ~~then monetizing such assets through a variety of value enhancing initiatives. In July 2013, we completed~~adversely impacted in the ~~merger with Lexington Technology Group which was accounted for~~near term as a ~~business combination in accordance with FASB ASC 805 Business Combinations.~~result of these conditions, including losses on inventory; impairment losses related to goodwill and other long-lived assets and current obligations.

~~We do business in four operating segments packaging and printing; plastics; digital and technology management, which includes our IP monetization business.~~

RESULTS OF OPERATIONS FOR THE FISCAL YEARS ENDED DECEMBER 31, ~~2017~~2021 AND ~~2016~~2020

Revenue -For the year ended December 31, ~~2017,~~2021, revenue ~~was~~increased 32% to approximately ~~$18.7~~$20.3 million ~~a decrease~~as compared to revenues of ~~3% from~~approximately $15.4 million for the year ended December 31, ~~2016.~~2020. Printed products sales, which include sales of packaging and printing ~~and plastic~~ products, ~~decreased 1%~~increased 19% in ~~2017~~2021 as compared to ~~2016, driven by a decrease in the sales of printing and packaging products of 3% and offset by an increase~~2020. The increases in sales were due primarily to the impact of ~~plastic card products of 3%.~~the COVID-19 pandemic in 2020 as key customers saw a decline in business. In 2021, those key customers returned to pre-pandemic numbers. Net investment income, Rental income and Management fee income, $250,000, $1,203,000 and $24,000 respectively, represent new revenue streams for the Company and are associated with our Securities and Commercial Lending business segments. The Company’s ~~technology sales, services and licensing~~Direct Marketing revenues ~~decreased 14%~~increased 40% in ~~2017,~~2021 as compared to ~~2016, because of decreases~~2020 due primarily to increase sales in ~~licensing royalties and recurring IT services, offset by an increase in revenue from the Company’s AuthentiGuard product line.~~our Asian market.

Year Ended
December 31, 2017 Year Ended
December 31, 2016 % change
Costs and expenses
Costs of goods sold, exclusive of depreciation and amortization $ 11,009,000 $ 11,120,000 -1 %
Sales, general and administrative compensation 3,758,000 4,199,000 -11 %
Depreciation and amortization 1,414,000 1,392,000 2 %
Professional fees 613,000 813,000 -25 %
Stock based compensation 215,000 329,000 -35 %
Sales and marketing 401,000 420,000 -5 %
Rent and utilities 634,000 602,000 5 %
Other operating expenses 844,000 963,000 -12 %

Total costs and expenses $ 18,888,000 $ 19,838,000 -5 %

Costs of revenue, ~~sold,~~ exclusive of depreciation and amortization includes all direct ~~cost~~costs of the Company’s printed products, including its packaging and printing sales and ~~plastic ID card~~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 as a result of technology licenses or settlements, if any. Costs of revenue ~~decreased 1%~~increased 11% in ~~2017~~2021 as compared to ~~2016. This decrease correlates~~2020, primarily due the increase price of labor, paper and other raw materials associated with ~~the decrease in printed products sales.~~our printing and packaging division as well as cost associated with direct marketing product manufacturing and procurement.

Sales, general and administrative compensation costs, ~~excluding stock based compensation, decreased 11%~~increased 81% in ~~2017~~2021 as compared to ~~2016,~~2020, primarily due ~~to the impact~~a bonus of ~~$732,500 of compensation cost sharing amounts received by the Company~~approximately $7.9 million accrued for Mr. Heng Fai Ambrose Chan, in conjunction with an intellectual property monetization program management arrangement the Company entered into in November of 2016 for which the Company received funds to offset certain of its compensation expenses associatedaccordance with the ~~monetization program. This amount more than offset increases in compensation costs~~terms of ~~approximately $292,000 due to increases in marketing and sales personnel at~~his employment contract as an executive of the Company’s ~~Digital division, and general annual incremental wage increases throughout~~DSS Cyber Security Pte. Ltd subsidiary as compared to $4.3 million accrued in 2020. Mr. Chan is also the Company’s ~~divisions.~~largest shareholder and Chairman of the Board of Directors.

Depreciation and amortization ~~includes~~ include the depreciation of machinery and equipment used for production, depreciation of office equipment and building and leasehold improvements, amortization of software, and amortization of acquired intangible assets such as customer lists, trademarks, non-competition agreements and patents, and internally developed patent assets. Also included is the depreciation of the buildings acquired and amortization of intangible assets included in real estate acquisitions made by our REIT business line. Depreciation and amortization expense ~~increases~~increased by 305% during ~~2017,~~2021, as compared to ~~2016, were~~2020, primarily due to ~~capital expenditures for Printed products, including~~beginning the amortization of the intangible assets obtained as part of the Impact BioMedical acquisition in January 2021 (approximately $93,000 per month) and other acquisitions made during 2021 as well as the 2020 expiration of the non-compete agreement with a ~~die-cutter machine for packaging~~former executive, and ~~printing, and security software for the plastics group.~~a large 10-year asset becoming fully depreciated.

Professional fees ~~decreased 25%~~ increased 73% in ~~2017~~2021 as compared to ~~2016,~~2020, primarily due to ~~a reduction~~an increase in legal fees associated with the direct marketing division, due diligence fees, as well as costs ~~of approximately $219,000 during the fourth quarter of 2017 by the Company, as result of a payment agreement~~associated with ~~one of its legal firms. Absent this amount, professional fees would have increased by approximately 2%.~~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 costs decreased ~~35%~~72% in ~~2017~~2021 as compared to ~~2016~~2020 due to ~~a general decrease~~the expiration of several warrants and options during 2021. Also, one-time stock grants that took place in ~~the number~~2020 to directors, certain officers, and ~~value of equity compensation awards granted by the Company since 2014.~~consultants with no similar offerings or grants in 2021.

Sales and marketing costs, which includes internet and trade publication advertising, travel and entertainment costs, sales-broker commissions, and trade show participation expenses, ~~decreased 5%~~increased 33% during ~~2017~~2021 as compared to ~~2016,~~2020, primarily due to ~~decreases in travel costs.~~increased direct marketing distributor commissions as well as increased commissions incurred at our printing and packing division

Rent and utilitiesincreased 5%15% during ~~2017~~2021 as compared to ~~2016~~2020 due to ~~increases~~a new lease in ~~rental~~Houston, Texas.

Research and development costs consist primarily of third-party research costs and consulting costs. During the year ended December 31, 2021, Research and development costs increased 414% as compared to the same period in 2020 primarily due to the acquisition of Impact Biomedical, Inc. in August of 2020 and the related costs for continued research and development of the ~~Company.~~acquired product formulations as well as development of new technologies.

Other operating expenses consist primarily of equipment maintenance and repairs, office supplies, IT support, bad debt expense, insurance costs, and ~~insurance costs.~~corporate travel. Other operating expenses ~~decreased 12%~~increased 55% in ~~2017~~2021 as compared to ~~2016 which~~2020 primarily ~~reflected decreases in insurance, office,~~due to increased software costs associated with enhancements to the Company’s ERP system as well as new software implement as part of the Company’s Direct Marketing segment and ~~equipment repair costs in 2017.~~increased D&O insurance.

Interest ~~expense decreased 10% in 2017 compared to 2016 reflecting~~income increased 6,503%, during the reduction in debt due to approximately $818,000 in debt principal payments made by the Company during 2017. Amortized debt discount expense is for the cost, including equity based cost, incurred when the Company extended the maturity dates of certain of its debt instruments during 2017.

~~During 2017, the Company had a net loss of approximately $578,000~~year ended December 31, 2021, as compared to ~~a net loss of approximately $950,000~~the same period in ~~2016, representing a 39% decrease. The decrease in net loss is primarily~~2020, due to ~~significant reductions~~interest recognized on the Company’s money markets, notes receivable, and the accretion of the discount on convertible notes receivable.

Interest expense increased 7% during the year ended December 31, 2021, as compared to the same period in ~~cost of goods sold, sales, general, and administrative compensation, professional fees, and stock based compensation costs incurred during 2017, which more than offset the 3% decrease~~2020, due to increases in ~~revenue in 2017.~~debt balances.

(Loss) gain on investments is recognized on the change in fair market value of warrants in SHRG ($8.9) million, Alset International Limited ($1.9) million and other marketable securities ($1.2) million for the year 2021, as compared to SHRG $7.1 million on related warrants, Alset International Limited $3.4 million and other marketable securities $0.1 million for the year 2020.

(Loss) gain 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, 2021 and 2020. See Note 6.

Gain on extinguishment of debt is associated funds received by AAMI in April 2020 from the SBA Paycheck Protection Program of $116,000. As of January 8, 2021, this note was forgiven in full.

Amortized debt discount decreased 100% during the year ended December 31, 2021, as compared to the same period in 2020, due to the balance of debt issue costs being fully expensed in 2020.

The Company has historically met its liquidity and capital requirements primarily through the sale of its equity securities and debt financings. As of December 31, ~~2017,~~2021, the Company had cash of approximately ~~$4.2~~$56.6 million. ~~In addition, the Company had $800,000 available to its packaging division under a revolving credit line.~~ As of December 31, ~~2017,~~2021, 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 ~~financings, if necessary.~~financings.

Operating Cash Flow - During ~~2017,~~2021, the Company expended approximately ~~$1.4~~$9.0 million for operations, which ~~resulted from significant pay down of~~generally reflected by fluctuations in accounts ~~payable~~receivable, inventory, and ~~the reduction in deferred~~prepaid and other current assets, accrued expenses ~~for to the Company’s patent monetization program.~~and other liabilities.

Investing Cash Flow- During ~~2017,~~2021, the Company expended approximately ~~$959,000 on equipment for~~$122.0 million in investing activities. This includes $56.8 million in investments in real estate associated with its ~~packaging and plastic card operations for various machinery, equipment, and software including a diecutter machine for packaging and new security software for plastic card operations. The~~REIT business line. In addition, the Company expended approximately ~~$12,000~~$21.5 million on ~~patent prosecution costs during 2017.~~

~~Financing Cash Flows~~ ~~- During 2017, the Company made aggregate principal payments on long-term debt~~purchases of ~~approximately $818,000. In addition, the Company’s subsidiary, Plastic Printing Professionals, used $522,000 from an equipment line of credit towards the initial payment~~investments and marketable securities, $18.1 million on the purchase of ~~a printing press expected to be placed~~intangible assets and $11.6 million on investments in ~~service at its facility during~~notes receivable.

Financing Cash Flows - During 2021, the ~~first quarter~~Company generated $179.2 million from financing activities, which includes $121.7 million from new issuances of ~~2018. The Company also received net proceeds of approximately $951,000~~common stock and $60.8 million from the ~~sale~~borrowings of ~~the Company’s common stock. During 2016, the Company made aggregate~~long-term debt. This is offset by principal payments ~~of long-term~~on debt of approximately $1,386,000, which included a one-time payment of $495,000 to one of its third-party funding providers. In addition, the company raised approximately $200,000 from the private placement of its common stock during the fourth quarter of 2016.$1.9 million.

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.

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 ~~2017~~2021 or ~~2016~~2020 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.

The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles in the U.S. (“U.S. GAAP”) requires management to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. The Company’s consolidated financial statements for the fiscal year ended December 31, ~~2017~~2021 describe the significant accounting policies and methods used in the preparation of the consolidated financial statements.

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 FASB 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 ~~preparation of consolidated financial statements in conformity with accounting principles generally accepted~~carrying amounts reported in the ~~United States requires the Company to make estimates~~balance sheet of cash 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 thecash equivalents, accounts receivable, prepaids, accounts payable and accrued expenses approximate fair ~~values~~value because of ~~intangible assets~~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 reflect recent market conditions. The fair value of revolving credit lines notes payable and ~~goodwill, useful lives~~long-term debt approximates their carrying value as the stated or discounted rates of ~~intangible assets and property and equipment,~~the debt reflect recent market conditions. The fair ~~values~~value of options and warrants to purchase the Company’s common 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.

~~Goodwill is the excess of cost of an acquired entity over~~investments where the fair value ~~of amounts assigned~~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 ~~assets acquired~~observable transactions for the same or similar securities, with unrealized gains and ~~liabilities assumed~~losses included 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 indicateearnings.

For equity method investments, the ~~carrying amount may be impaired. FASB ASC Topic 350 provides an entity with the option to first assess qualitative factors~~Company regularly reviews its investments to determine whether ~~the existence of events or circumstances leads to~~there is a ~~determination that it is more likely than not that the~~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 6 for further discussion on investments.

Related Party Liabilities - On April 1, 2020 the Company’s HWH World, Inc subsidiary has a service agreement with HWH Korea, a subsidiary of Alset International Limited (“Alset Intl.”) (formally Singapore eDevelopment Limited). The Chairman of the Company, Mr. Heng Fai Ambrose Chan, is the Executive Director and Chief Executive Officer of Alset Intl. Mr. Chan is also the majority shareholder of Alset Intl as well as the largest shareholder of the Company, beneficially owning approximately 31.3% of DSS. The Company also owns approximately 127,179,000 shares of Alset Intl, a ~~reporting unit is less than its carrying amount. If, after assessing~~company publicly listed on the ~~totality~~Singapore Exchange Limited. This service agreement will allow HWH Korea to utilize the Company’s merchant account in connection with their direct marketing network with periodic remittance of ~~events or circumstances, an entity determines it is not more likely than not that~~ the ~~fair value~~cash collected to them for a fee of ~~a reporting unit is less than its carrying amount, then performing~~2.5% of amounts collected. As of December 31, 2021, the ~~two-step impairment test is unnecessary. If the two-step impairment test is necessary, a fair-value-based test is applied at the reporting unit level,~~Company had collected approximately $0 as compared to $1,100,000 as of December 31, 2020, on behalf of HWH Korea, which is ~~generally one level below~~included in Accrued expenses and deferred revenue on the ~~operating segment level.~~consolidated balance sheet. There were no amounts outstanding to this related party at December 31, 2021.

Revenue - The ~~test compares~~Company recognizes its products and services revenue based on when the ~~fair value of an entity’s reporting units~~title passes to the ~~carrying value of those reporting units. This test requires various judgments~~customer or when the service is completed and ~~estimates. The Company estimates~~accepted by the ~~fair value of the reporting unit using a market approach in combination with a discounted operating cash flow approach. Impairment of goodwill~~customer. Revenue 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. An adjustment to goodwill will be recorded for any goodwill that is determined to be impaired. The Company tests goodwill for impairment at least annually in conjunction with preparation of its annual business plan, or more frequently if events or circumstances indicate it might be impaired. FASB ASU 2010-28 modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist.

Other intangible assets consists of costs associated with the application for patents, acquisition of patents and contractual rights to patents and trade secrets associated with the Company’s technologies. The Company’s patents and trade secrets are generally for document anti-counterfeiting and anti-scanning technologies and processes that form the basis of the Company’s document security business. Patent application costs are capitalized and amortized over the estimated useful life of the patent, which generally approximates its legal life. In addition, intangible assets include customer lists and non-compete agreements obtained as a result of acquisitions. Intangible asset amortization expense is classified as an operating expense. The Company believes that the decision to incur patent costs is discretionary as the associated products or services can be sold prior to or during the application process. The Company accounts for other intangible amortization as an operating expense, unless the underlying asset is directly associated with the production or delivery of a product. Subsequent to acquisition of patents and trade secrets, legal and associated costs incurred in prosecuting alleged infringements of the patents will be recognized as expense when incurred. Costs incurred to renew or extend the term of recognized intangible assets, including patent annuities and fees, and patent defense costs are expensed as incurred. To date, the amount of related amortization expense for other intangible assets directly attributable to revenue recognized is not material.

Contingent legal fees are expensed in the consolidated statements of operations in the period that the related revenues are recognized. In instances where there are no recoveries from potential infringers, no contingent legal fees are paid; however,consideration the Company ~~may be liable for certain out of pocket legal costs incurred pursuant~~expects to the underlying legal services agreement that will be paid out from the proceeds from settlements or licenses that arise pursuant to an enforcement action, which will be expensed as legal fees in the period in which the payment of such fees is probable. Any unamortized patent acquisition costs will be expensed in the period in which a conclusion is reached in an enforcement action that does not yield future royalties potential.

We measure compensation cost for stock awards at fair value and recognize compensation expense over the service period for which awards are expected to vest. The Company uses the Black-Scholes-Merton option pricing model for determining the estimated fair value for stock-based awards. The Black-Scholes-Merton model requires the use of subjective assumptions which determine the fair value of stock-based awards, including the option’s expected term and the price volatility of the underlying stock. For equity instruments issued to consultants and vendorsreceive in exchange for ~~goods~~shipped product or service provided. Sales and ~~services, the~~other taxes billed and collected from customers are excluded from revenue. The Company ~~determines the measurement date for the fair value~~recognizes rental income associated with its REIT, net of ~~the equity instruments issued at the earlier~~amortization of ~~(i) the date at which~~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 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 recognizedstraight-line basis over the term of the ~~consulting agreement.~~

related lease. The Company recognizes ~~estimated~~management fee income ~~taxes payable~~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, 2021, 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 refundable on income tax returns for the current year and for the estimated future tax effect attributable to temporary differences and carry-forwards. Measurement of deferred income items is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not expected to be realized. We recognize penalties and accrued interest related to unrecognized tax benefits in income tax expense.less.

In ~~May 2014,~~January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting ~~Standards~~Standard Update ~~No. 2014-09 (Topic 606) “Revenue from Contracts~~(“ASU”) 2017-01, Business Combinations (“Topic 805”): Clarifying the Definition of a Business (“ASU 2017-01”). The guidance is intended to assist entities with ~~Customer” related to revenue from contracts with customers.~~evaluating whether a set of transferred assets and activities is a business. Under this standard, revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The updated standard will replace most existing revenue recognition guidance, under GAAP and permits the use of either the retrospective or cumulative effect transition method. Topic 606 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company will adopt Topic 606 effective January 1, 2018. Topic 606 will not have a material impact on our Consolidated Financial Statements.

In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities”, which requires that most equity investments be measured at fair value, with subsequent changes in fair value recognized in net income. Entities will no longer be able to use the cost method of accounting for equity securities. However, for equity investments without readily determinable fair values, entities may elect a measurement alternative that will allow those investments to be recorded at cost, less impairment, and adjusted for subsequent observable price changes. The pronouncement also impacts financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. This pronouncement is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is not permitted. The Company is currently assessing the impact that adopting this new accounting standard will have on our Consolidated Financial Statements.

~~In February 2016, the FASB issued ASU 2016-02, “Leases”, which requires that lease arrangements longer than 12 months result in~~ an entity ~~recognizing an asset and liability. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. We have elected~~~~not~~ ~~to adopt this standard in advance~~first determines whether substantially all of ~~its required effective date.~~

In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments”, which clarifies the treatment of several types of cash receipts and payments for which there was diversity in practice. This update is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted, including adoption in an interim period. We anticipate that the adoption of this guidance will not have a material impact on our consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows”, regarding the presentation of restricted cash on the statement of cash flows. The standards update requires that the reconciliation of the beginning and end of period cash amounts shown in the statement of cash flows include restricted cash. When restricted cash is presented separately from cash and cash equivalents on the balance sheet, a reconciliation is required between the amounts presented on the statement of cash flows and the balance sheet. Also, the new guidance requires the disclosure of information about the nature of the restrictions. The standards update is effective retrospectively for fiscal years and interim periods beginning after December 15, 2017, with early adoption permitted.

In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment”, which eliminates the two-step process that required identification of potential impairment and a separate measure of the actual impairment. The annual assessment of goodwill impairment will be determined by using the difference between the carrying amount and the fair value of the ~~reporting unit. The standards update are effective for goodwill impairment tests~~gross assets acquired is concentrated in ~~fiscal years beginning after December 15, 2019. The Company~~a single identifiable asset or a group of similar identifiable assets. If this threshold is ~~currently assessing~~met, the ~~impact~~set is not a business. If the threshold is not met, the entity then evaluates whether the set meets the requirement that ~~adopting this new accounting standard will have on our Consolidated Financial Statements.~~

~~In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718) – Scope of Modification Accounting”, which provides guidance about which changes~~a business include, at a minimum, an input and a substantive process that together significantly contribute to the ~~terms or conditions of a share-based payment award require an entity~~ability to ~~apply modification accounting~~create outputs. See Note 7 regarding the acquisitions.

Business combinations and non-controlling interests are recorded in Topic 718. ASU 2017-09 is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, and early adoption is permitted, including in an interim period. ASU 2017-09 is to be applied on a prospective basis to an award modified on or afteraccordance with FASB ASC 805 Business Combinations. Under the ~~adoption date. We do not intend to early adopt ASU 2017-09 and do not expect~~guidance, the ~~adoption of this new accounting standard will have a material impact on our Consolidated Financial Statements.~~

In February 2018, the FASB issued ASU 2018-03, “Technical Corrections and Improvements to Financial Instruments (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities”. This update was issued to clarify certain narrow aspects of guidance concerning the recognition of financial assets and liabilities ~~established in ASU No. 2016-01,~~“~~Financial Instruments—Overall (Subtopic 825-10): Recognition~~of the acquired business are recorded at their fair values at the date of acquisition and ~~Measurement~~all acquisition costs are expensed as incurred. The excess of ~~Financial Assets~~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 ~~Financial Liabilities~~”.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 capitalized as a component of the acquired assets. This includes ~~an amendment~~all costs related to ~~clarify that an entity measuring an equity security using the measurement alternative may change its measurement approach to~~finding, analyzing and negotiating a ~~fair valuation method in accordance with Topic 820, Fair Value Measurement, through an irrevocable election that would apply to that security and all identical or similar investments~~transaction. The allocation of the ~~same issued.~~purchase price is an area that requires judgment and significant estimates. Tangible and intangible assets include land, building and improvements, furniture, fixtures and equipment, acquired above market and below market leases, in-place lease value (if applicable). Acquisition-date fair values of assets and assumed liabilities are determined based on replacement costs, appraised values, and estimated fair values using methods similar to those used by independent appraisers and that use appropriate discount and/or capitalization rates and available market information.

~~In July 2015,~~ the ~~FASB issued ASU 2015-11, “Simplifying the Measurement~~magnitude of Inventory,” which simplifies the subsequent measurement of inventory by using only the lower of cost and net realizable value. This standard is effective for fiscal years and interim periods within those years beginning after December 15, 2016, and must be applied on a retrospective basis. We adopted the new accounting standard in the first quarter of 2017. There was no material impactDSS Plastics’ historical revenue to the ~~Company’s financial statements as~~Company and because the Company has exited the production of laminated and surface printed cards, this sale represented a ~~result of adopting this new accounting standard.~~

In March 2016, the FASB issued ASU 2016-09, “Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting.” The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classificationsignificant strategic shift that has a material effect on the ~~statement of cash flows~~Company’s operations and ~~forfeitures. ASU 2016-09 is effective for~~financial results. Accordingly, the Company has applied discontinued operations treatment for this sale as required by Accounting Standards Codification 210-05—Discontinued Operations. The major classes of assets and liabilities of DSS Plastics are classified as Held For Sale – Discontinued Operations on ~~January 1, 2017. Adoption~~the Consolidated Balance Sheets and the operating results of ~~this new accounting standard resulted in~~ the ~~recognition~~discontinued operations is reflected on the Consolidated Statements of ~~an increase in~~Operations as Loss from Discontinued Operations. See Note 16.

On May 7, 2021, the Company completed the sale of 100% of the capital stock of DSS Digital Inc. (“DSS Digital”), the Company’s ~~gross deferred tax asset~~wholly owned subsidiary, which researched, developed, marketed, and sold the Company’s digital products worldwide. Based on the magnitude of ~~approximately $350,000 and an offsetting increase in the valuation allowance. There was no impact~~DSS Digital’s historical revenue to the Company and because the Company has exited the brand authentication services, functional anti-counterfeiting technology and technologies to satisfy commercial and consumer product needs for branding, intelligent packaging, and marketing, this sale represented a significant strategic shift that has a material effect on the Company’s ~~retained earnings or other material impact to~~operations and financial results. Accordingly, the ~~financial statements~~Company has applied discontinued operations treatment for this sale as ~~a result of adopting this new accounting standard.~~required by Accounting Standards Codification 210-05—Discontinued Operations. See Note 16.

of DSS, Inc. (formerly, Document Security Systems, Inc. and ~~Subsidiaries~~Subsidiaries)

We have audited the accompanying consolidated balance ~~sheets~~sheet of DSS, Inc. (formerly Document Security Systems, ~~Inc.~~Inc and ~~Subsidiaries~~Subsidiaries) (the Company) as of December 31, ~~2017 and 2016,~~2020, the related consolidated statements of operations and comprehensive ~~loss,~~income (loss), changes in stockholders’ equity and cash flows for the ~~years~~year then ended, and the related notes to the consolidated financial ~~statement~~statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2017 and 2016,~~2020, and the results of its operations and its cash flows for the ~~years~~year then ended, in conformity with accounting principles generally accepted in the United States of America.

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our ~~audits.~~audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our ~~audits~~audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our ~~audits~~audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our ~~audits~~audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our ~~audits~~audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our ~~audits~~audit provide a reasonable basis for our opinion.

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

As described in Note 7 to the consolidated financial statements, the Company completed its acquisition of Impact BioMedical, Inc. from a related party during the year ended December 31, 2020 for consideration of approximately $38 million. In connection with this transaction, the Company evaluated whether this transaction qualified as a business combination, evaluated the classification of the preferred shares as either a liability or equity, determined the fair value of the consideration paid, determined the fair value of the separately identifiable assets acquired and liabilities assumed and reflected the excess of the consideration paid over net assets acquired as goodwill. In connection with this transaction a deferred tax liability was recorded resulting in the release of a previously recorded valuation allowance. The operations of this acquisition are considered to be a single reporting unit.

The evaluation of the classification of the transaction as a business combination and the preferred shares issued as permanent equity is complex. Further, based on the stage of development of the business and the related party nature of the transaction, the valuation of the consideration paid, assets acquired, liabilities assumed, and related non-controlling interest is complex and judgmental. The valuation models used by management when determining their estimated fair value require subjective assumptions. In particular, the fair value estimates are sensitive to changes in assumptions for revenue growth, gross margin, and operating expenses as well as weighted average cost of capital, illiquidity discounts relating to the consideration paid, and lack of control discounts for the non-controlling interest. Additionally, the accounting for the transaction and income tax accounting related to the opening balance sheet was complex. Due to the complexity of the transactions and subjectivity involved with the assumptions used, we identified the business combination as a critical audit matter, which required a high degree of auditor judgement.

Addressing the matter involved performing subjective procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. The primary procedures we performed included: (i) Obtaining an understanding and evaluating of the design of controls over accounting for and reporting of the transaction, (ii) auditing the appropriateness of management’s conclusions surrounding the classification of this transaction as a business combination and the preferred share consideration as permanent equity, (iii) auditing management’s assessment of the identification of assets to be acquired and valued, (iv) auditing management’s development of the assumptions used in the valuation models applied and the reasonableness of those assumptions, and auditing the disclosures over this transaction, and (v) auditing the calculation of the deferred tax liability recorded related to the transaction. Professionals with specialized skills and knowledge were used to assist in evaluating certain methodologies and assumptions used in determining fair values.

Valuation of Investments in Related Parties – Alset International, Inc. and Sharing Services Global Corp

As described in Note 6 to the consolidated financial statements, the Company has an equity investment in Alset International, Inc. (“Alset”), a related party, of approximately $6.8 million as of December 31, 2020, recorded as a marketable security with a readily determinable fair value. This investment was previously recorded at cost, less impairment. During the year ended December 31, 2020, the Company recorded unrealized gains associated with this investment of approximately $3.4 million. The Company also has an equity investment in Sharing Services Global Corp (“SHRG”), a related party, of approximately $12.2 million as of December 31, 2020, recorded as an equity method investment, as the Company has significant influence of SHRG. Prior to obtaining significant influence, the investment was accounted for as a marketable security with a readily determinable fair value. During the year ended December 31, 2020, the Company recorded unrealized gains associated with this investment of approximately $6.8 million, prior to gaining significant influence, and income of approximately $600,000 associated with the Company’s share of equity in SHRG. Further, the Company holds a warrant to purchase additional shares of SHRG amounting to approximately $1.1 million, which is accounted for as an investment in an equity instrument and recorded at fair value, resulting in approximately $350,000 of unrealized gains.

The evaluation of the related party relationships and proper accounting treatment is complex and involves a high degree of subjectivity and effort in performing procedures surrounding the classification and calculations related to the investments. Due to the complexity of the transactions and subjectivity involved with the assumptions used, we identified the accounting for these related party investments as a critical audit matter, which required a high degree of auditor judgement.

March 31, 2021, except for the effect of discontinued operations discussed in Note 16 to the consolidated financial statements and except for the retrospective application of changes to the Company’s reportable segments discussed in Note 18, as to which the date for each is March 31, 2022.

We have audited the accompanying consolidated balance sheets of DSS, Inc. and its subsidiaries (the “Company”) as of December 31, 2021 and the related consolidated statements of operations and comprehensive (loss) income, stockholders’ equity and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2021, and the results of its consolidated operations and its consolidated cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Business acquisition of American Pacific Bancorp and real estate asset acquisitions

As described in Note 7 to the consolidated financial statements, the Company completed the acquisition of American Pacific Bancorp. and the assets acquired and liabilities assumed were required to be recorded at fair value as of the acquisition date. Also described in Note 7, the Company completed acquisitions of real estate assets as each transaction was concentrated in a single identifiable asset or group of assets. The Company utilized third-party valuation specialists to assist in the preparation of these valuations. We identified the fair value determination of the acquired assets, liabilities assumed, and residual value of goodwill as well as the allocation of the real estate assets’ purchase price to be a critical audit matter.

The principal considerations for our determination that estimation of the fair value of the assets acquired in the acquisitions of is a critical audit matter are that there was a high estimation uncertainty due to significant judgments with respect to assumptions used to estimate the future revenues and cash flows, including revenue growth rates, operating margins, the discount rate, the valuation methodologies applied by the third-party valuation specialist for the fair value of the intangible assets. This in turn led to a high degree of auditor judgment, subjectivity, and efforts in performing procedures and evaluating audit evidence related to management’s forecasted future revenues and cash flows and valuation methodologies. In addition, the audit effort involved the use of specialists to assist in performing these procedures and evaluating the audit evidence obtained.

Consolidated Statements of Operations and Comprehensive ~~Loss~~(Loss) Income

	2017			2016			2021			2020
Cash flows from operating activities:
Net loss	$	(578,156	)	$	(950,003	)
Adjustments to reconcile net loss to net cash (used by) from operating activities:
Net (loss) income from continuing operations							$	(34,050,000	)	$	2,060,000
Adjustments to reconcile net (loss) income from continuing operations to net cash used by operating activities:
Depreciation and amortization		1,413,838			1,391,815			4,322,000			1,068,000
Stock based compensation		214,862			328,567			78,000			149,000
Paid in-kind interest		72,000			39,000
Change in deferred tax provision		80,363			(116,488	)
Amortization of deferred financing costs		154,142			21,351
Gain on settlement of legal expenses		(219,364	)		-
Loss (income) on equity method investment								9,939,000			(604,000	)
Loss (gain) on investments								12,035,000			(10,609,000	)
Gain on extinguishment of debt								(116,000	)		(622,000	)
Deferred tax benefit								(4,032,000	)		(1,774,000	)
Decrease (increase) in assets:
Accounts receivable		(134,303	)		206,452			(2,084,000	)		(665,000	)
Inventory		(444,869	)		(268,547	)		(8,425,000	)		(705,000	)
Prepaid expenses and other current assets		51,409			(38,532	)		(2,274,000	)		(509,000	)
Restricted cash		(78,396	)		115,434
Other assets								1,216,000			264,000
Increase (decrease) in liabilities:
Accounts payable		(893,431	)		267,581			463,000			(183,000	)
Accrued expenses		(60,791	)		-			15,920,000			4,291,000
Other liabilities		(944,834	)		4,469,895			(2,004,000	)		1,001,000
Net cash (used by) from operating activities		(1,367,530	)		5,466,525
Net cash used by operating activities								(9,012,000	)		(6,831,000	)

Cash flows from investing activities:
Purchase of property, plant and equipment		(958,819	)		(269,870	)		(14,283,000	)		(321,000	)
Proceeds from sale of intangibles		-			495,000
Purchase of real estate								(56,794,000	)		-
Purchase of investment								(4,130,000	)		-
Purchase of marketable securities								(8,171,000	)		(9,791,000	)
Asset acquired with APB acquisition								3,356,000			-
Conversion of SHRG to consolidation								(12,225,000	)		-
Note receivable investment								(11,651,000	)		(574,000	)
Purchase of intangible assets		(11,552	)		(73,661	)		(18,110,000	)		-
Net cash (used by) from investing activities		(970,371	)		151,469
Net cash used by investing activities								(122,008,000	)		(10,686,000	)

Cash flows from financing activities:
Payments of long-term debt		(818,332	)		(1,386,420	)		(1,950,000	)		(304,000	)
Borrowings from equipment line of credit		522,000			-
Borrowings of long-term debt								60,864,000			1,278,000
Payments of revolving lines of credit, net								-			(500,000	)
Deferred financing fees								(1,425,000	)		-
Issuances of common stock, net of issuance costs		951,118			199,908			121,736,000			20,195,000
Net cash from (used by) financing activities		654,786			(1,186,512	)
Net cash provided by financing activities								179,225,000			20,669,000

Net (decrease) increase in cash		(1,683,115	)		4,431,482
Cash at beginning of year		5,871,738			1,440,256
Cash flows from discontinued operations:
Cash provided (used) by discontinued operations								207,000			636,000
Cash provided by investing activities								3,000,000			876,000
Cash used by financing activities								-			(577,000	)
Net cash provided (used) by discontinued operations								3,207,000			935,000

Cash at end of year	$	4,188,623		$	5,871,738
Net increase in cash								51,412,000			4,087,000
Cash and cash equivalents at beginning of year								5,183,000			1,096,000
Cash and cash equivalents at end of year							$	56,595,000		$	5,183,000

The Company, incorporated in the state of New York in May 1984 has conducted business in the name of Document Security Systems, Inc. ~~(the~~On September 16, 2021, the board of directors approved an agreement and plan of merger with a wholly-owned subsidiary, DSS, Inc. (a New York corporation, incorporated in August 2020), for the sole purpose of effecting a name change from Document Security Systems, Inc. to DSS, Inc. This change became effective on September 30, 2021. DSS, Inc. maintained the same trading symbol “DSS” and updated its CUSIP number to 26253C 102.

DSS, Inc. (together with its consolidated subsidiaries, referred to herein as “DSS,” “we,” “us,” “our” or the “Company”)~~, through two~~ currently operates nine (9) distinct business lines with operations and locations around the globe. These business lines are: (1) Product Packaging, (2) Biotechnology, (3) Direct, (4) Commercial Lending, (5) Securities and Investment Management, (6) Alternative Trading (7) Digital Transformation, (8) Secure Living, and (9) Alternative Energy. Each of ~~its~~these business lines are in different stages of development, growth, and income generation.

Our divisions, their business lines, subsidiaries, and operating territories: (1) Our Product Packaging line is led by Premier Packaging Corporation, ~~which operates under the assumed name of DSS Packaging Group, and Plastic Printing Professionals,~~ Inc. (“Premier”), ~~which operates under the name of DSS Plastics Group,~~a New York corporation. Premier operates in the ~~security~~paper board and ~~commercial printing,~~fiber based folding carton, consumer product packaging, and ~~plastic ID~~document security printing markets. ~~The Company develops,~~It markets, manufactures, and sells ~~paper~~sophisticated custom folding cartons, mailers, photo sleeves and ~~plastic~~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, 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 specializes in marketing and distributing its products ~~designed~~and services through its subsidiary and partner network, using the popular gig economic marketing strategy as a form of direct marketing. Direct’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 ~~protect valuable information~~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 trust (“REIT”), organized for the purposes of acquiring hospitals and other acute or post-acute care centers from ~~unauthorized scanning, copying,~~leading clinical operators with dominant market share in secondary and tertiary markets, and leasing each property to a single operator under a triple-net lease. the REIT was formed to originate, acquire, and lease a credit-centric portfolio of licensed medical real estate. (6) Alternative Trading was established to develop and/or acquire assets and investments in the securities trading and/or funds management arena. Alt. Trading, in partnership with recognized global leaders in alternative trading systems, intends to own and operate in the US a single or multiple vertical digital ~~imaging.~~asset exchanges for securities, tokenized assets, utility tokens, and cryptocurrency via an alternative trading platform using blockchain technology. The scope of services within this section is planned to include asset issuance and allocation (securities and cryptocurrency), FPO, IPO, ITO, PPO, and UTO listings on a primary market(s), asset digitization/tokenization (securities, currency, and cryptocurrency), and the listing and trading of digital assets (securities and cryptocurrency) on a secondary market(s). (7) Digital Transformation was established to be a Preferred Technology Partner and Application Development Solution for mid cap brands in various industries including the direct selling and affiliate marketing sector. Digital improves marketing, communications and operations processes with custom software development and implementation. (8) The Secure Living division has developed a plan for fully sustainable, secure, connected, and healthy living communities with homes incorporating advanced technology, energy efficiency, and quality of life living environments both for new construction and renovations for single and multi-family residential housing. (9) The Alternative Energy group was established to help lead the Company’s future in the clean energy business that focuses on environmentally responsible and sustainable measures. Alset Energy, Inc, the holding company for this group, and its wholly owned subsidiary, Alset Solar, Inc., pursue utility-scale solar farms to serve US regional power grids and to provide underutilized properties with small microgrids for independent energy.

On August 21, 2020, the Company, completed its acquisition of Impact BioMedical, Inc. (“Impact BioMedical”), pursuant to a Share Exchange Agreement by and among the Company, DSS BioHealth Security, Inc. (“DSS BioHealth”), Alset International Limited (formally Singapore eDevelopment Ltd.), and Global Biomedical Pte Ltd. (“GBM”), which was previously approved by the Company’s shareholders (the “Share Exchange”). Under the terms of the Share Exchange, the Company issued 483,334 shares of the Company’s common stock, par value $0.02 per share, nominally valued at $6.48 per share, and 46,868 newly issued shares of the Company’s Series A Convertible Preferred Stock (“Series A Preferred Stock”). As a result of the Share Exchange, Impact BioMedical is now a wholly owned subsidiary of DSS BioHealth, the Company’s wholly owned subsidiary (see Note 7).

Impact BioMedical strives to leverage its scientific know-how and intellectual property rights to provide solutions that have been plaguing the biomedical field for decades. By tapping into the scientific expertise of its partners, Impact BioMedical has undertook a concerted effort in the research and development (“R&D”), drug discovery and development for the prevention, inhibition, and treatment of neurological, oncological, and immune related diseases.

On September 9, 2021, the Company finalized a stock purchase agreement (the “SPA”) with American Pacific Bancorp, Inc. (“APB”), which provided for an investment of $40,000,200 by the Company into APB for an aggregate of 6,666,700 shares of the APB’s Class A Common Stock, par value $0.01 per share. Subject to the terms and conditions contained in the SPA, the shares issued at a purchase price of $6.00 per share. As a result of this transaction, DSS became the majority owner of APB. (see Note 7).

On September 13, 2021, the Company finalized a shareholder agreement between its subsidiary, DSS Digital Inc., which also operates under the name of DSS Digital Group, develops, markets and sells digital information services, including data hosting, disaster recovery and data back-up and security services. The Company’s subsidiary, DSS TechnologyFinancial Management, Inc. (“DFMI”) and HR1 Holdings Limited (“HR1”), ~~manages, licenses and acquires intellectual property (“IP”) assets~~a company incorporated in the British Virgin Islands, for the purpose to operate a vehicle for private and institutional investors seeking a highly liquid investment fund with attractive risk adjusted returns relative to market unpredictability and volatility. Under the terms of ~~monetizing these assets~~this agreement, 4000 shares or 40% of the Company’s subsidiary Liquid Asset Limited Management Limited (“LVAM”), a Hong Kong company was transferred to HR1 whereas at the conclusion of the transaction DFMI would own 60% of LVAM and HR1 would own 40%. LVAM executes within reliable platforms and broad market access and uses proprietary systems and algorithms to trade liquid exchange-traded funds (ETFs), stocks, futures or crypto. Aimed at providing consistent returns while offering the unique ability to liquidate the portfolio within 5 to 10 minutes under normal market conditions, LVAM provides an array of advanced tools and products enabling customers to explore multiple opportunities, strengthen and diversify their portfolios, and meet their individual investing goals.

On December 23, 2021, DSS purchased 50,000,000 shares at $0.06 per share of Sharing Services Global Corporation (“SHRG”) via a private placement. With this purchase, DSS increased its ownership of voting shares from approximately 47% of SHRG to approximately 58%. SHRG aims to build shareholder value by developing or acquiring businesses that increase the Company’s product and services portfolio, business competencies and geographic reach. Currently, the Company, through ~~a variety of value-enhancing initiatives, including, but not limited to, investments~~its subsidiaries, markets and distributes its health and wellness and other products primarily in the ~~development~~United States, Canada, and ~~commercialization~~the Asia Pacific region using a direct selling business model. The Company markets its products and services through its independent sales force, using its proprietary websites, including: www.elevacity.com and www.thehappyco.com. The Company, headquartered in Plano, Texas, was incorporated in the State of ~~patented technologies, licensing, strategic partnerships~~Nevada on April 24, 2015, and ~~commercial litigation.~~is an emerging growth company. The Company’s Common Stock is traded, under the symbol “SHRG,” in the OTCQB Market, an over-the-counter trading platforms market operated by OTC Markets Group Inc.

Principles of Consolidation -– The consolidated financial statements include the accounts of ~~Document Security System~~DSS and its ~~subsidiaries, including DSS International, which was formed in July of 2017. DSS International has a subsidiary in Hong Kong which had minimal activity in 2017.~~subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates -– The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires the Company to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, the Company evaluates its estimates, including those related to the accounts and notes receivable, inventory, fair values of ~~intangible~~investments, recoverability of long-lived assets and goodwill, useful lives of intangible assets and property and equipment, contingencies fair values of options and warrants to purchase the Company’s common stock, deferred revenue and income taxes, substantial doubt about ability to continue as a going concern 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.

Reclassifications-– Certain ~~prior~~amounts on the accompanying consolidated balance sheets and income statements for the year ~~amounts~~ended December 31, 2020 have been reclassified to conform to ~~the~~ current year presentation.

~~Restricted~~ Cash Equivalents – ~~- As~~All highly liquid investments with maturities of ~~December 31, 2017,~~three months or less at the date of purchase are classified as cash ~~of $256,005 ($177,609– December 31, 2016) is restricted for payments of~~equivalents. Amounts included in cash equivalents in the accompanying consolidated balance sheets are money market funds whose adjusted costs ~~and expenses associated with one of the Company’s IP monetization programs.~~approximate fair value.

Accounts Receivable -– The Company extends credit to its customers in the normal course of business. The Company performs ongoing credit evaluations and generally do not require collateral. Payment terms are generally 30 days but up to net 105 for certain customers. The Company carries its trade accounts receivable at invoice amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts based upon management’s estimates that include a review of the history of past write-offs and collections and an analysis of current credit conditions. AtAs of December 31, ~~2017,~~2021, the Company established a reserve for doubtful accounts of approximately ~~$50,000 ($50,000~~ $20,000 ($25,000 – ~~2016)~~2020). The Company does not accrue interest on past due accounts receivable.

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.

The carrying amounts reported in the consolidated balance sheet of cash and cash equivalents, accounts receivable, prepaids, accounts payable and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments. Marketable securities classify as a Level 1 fair value financial instrument. The fair value of notes receivable approximates their carrying value as the stated or discounted rates of the notes do not reflect recent market conditions. The fair value of revolving credit lines notes payable and long-term debt approximates their carrying value as the stated or discounted rates of the debt reflect recent market conditions. The fair value of investments where the fair value is not considered readily determinable, are carried at cost.

Inventory-– Inventories consist primarily of paper, ~~plastic materials and cards,~~ pre-printed security paper, paperboard, fully prepared packaging, and ~~fully-prepared packaging~~health and beauty products which and are stated at the lower of cost or net realizable value on the first-in, first-out (“FIFO”) method. Packaging work-in-process and finished goods included the cost of materials, direct labor and overhead. At the closing of each reporting period, the Company evaluates its inventory in order to adjust the inventory balance for obsolete and slow-moving items. An allowance for obsolescence of $388,000 associated with the inventory at our SHRG subsidiary was recorded as of December 31, 2021. No allowance was recorded at December 31, 2020. Write-downs and write-offs are charged to cost of revenue.

Notes receivable, unearned interest, and related recognition – The Company records all future payments of principal and interest on notes as notes receivable, which are then offset by the amount of any related unearned interest income. For financial statement purposes, the Company reports the net investment in the notes receivable on the consolidated balance sheet as current or long-term based on the maturity date of the underlying notes. Such net investment is comprised of the amount advanced on the loans, adjusting for net deferred loan fees or costs incurred at origination, amounts allocated to warrants received upon origination, and any payments received in advance. The unearned interest is recognized over the term of the notes and the income portion of each note payment is calculated so as to generate a constant rate of return on the net balance outstanding. Net deferred loan fees or costs, together with discounts recognized in connection with warrants acquired at origination, are accreted as an adjustment to yield over the term of the loan.

Investments– Investments in equity securities with a readily determinable fair value, not accounted for under the equity method, are recorded at fair value with unrealized gains and losses included in earnings. For equity securities without a readily determinable fair value, the investment is recorded at cost, less any impairment, plus or minus adjustments related to observable transactions for the same or similar securities, with unrealized gains and losses included in earnings.

For equity method investments, the Company regularly reviews its investments to determine whether there is a decline in fair value below book value. If there is a decline that is other-than-temporary, the investment is written down to fair value. See Note 6 for further discussion on investments.

Property, Plant and Equipment -– Property, plant and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives or lease period of the assets whichever is shorter. Expenditures for renewals and betterments are capitalized. Expenditures for minor items, repairs and maintenance are charged to operations as incurred. Any gain or loss upon sale or retirement due to obsolescence is reflected in the operating results in the period the event takes place.

Investments in real estate, net– Acquisition of assets are recorded at their relative fair value based on total accumulated costs of the acquisition. Direct acquisition-related costs are capitalized as a component of the acquired assets. This includes all costs related to finding, analyzing and negotiating a transaction. The allocation of the purchase price is an area that requires judgment and significant estimates. Tangible and intangible assets include land, building and improvements, furniture, fixtures and equipment, acquired above market and below market leases, in-place lease value (if applicable). Acquisition-date fair values of assets and assumed liabilities are determined based on replacement costs, appraised values, and estimated fair values using methods similar to those used by independent appraisers and that use appropriate discount and/or capitalization rates and available market information. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets.

Leases- ASC 842 requires recognition of leases on the consolidated balance sheets as right-of-use (“ROU”) assets and lease liabilities. ROU assets represent the Company’s right to use underlying assets for the lease terms and lease liabilities represent the Company’s obligation to make lease payments arising from the leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value and future minimum lease payments over the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company used its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. A number of the lease agreements contain options to renew and options to terminate the leases early. The lease term used to calculate ROU assets and lease liabilities only includes renewal and termination options that are deemed reasonably certain to be exercised.

The Company recognized lease liabilities, with corresponding ROU assets, based on the present value of unpaid lease payments for existing operating leases longer than twelve months. The ROU assets were adjusted per ASC 842 transition guidance for existing lease-related balances of accrued and prepaid rent, and unamortized lease incentives provided by lessors. Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term and is recorded in selling, general and administrative expenses. Variable lease payments for common area maintenance, property taxes and other operating expenses are recognized as expense in ~~2017 was approximately $727,000 ($635,000 - 2016).~~

~~Investment~~~~- In accordance with ASC 325-20,~~ the ~~Company records its investment in common stock of Singapore eDevelopment Limited at cost as the fair market value of the investment is not readily determinable.~~period incurred. The Company ~~evaluates investment~~has elected to separate lease and non-lease components for ~~indications~~all property leases for the purposes of ~~impairment at least annually.~~calculating ROU assets and lease liabilities.

Goodwill -– Goodwill is the excess of cost of an acquired entity over the fair value of amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill is subject to impairment testing at least annually and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. ~~Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)~~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 ~~assessing~~completing the ~~totality of events or circumstances, an entity determines~~assessment, it is ~~not~~determined that it is more likely than not that the fair value of a reporting unit is less than its carrying ~~amount, then performing~~value, the ~~two-step impairment~~Company will proceed to a quantitative test. The Company may also elect to perform a quantitative test ~~is unnecessary. If the two-step impairment~~instead of a qualitative test ~~is necessary, a fair-value-based test is applied at the~~for any or all of our reporting ~~unit level, which is generally one level below the operating segment level.~~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. ~~An adjustment to goodwill will be recorded for any goodwill that is determined to be impaired. In determining whether it is more likely than not that a~~The Company performed its annual goodwill impairment ~~exists, an entity should consider whether there are any adverse qualitative~~test as of December 31, 2021, and no impairment was deemed necessary for the goodwill associated with Premier Packaging Company, APB and Impact BioMedical of approximately $1,769,000, $29,744,000, and $25,093,000, respectively. Consistent with this accounting impairment analysis, the Company determined that due to many factors, ~~indicating~~including the impact of the COVID-19 outbreak and the related closing of the operations of the Plastic Group, the Company has quantitatively tested the carrying value of its goodwill associated with the DSS Plastics Group and determined that an impairment ~~may exist.~~of the DSS Plastics’ goodwill had occurred and the Company recorded a full goodwill impairment of $685,000 during the twelve-months ended December 31, 2020. This impairment has been included in the calculation of the discontinued operations of DSS Plastics group. There was no goodwill impairment recorded during the year ended December 31, 2021.

~~Other~~ Intangible Assets ~~and Patent Application Costs~~ - ~~Other~~The estimated fair values of acquired intangibles are generally determined based upon future economic benefits such as earnings and cash flows. Acquired identifiable intangible assets ~~consist of costs associated with the application for patents, acquisition of patents~~are recorded at fair value and ~~contractual rights to patents and trade secrets associated with the Company’s technologies. The Company’s patents and trade secrets~~ are ~~generally for document anti-counterfeiting and anti-scanning technologies and processes that form the basis of the Company’s document security business. Patent application costs are capitalized and~~ amortized over ~~the~~their estimated useful ~~life of the patent, which generally approximates its legal life. In addition,~~lives. Acquired intangible assets ~~include customer lists and non-compete agreements obtained as a result of acquisitions. Intangible asset amortization expense is classified as~~with an ~~operating expense. The Company believes~~indefinite life are not amortized but are reviewed for impairment at least annually or more frequently whenever events or changes in circumstances indicate that the ~~decision to incur patent costs~~carrying amounts of those assets are below their estimated fair values. Impairment is discretionary as the associated products or services can be sold prior to or during the application process. The Company accounts for other intangible amortization as an operating expense, unless the underlying asset is directly associated with the production or delivery of a product. Subsequent to acquisition of patents and trade secrets, legal and associated costs incurred in prosecuting alleged infringements of the patents will be recognized as expense when incurred. Costs incurred to renew or extend the term of recognized intangible assets, including patent annuities and fees, and patent defense costs are expensed as incurred. To date, the amount of related amortization expense for other intangible assets directly attributable to revenue recognized is not material.tested under ASC 350.

~~Impairment of Long Lived~~Long-Lived Assets-The Company monitors the carrying value of long-lived assets for potential impairment and tests the recoverability of such assets whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. If a change in circumstance occurs, the Company performs a test of recoverability by comparing the carrying value of the asset or asset group to its undiscounted expected future cash flows. If cash flows cannot be separately and independently identified for a single asset, the Company will determine whether impairment has occurred for the group of assets for which the Company can identify the projected cash flows. If the carrying values are in excess of undiscounted expected future cash flows, the Company measures any impairment by comparing the fair value of the asset or asset group to its carrying value.

~~Fair Value of Financial Instruments~~Related Party Liabilities - ~~Fair value~~On April 1, 2020 the Company’s HWH World, Inc subsidiary has a service agreement with HWH Korea, a subsidiary of Alset International Limited (“Alset Intl.”) (formally Singapore eDevelopment Limited). The Chairman of the Company, Mr. Heng Fai Ambrose Chan, is ~~defined~~the Executive Director and Chief Executive Officer of Alset Intl. Mr. Chan is also the majority shareholder of Alset Intl as well 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~~largest shareholder of the ~~FASB ASC establishes~~Company. The Company also owns approximately 127,179,000 shares of Alset Intl, a ~~three-tier fair value hierarchy which prioritizes~~company publicly listed on the ~~inputs used~~Singapore Exchange Limited. This service agreement will allow HWH Korea to utilize the Company’s merchant account 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:

~~The carrying amounts reported in the balance sheet of cash, accounts receivable, prepaids, accounts payable and accrued expenses approximate fair value because~~connection with their direct marketing network with periodic remittance of the ~~immediate or short-term maturity~~cash collected to them for a fee of ~~these financial instruments. The fair value~~2.5% of ~~revolving credit lines, notes payable~~amounts collected. As of December 31, 2021, the Company had collected approximately $0 as compared to $1,100,000 as of December 31, 2020, on behalf of HWH Korea, which is included in Accrued expenses and ~~long-term debt approximates their carrying value as~~deferred revenue on the ~~stated or discounted rates~~consolidated balance sheet. There were no amounts outstanding to this related party at December 31, 2021.

Reverse Stock Split - On May 4, 2020, DSS, Inc. held a Special Meeting of Stockholders at which the Company’s stockholders approved amendment to the Company’s certificate of incorporation to effect a reverse split of common stock of the ~~debt reflect recent market conditions. Derivative instruments, as discussed below, are recorded as assets and liabilities~~Company by a ratio of 1-for-30 with the effectiveness of such amendment to be determined by the Board of Directors of the Company The form of the certificate of amendment to effect the Reverse Split was subsequently approved by the Board on May 4, 2020. On May 7, 2020, the Company filed a Certificate of Amendment of Certificate of Incorporation with the Secretary of State of the State of New York to effect a 1-for-30 reverse stock split of the Company’s outstanding common stock. The Amendment was effective at ~~estimated fair value based~~5:01 p.m. Eastern Time on ~~available market information.~~May 7, 2020. The ~~fair value of investments carried at cost is estimated~~reverse stock split has been retroactively applied to ~~exceed carrying value; however the fair value is not considered readily determinable based on the lack of liquidity for the shares owned.~~all financial statements presented.

~~Derivative Instruments~~Revenue - The Company ~~maintains an overall interest rate risk management strategy that incorporates~~recognizes its products and services revenue based on when the ~~use~~title passes to the customer or when the service is completed and accepted by the customer. Revenue is measured as the amount of ~~interest rate swap contracts~~consideration the Company expects to ~~minimize significant fluctuations~~receive in ~~earnings that~~exchange for shipped product or service provided. Sales and other taxes billed and collected from customers are ~~caused by interest rate volatility.~~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 ~~two~~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 ~~rate swaps that change variable rates into fixed rates on two term loans. These swaps qualify as Level 2 fair value financial instruments. These swap agreements are not held for trading purposes and~~owed to the Company ~~does not intend to sell the derivative swap financial instruments.~~occurs. The Company ~~records~~generates revenue from its direct marketing line of business primarily through internet sales and recognizes revenue as items are shipped.

As of December 31, 2021, the ~~interest swap agreements~~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 ~~balance sheet at fair value because~~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 ~~agreements qualify~~amortization period of the asset that the Company would have otherwise recognized is one year or less.

Costs of revenue- Costs of revenue includes all direct cost of the Company’s packaging, commercial and security printing sales, primarily, paper, inks, dies, and other consumables, and direct labor, transportation, and manufacturing facility costs. In addition, this category includes all direct costs associated with the manufacturing and procurement of the products sold in the Company’s Direct Marketing line of business as well as with the Company’s technology sales, services and licensing including hardware and software that is resold, third-party fees, and fees paid to inventors or others as a ~~cash flow hedges under accounting principles generally accepted~~result of technology licenses or settlements, if any. Amortization of intangible assets, patent costs and acquired technology are included in ~~the United States of America~~.~~Gains~~depreciation and ~~losses~~amortization on these instruments are recorded in other comprehensive loss until the underlying transaction is recorded in earnings. When the hedged item is realized, gains or losses are reclassified from accumulated other comprehensive loss (“AOCI”) to the consolidated statement of ~~operations~~operations. Costs of revenue do not include expenses related to product development, integration, and support. These costs are included in research and development, which is a component of selling, general and administrative expenses on the ~~same line item as the underlying transaction. The valuations~~consolidated statement of ~~the interest rate swaps have been derived from proprietary models of Citizens Bank based upon recognized financial principles~~operations. Legal costs are included in selling, general and ~~reasonable estimates about relevant future market conditions~~administrative.

Shipping and may reflect certain other financial factors such as anticipated profit or hedging, transactional, and other costs. The notional amounts of the swaps decrease over the life of the agreements. The Company is exposed to a credit loss in the event of non-performanceHandling Costs - Costs incurred by the ~~counter parties~~Company related to ~~the interest rate swap agreements. However, the Company does not anticipate non-performance by the counter parties. The cumulative net loss attributable~~shipping and handling are included in cost of revenue. Amounts charged to ~~this cash flow hedge recorded in accumulated other comprehensive loss and other liability~~customers pertaining to these costs are reflected as ~~of December 31, 2017 was approximately $23,000 ($45,000 - December 31, 2016).~~revenue.

As of December 31, 2017 the Company has an interest rate swap agreement for its debt with RBS Citizens, N.A. (“Citizens Bank”) (see Note 7) which changes a variable rate into a fixed rate on a term loan as follows:

Share-Based Payments- Compensation cost for stock awards are measured at fair value and the Company recognizes compensation expense over the service period for which awards are expected to vest. The Company uses the Black-Scholes-Merton option pricing model for determining the estimated fair value for stock-based awards. The Black-Scholes-Merton model requires the use of subjective assumptions which determine the fair value of stock-based awards, including the option’s expected term and the price volatility of the underlying stock. For equity instruments issued to consultants and vendors in exchange for goods and services the Company determines the measurement date for the fair value of the equity instruments issued at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.

~~Revenue Recognition~~ -Sales Commissions - Sales commissions are expensed as incurred for contracts with an expected duration of ~~printed products including commercial and security printing, packaging, and plastic cards are recognized when a product~~one year or ~~service is delivered, shipped or provided to the customer and all material conditions relating to the sale have been substantially performed.~~

For technology sales and services, revenue is recognized in accordance with FASB ASC 985-605. Accordingly, revenue is recognized when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service or product has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of our fees is reasonably assured. We recognize cloud computing revenue, including data backup, recovery and security services, on a monthly basis, beginning on the date the customer commences use of our services. Professional services are recognized in the period services are provided.

For printing technology licenses, revenue is recognized once all the following criteria for revenue recognition have been met: (1) persuasive evidence of an agreement exists; (2) the right and ability to use the product or technology has been rendered; (3) the fee is fixed and determinable and not subject to refund or adjustment; and (4) collection of the amounts due is reasonably assured.

For other technology licenses, revenue arrangements generally provide for the payment of contractually determined fees in consideration for the grant of certain intellectual property rights for patented technologies owned or controlled by the Company. These rights typically include some combination of the following: (i) the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products covered by patented technologies owned or controlled the Company, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. The intellectual property rights granted may be perpetual in nature, extending until the expiration of the related patents, or can be granted for a defined, relatively short period of time, with the licensee possessing the right to renew the agreement at the end of each contractual term for an additional payment. Pursuant to the terms of these agreements, the Company has no further obligation with respect to the grant of the non-exclusive retroactive and future licenses, covenants-not-to-sue, releases, and other deliverables, including no express or implied obligation on the Company’s part to maintain or upgrade the technology, or provide future support or services. Generally, the agreements provide for the grant of the licenses, covenants-not-to-sue, releases, and otherless. A significant deliverables upon execution of the agreement, or upon receipt of the minimum upfront payment for term agreement renewals. As such, the earnings process is complete and revenue is recognized upon the execution of the agreement, when collectability is reasonably assured, or upon receipt of the minimum upfront fee for term agreement renewals, and when all other revenue recognition criteria have been met.

~~Certain~~portion of the Company’s ~~revenue arrangements provide for future royalties or additional required payments~~sales commissions expense is generated from its direct marketing line of business. These commissions are based on ~~future licensee activities. Additional royalties~~current month shipments and are ~~recognized~~paid one month in ~~revenue upon resolution~~arrears. There were 0 sales commissions capitalized as of the related contingency provided that all revenue recognition criteria, as described above, have been met. Amounts of additional royalties due under these license agreements, if any, cannot be reasonably estimated by management.December 31, 2021.

~~Costs of revenue~~Contingent Legal Expenses -Costs of revenue includes all direct cost of the Company’s packaging, commercial and security printing and plastic ID card sales, primarily, paper, plastic, inks, dies, and other consumables, and 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 is resold, third-party fees, and fees paid to inventors or others as a result of technology licenses or settlements, if any. Costs of revenue recorded in the DSS Technology Management group include contingent legal fees, inventor royalties, legal, consulting and other professional fees directly related to the Company’s patent monetization, litigation and licensing activities. Amortization of patent costs and acquired technology are included in depreciation and amortization on the consolidated statement of operations. Costs of revenue do not include expenses related to product development, integration, and support. These costs are included in research and development, which is a component of selling, general and administrative expenses on the consolidated statement of operations. Legal costs are included in selling, general and administrative.

~~Contingent Legal Expenses~~ -Contingent legal fees are expensed in the consolidated statements of operations in the period that the related revenues are recognized. In instances where there are no recoveries from potential infringers, no contingent legal fees are paid; however, the Company may be liable for certain out of pocket legal costs incurred pursuant to the underlying legal services agreement that will be paid out from the proceeds from settlements or licenses that arise pursuant to an enforcement action, which will be expensed as legal fees in the period in which the payment of such fees is probable. Any unamortized patent acquisition costs will be expensed in the period a conclusion is reached in an enforcement action that does not yield future royalties potential.

~~Advertising Costs~~~~– Generally consist of online, keyword advertising with Google with additional amounts spent on certain print media in targeted industry publications~~. ~~Advertising costs were approximately $23,000 in 2017 ($27,000– 2016).~~

Research and Development - Research and development costs are expensed as incurred. Research and development costs consist primarily of ~~compensation costs for research personnel,~~ third-party research costs and consulting costs. The Company ~~spent~~recognized costs of approximately ~~$106,000~~$1,080,000 and ~~$435,000 on research~~$210,000 in 2021 and ~~development during 2017 and 2016,~~2020, respectively. Research and development costs decreased during 2017 as compared to 2016 as the Company moved some personnel from research and development to program support to meet the requirements of current and prospective customers of the Company’s AuthentiGuard product line.

Income Taxes - The Company recognizes estimated income taxes payable or refundable on income tax returns for the current year and for the estimated future tax effect attributable to temporary differences and carry-forwards. Measurement of deferred income items is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not expected to be realized. We recognize penalties and accrued interest related to unrecognized tax benefits in income tax expense.

Earnings Per Common Share- The Company presents basic and diluted earnings per share. Basic earnings per share reflect the actual weighted average of shares issued and outstanding during the period. Diluted earnings per share are computed including the number of additional shares from outstanding warrants, stock options and preferred stock that would have been outstanding if dilutive potential shares had been ~~issued.~~issued and is calculated utilizing the treasury stock method. In a loss ~~year,~~period, the calculation for basic and diluted earnings per share is ~~considered to be~~ the same, as the impact of potential common shares is anti-dilutive.

~~As of~~ For the year ended December 31, ~~2017 and 2016, there were 3,177,759 and 3,672,878, respectively, of common stock share equivalents potentially issuable under convertible debt agreements, employment agreements, options,~~2021, potential dilutive instruments includes both warrants and ~~restricted stock agreements that could potentially dilute basic earnings per share in the future. Common stock equivalents were excluded from the calculation~~options of3,556 and 11,930 shares respectively. Weighted average shares outstanding used for diluted earnings per share ~~for 2017 and 2016 in which~~includes the ~~Company had a net loss, since their inclusion would have been anti-dilutive.~~

~~Comprehensive Loss~~~~- Comprehensive loss is defined as the change in equity~~assumed conversion of the Company during a period from transactions and other events and circumstances from non-owner sources. It consists of net income (loss) and other income and losses affecting stockholders’ equity that, under U.S. GAAP, are excluded from net income (loss). The change in fair value of interest rate swaps was the only item impacting accumulated other comprehensive loss47,000 preferred shares, convertible into 7,233,000 common shares, for the ~~years~~period they were outstanding resulting in an additional 2,471,000 shares for the year ended December 31, ~~2017 and 2016.~~2020.

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 as a result of any non-performance by the financial institutions.

During ~~2017,~~2021, two customers accounted for ~~46%~~ approximately 27% and 14%of our consolidated revenue. As of December 31, ~~2017,~~2021, these two customers accounted for ~~38%~~ approximately 29% and 19%of our consolidated trade accounts receivable balance. ~~During 2016,~~As of December 31, 2020, these two customers accounted for ~~38%~~ approximately 20% and 18%of our consolidated ~~revenue. As~~revenue and 41% and 19% of ~~December 31, 2016, these two customers accounted for 31% of~~ our consolidated trade accounts receivable balance.

Acquisitions - In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2017-01, Business Combinations (“Topic 805”): Clarifying the Definition of a Business (“ASU 2017-01”). The guidance is intended to assist entities with evaluating whether a set of transferred assets and activities is a business. Under this guidance, an entity first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set is not a business. If the threshold is not met, the entity then evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. See Note 7 regarding the acquisitions.

Business Combinations - Business combinations and non-controlling interests are recorded in accordance with FASB ASC 805 Business Combinations. Under the guidance, the assets and liabilities of the acquired business are recorded at their fair values at the date of acquisition and all acquisition costs are expensed as incurred. The excess of the purchase price over the estimated fair values is recorded as goodwill. If the fair value of the assets acquired exceeds the purchase price and the liabilities assumed, then a gain on acquisition is recorded. The application of business combination accounting requires the use of significant estimates and assumptions.

Discontinued Operations– On April 20, 2020, the Company executed a nonbinding letter of intent with a perspective buyer for the sale of certain assets of its plastic printing business line, which it operated under Plastic Printing Professionals, Inc. (“DSS Plastics”), a wholly-owned subsidiary of the Company. That sale was consummated and closed on August 14, 2020. The remaining assets of DSS Plastics were either sold, separately disposed, or retained by other existing DSS businesses lines. Accordingly, the operations of DSS Plastics have been discontinued. Based on the magnitude of DSS Plastics’ historical revenue to the Company and because the Company has exited the production of laminated and surface printed cards, this sale represented a significant strategic shift that has a material effect on the Company’s operations and financial results. Accordingly, the Company has applied discontinued operations treatment for this sale as required by Accounting Standards Codification 205—Discontinued Operations. The major classes of assets and liabilities of DSS Plastics are classified as Held for Sale – Discontinued Operations on the Consolidated Balance Sheets and the operating results of the discontinued operations is reflected on the Consolidated Statements of Operations and Comprehensive Income (Loss) as Loss from Discontinued Operations. See Note 16.

Newly Adopted and Recent Accounting Pronouncements – - In ~~May 2014,~~June 2016, the FASB issued ~~ASU 2014-9 “Revenue from Contracts with Customers”. The new guidance~~Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments-Credit Losses (Topic 326)”, which requires ~~an entity~~entities to ~~recognize~~measure all expected credit losses for financial assets held at the ~~amount~~reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. Subsequently, the FASB has issued the following standards related to ASU 2014-09: ASU No. 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” (“ASU 2016-08”); ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”); and ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”). The Company must adopt ASU 2016-08, ASU 2016-10 and ASU 2016-12 with ASU 2014-09 (collectively, the “new revenue standards”). The revenue standards will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either a retrospective or cumulative effect transition method.credit losses on financial assets measured at amortized cost. This guidance is effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, ~~2017. The Company will adopt Topic 606 effective January 1, 2018. Topic 606 will not have a material impact on our Consolidated Financial Statements.~~

In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities”, which requires that most equity investments be measured at fair value, with subsequent changes in fair value recognized in net income. Entities will no longer be able to use the cost method of accounting for equity securities. However, for equity investments without readily determinable fair values, entities may elect a measurement alternative that will allow those investments to be recorded at cost, less impairment, and adjusted for subsequent observable price changes. The pronouncement also impacts financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. This pronouncement is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is not permitted.2022. The Company is currently assessing the impact that adopting this new accounting standard will have on our ~~Consolidated Financial Statements.~~ consolidated financial statements.

In ~~February 2016,~~December 2019, the FASB issued ASU ~~2016-02, “Leases”,~~2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which ~~requires that lease arrangements longer than 12 months result in an entity recognizing an asset and liability. ASU 2016-02 is~~simplifies the accounting for income taxes. This guidance will be effective for ~~interim and annual periods beginning after December 15, 2018, and early adoption is permitted. The Company has not yet evaluated nor has it determined~~entities for the ~~effect of the standard will have on its consolidated financial statements and related disclosures.~~

In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments”, which clarifies the treatment of several types of cash receipts and payments for which there was diversity in practice. This update is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years, ~~with early adoption permitted, including adoption in an interim period. We anticipate that the adoption of this guidance will not have a material impact on our consolidated financial statements.~~

In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment”, which eliminates the two-step process that required identification of potential impairment and a separate measure of the actual impairment. The annual assessment of goodwill impairment will be determined by using the difference between the carrying amount and the fair value of the reporting unit. The standards update are effective for goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company is currently assessing the impact that adopting this new accounting standard will have on our Consolidated Financial Statements.

In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718) – Scope of Modification Accounting”, which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, and early adoption is permitted, including in an interim period. ASU 2017-09 is to be applied on a prospective basis to an award modified on or after the adoption date. We do not intend to early adopt ASU 2017-09 and do not expect the adoption of this new accounting standard will have a material impact on our Consolidated Financial Statements.

In February 2018, the FASB issued ASU 2018-03, “Technical Corrections and Improvements to Financial Instruments (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities”. This update was issued to clarify certain narrow aspects of guidance concerning the recognition of financial assets and liabilities established in ASU No. 2016-01,“~~Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~”.This includes an amendment to clarify that an entity measuring an equity security using the measurement alternative may change its measurement approach to a fair valuation method in accordance with Topic 820, Fair Value Measurement, through an irrevocable election that would apply to that security and all identical or similar investments of the same issued. The update is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, beginning after ~~June~~December 15, ~~2018. The Company is currently assessing~~2020 on a prospective basis, with early adoption permitted. We will adopt ASU 2019-12 effective March 1, 2021 and do not expect the ~~impact that adopting~~adoption of this ~~new accounting standard will~~guidance to have a material impact on our ~~Consolidated Financial Statements.~~ consolidated financial statements

~~Newly Adopted Accounting Pronouncements~~Impact of COVID-19 Outbreak ~~– In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” which simplifies the subsequent measurement of inventory by using only the lower of cost~~- The COVID-19 pandemic has created global economic turmoil and ~~net realizable value. This standard is effective for fiscal years~~has potentially permanently impacted how many businesses operate and ~~interim periods within those years beginning after December 15, 2016,~~how individuals will socialize and ~~must be applied on a retrospective basis. We adopted the new accounting standard~~shop in the ~~first quarter~~future. We continue to feel the effect of ~~2017. There was no material impact to~~ the ~~Company’s~~COVID-19 business shutdowns and consumer stay-at-home protections. But the effect of the economic shutdown has impacted our business lines differently, some more severely than others. In most cases, we believe the negative economic trends and reduced sales will recover over time. Additionally, it is reasonably possible that estimates made in the financial statements have been, or will be, materially and adversely impacted in the near term as a result of ~~adopting this new accounting standard.~~these conditions, including losses on inventory; impairment losses related to goodwill and other long-lived assets and current obligations.

In March 2016, the FASB issued ASU 2016-09, “Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting.” The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 was effective for the Company as of January 1, 2017. Adoption of this new accounting standard resulted in the recognition of an increase in the Company’s gross deferred tax asset of approximately $350,000 and an offsetting increase in the valuation allowance. There was no impact to the Company’s retained earnings or other material impact to the financial statements as a result of adopting this new accounting standard.

2017 2016
Finished Goods $ 965,757 $ 736,987
Work in process 383,270 314,353
Raw Materials 302,219 155,037

$ 1,651,246 $ 1,206,377

On October 10, 2019, the Company entered into a convertible promissory note (“TBD Note”) with Century TBD Holdings, LLC (“TBD”), a Florida limited liability company. The Company loaned the principal sum of $500,000, of which up to $500,000 and all accrued interest can be paid by an “Optional Conversion” of such amount up to 19.8% (non-dilutable) of all outstanding membership interest in TBD. This TBD Note accrues interest at 6% and matures on October 9, 2021. As of December 31, 2021, and December 31, 2020, this TBD Note had outstanding principal and interest of approximately $537,000. This asset was classified as long-term portion of Notes receivable on the consolidated balance sheet as December 31, 2021, and as Notes receivable on the consolidated balance sheet as of December 31, 2020. On December 30, 2020, the Company signed a binding letter of intent with West Park Capital, Inc (“West Park”) and TBD where the parties agreed to prepare a note and stock exchange agreement whereby DSS will assign the TBD Note to West Park and West Park shall issue to DSS a stock certificate reflecting 7.5% of the issued and outstanding shares of West Park. This note and stock exchange agreement is expected to be finalized sometime during the first quarter of 2022.

On February 8, 2021, the Company entered into a convertible promissory note (“GSX Note”) with GSX Group Limited (“GSX”), a company registered in Gibraltar. The Company loaned the principal sum of $800,000, with principal and interest at a rate of 4%, due in one year from date of issuance. The outstanding principal and interest as of December 31, 2021, approximated $829,000, and is classified as a Current portion of notes receivable on the Consolidated Balance Sheets at December 31, 2021. The GSX Note shall be converted, at the Company’s option, into shares of GSX at the conversion price of $1.05 per share. As of the date of filing, this note is in default. The Company and GSX are currently re-negotiating the terms of the GSX Note.

On February 3, 2021, USX Holdings Company, Inc., a subsidiary of the Company entered into a binding joint venture term sheet (“GSX JV”), along with Coinstreet, whose CEO is also a member of the Company’s board of directors, for the creation of a USA based joint venture alternative trading system or exchange (“JV Exchange”). During the nine-months ended September ~~12, 2017,~~30, 2021, the Company and ~~Hengfai Business Development Pte~~GSX finalized the terms of the JV Exchange. This JV is currently in the planning stages.

On February 21, 2021, Impact BioMedical, Inc. a subsidiary of the Company, entered into a promissory note (“Crum Note”) with Dustin Crum (“Mr. Crum”). The Company loaned the principal sum of $206,000, with interest at a rate of 6.5%, and maturity date of August 19, 2022. Monthly payments are due on the twenty-first day of each month and continuing each month thereafter until August 19, 2022, at which time all accrued interest and the entire remaining principal shall be due and payable in full. This note is secured by certain real property situated in Collier County, Florida. The outstanding principal and interest as of December 31, 2021, approximated $197,000 and is classified in current notes receivable on the accompanying consolidated balance sheets.

On May 13, 2021, a subsidiary of the Company entered a revolving credit promissory note (“Sentinel Note”) with Sentinel Brokers Company, Inc. (“Sentinel”), a company registered in the state of New York. The Sentinel Note has an aggregate principal balance up to $600,000, to be funded at request of Sentinel. The Sentinel Note, which incurs interest at a rate of 6.65% is payable in arears until the principal is paid in full at the maturity date of May 13, 2023. As of December 31, 2021, there is $0 outstanding on the Sentinel Note.

On May 14, 2021, DSS Pure Air, Inc. a subsidiary of the Company entered into a convertible promissory note (“Puradigm Note”) with Puradigm, LLC (“Puradigm”), a company registered in the state of Texas. The Puradigm Note has an aggregate principal balance up to $5,000,000, to be funded at request of Puradigm. The Puradigm Note, which incurs interest at a rate of 6.65% due quarterly, has a maturity date of May 14, 2023. The Puradigm Note contains an options conversion clause that allows the Company to convert all, or a portion of all, into new issued member units of Puradigm with the maximum principal amount equal to 18% of the total equity position of Puradigm at conversion. The outstanding principal and interest as of December 31, 2021, approximated $5,081,000, which is classified as Notes receivable on the consolidated balance sheet.

On September 23, 2021, APB entered into refunding bond anticipatory note (“District Note”) with Harris-Montgomery Counties Management District (the “District”), which operates as a conservation and reclamation district pursuant to Chapter 3891, Texas Special District Local Laws Code; Chapter 375, Texas Local Government Code; and Chapter 49, Texas Water Code. The District Note was in the sum of $3,500,000 and incurs interest at a rate of 4.15% per annum. Principal and interest are due in full on September 22, 2022. This note may be redeemed prior to maturity with 10 days written notice to APB at a price equal to principal plus interest accrued on the redemption date.The outstanding principal and interest of $3,540,000 of the District Note is included in current portion of notes receivable on the consolidated balance sheet at December 31, 2021.

On October 25, 2021, APB entered into loan agreements (“Asili Agreement”) with Asili, LLC. (“Asili”) a company registered in the state of Utah. The Asili Agreement has an initial aggregate principal balance up to $1,000,000, to be funded at request of Asili, with an option to increase the maximum principal borrowing to $3,000,000. The Asili Agreement, which incurs interest at a rate of 8.0% with principal and interest due at the maturity date of October 25, 2022. The Asili Agreement contains an optional conversion feature allowing APB to convert the outstanding principal to a 10% membership interest in Asili, at a ratio of $1,000,000 to 10%. APB, as holder of the Asili Agreement, has the right to elect one member to the Asili Board of Managers. The outstanding principal and interest of $784,000 of the Asili Agreement is included in current portion of notes receivable on the consolidated balance sheet at December 31, 2021.

On December 28, 2021, APB entered into promissory note (“West Park Note”) with West Park Capital Group, LLC. (“West Park”), a company registered in the state of California. The West Park Note has an principal balance of $700,000. The West Park Note, which incurs interest at a rate of 12.0% with principal and interest due at the maturity date of December 28, 2022. The outstanding principal and interest of $700,000 of the West Park Note is included in current portion of notes receivable on the consolidated balance sheet at December 31, 2021.

On June 13, 2019, the Company extended the credit to Leopoldo Bustamate (“Bustamate Note”) in the form of a promissory note for $249,540, bearing interest at 15%, with a maturity date of May 15, 2020. On June 5, 2020, the Company further extended the same credit in the form of a promissory note for $249,540, bearing interest at 15%, with a maturity date of May 14, 2021. On August 30, 2021, the Company further extended the same credit in the form of a promissory note for $249,540, bearing interest at 12.5%, with a maturity date of May 15, 2023. The modification agreement is effective May 14, 2021. This promissory note is secured by a deed of trust on a tract of land, which is approximately 315 acres, and located in Coke County, Texas. The outstanding principal and interest of $260,000 of the Bustamate Note is included in long term portion of Notes receivable on the consolidated balance sheet at December 31, 2021.

On October 7, 2021, HWH entered into a revolving loan commitment (“HWH Ltd Note”) with HWH World Ltd. (“~~HBD”~~HWH Ltd.”) a company registered in Taiwan. The HWH Ltd. Note has an principal balance of $52,000 and incurred no interest through the maturity date of December 31,2021. The outstanding principal at December 31, 2021 is $52,000 and is included in the current portion of notes receivable. This note is currently in default and the Company is currently in the process of extending the terms. In accordance with the terms of the HWH Ltd. Note, the Company began charging interest at the default rate of 18% on January 1, 2022.

In January 2021, the SHRG and 1044PRO, LLC (“1044 PRO”) entered into a ~~Securities Exchange~~Funding Agreement ~~whereby~~pursuant to which the Company agreed to ~~issue~~provide to 1044 PRO a $250,000 revolving credit line and ~~sell~~loaned $204,879 to ~~HBD 683,000~~1044 PRO under the credit line. Borrowings under the credit line are payable in monthly installments in amounts determined by the amount of each cash advance. At December 31, 2021, loans of $193,000 are outstanding, net of an allowance for the impairment losses of $115,000, and is included in Current portion of notes receivable on the consolidated balance sheet as of December 31, 2021. In connection with the loan, the Company acquired a 10% equity interest in 1044 PRO and a security interest in 1044 PRO’s cash receipts and in substantially all 1044 PRO’s assets.

In the fiscal year 2019, SHRG received a promissory note for $106,404 from a prior merchant payment processor in connection with amounts owed to the Company. At December 31, 2021, $15,000 is outstanding and included in Current portion of notes receivable on the consolidated balance sheet.

The following tables show the Company’s cash and marketable securities by significant investment category as of December 31, 2021 and December 31, 2020:

The Company typically invests with the primary objective of minimizing the potential risk of principal loss. The Company’s investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer. Fair values were determined for each individual security in the investment portfolio.

As of December 31, 2018, the Company owned 21,196,552 ordinary shares of its common stock, which had a market value on that date of $484,930, in exchange for 21,196,552 ordinary shares and an existing three-year warrant to purchase up to 105,982,759 of ordinary shares at an exercise price of SGD$0.040 (US$0.0298) per share ofAlset International Limited (“Alset Intl”), formerly named Singapore eDevelopment Limited (“SED”), a company incorporated in Singapore and ~~publicly-listed~~publicly listed on the Singapore Exchange Limited. ~~The SED~~and an existing three-year warrant to purchase up to 105,982,759 ordinary shares ~~and warrants were owned by HBD. One~~ at an exercise price of SGD$0.040 (US$0.0298) per share During the year ended December 31, 2019 the Company exercised 61,977,577 of the ~~directors~~warrants for total cost of $1,829,000 and at December 31, 2019 recorded the investment at cost, less impairment under the measurement alternative in ASC 321 for a total value of $2,154,000. As of June 26, 2020, the Company exercised the remaining warrants for total cost of $1,291,000 bringing its total ownership to 127,179,291 shares or approximately 7% of the outstanding shares of Alset Intl as of December 31, 2020. Historically and through June 30, 2020, the Company carried its investment in Alset Intl at cost, less impairments under the measurement alternative in ASC 321 in part due to the restriction on the sale of shares which expired on September 17, 2019 as well as the lack of historical volume associated with the shares of Alset Intl. During the third quarter 2020, the Company determined fair value based on the volume of shares traded on the Singapore Exchange which has a breadth and scope comparable to United States markets, as well as a consistent and observable market price. Accordingly, this investment is now classified as a marketable security and is classified as long-term assets on the consolidated balance sheets as the Company has the intent and ability to hold the investments for a period of at least one year. The Chairman of the Company, Mr. Heng Fai Ambrose Chan, is ~~a related party to each~~the Executive Director and Chief Executive Officer of ~~HBD and SED. The cost~~Alset Intl. Mr. Chan is also the majority shareholder of Alset Intl as well as the largest shareholder of the Company. The fair value of the marketable security as of December 31, 2021 and 2020, respectively, was approximately $4,909,000 and $6,830,000. During the years ended December 31, 2021 and 2020, the Company recorded an unrealized losses and gains on this investment of approximately $ 1,920,000 and $3,384,200, respectively.

On September 10, 2020, the Company’s wholly owned subsidiary DSS Securities, Inc. entered into membership interest purchase agreement with BMI Financial Group, Inc. a Delaware corporation (“BMIF”) and BMI Capital International LLC, a Texas limited liability company (“BMIC”) whereas DSS Securities, Inc. purchased 14.9% membership interests in BMIC for $100,000. DSS Securities also had the option to purchase an additional 10% of the outstanding membership interest which it exercised in January of 2021 and increased its ownership to 24.9%. Upon achieving greater than 20% ownership in BMIC, the Company began accounting for this investment under the equity method of accounting per ASC 323. The Company’s portion of net loss in BMIC for the year ended December 31, 2021, was $19,000, and is included in Investments, equity method on the Consolidated Balance Sheet.

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.

On or about August 28, 2020, the Company’s wholly owned subsidiary, DSS Securities, Inc. entered into a corporate venture to form and operate a real estate title agency, under the name and flagging of Alset Title Company, Inc, a Texas corporation (“ATC”). DSS Securities, Inc. shall own 70% of this venture with the other two shareholders being attorneys necessary to the state application and permitting process. ATC have initiated or have pending applications to do business in a number of states, including Texas, Tennessee, Connecticut, Florida, and Illinois. For the purpose of organization and the state application process, the Company’s CEO, who is a licensed attorney, has a stated non-compensated 15% ownership interest in the venture. There was minimal activity for the year ended December 31, 2021.

On December 19, 2020, Impact BioMedical, a wholly-owned subsidiary of the Company, entered into a subscription agreement (the “Subscription Agreement”) with BioMed Technologies Asia Pacific Holdings Limited (“BioMed”), a limited liability company incorporated in the British Virgin Islands, pursuant to which the Company agreed to purchase 525 ordinary shares or 4.99% of BioMed at a purchase price of approximately $630,000. The Subscription Agreement provides, among other things, the Company 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 entered into an exclusive distribution agreement (the “Distribution Agreement”) with BioMed, to directly market, advertise, promote, distribute, and sell certain BioMed products, which focus on manufacturing natural probiotics, to resellers. This investment is valued at cost as it does not have a readily determined fair value.

BioMed focuses on manufacturing natural probiotics, pursuant to which the Company will directly market, advertise, promote, distribute and sell certain BioMed products to resellers. The products to be distributed by the Company include BioMed’s PGut Premium Probiotics^®, PGut Allergy Probiotics^®, PGut SupremeSlim Probiotics^®, PGut Kids Probiotics^®, and PGut Baby Probiotics^®.

Under the terms of the Distribution Agreement, the Company will have exclusive rights to distribute the products within the United States, Canada, Singapore, Malaysia, and South Korea and non-exclusive distribution rights in all other countries. In exchange, the Company agreed to certain obligations, including mutual marketing obligations to promote sales of the products. This agreement is for ten years with a one year auto-renewal feature.

On March 15, 2021, the Company, through one of its subsidiaries, entered into a Stock Purchase Agreement (the “Vivacitas Agreement #1”) with Vivacitas Oncology Inc. (“Vivacitas”), to purchase 500,000 shares of its common stock at the per share price of $1.00, with an option to purchase 1,500,000 additional shares at the per share price of $1.00. This option will terminate upon one of the following events: (i) Vivacitas’ board of directors cancels this option because it is no longer in the best interest of the Company; (ii) December 31, 2021; or (iii) the date on which Vivacitas receives more than $1.00 per share of the Company’s common stock in a private placement with gross proceeds of $500,000. Under the terms of the Vivacitas Agreement #1, the Company will be allocated two seats on the board of Vivacitas. On March 18, 2021, the Company entered into an agreement with Alset EHome International, Inc. (“Seller”) to purchase from the Seller’s its wholly owned subsidiary Impact Oncology PTE Ltd. (“IOPL”) for a purchase price $2,480,000. The acquisition of IOPL has been treated as an asset acquisition as IOPL does not meet the definition of a business as defined in Topic 805. IOPL owns 2,480,000 shares of common stock of Vivacitas along with the option to purchase an additional 250,000 shares of common stock. The Sellers largest shareholder is Mr. Chan Heng Fai Ambrose, the Chairman of the Company’s board of directors and its largest shareholder.

On April 1, 2021, the Company entered into an additional stock purchase agreement with Vivacitas (“Vivacitas Agreement #2”), whereas Vivacities wished to employ the service of the Chief Business Officer of Impact Biomedical, and in return for the services of this individual, Vivacitas shall issue to the Company, the aggregate purchase price for the Class A Common Shares of Vivacitas at the value of $1.00 per share shall be $120,000 to be paid in twelve (12) equal monthly installments for the period between April 1, 2021 and March 31, 2022. As of December 31, 2021, the Company has received 90,000 Common A Shares of Vivacitas.

On July 22, 2021, the Company exercised 1,000,000 of the available options under the Vivacitas Agreement #1 for $1,000,000. This, along with the shares received as part Vivacitas Agreement #2 increased the Company’s equity position in Vivacitas to approximately 16% as of December 31, 2021.

On May 13, 2021, a Sentinel Brokers, LLC., subsidiary of the Company entered into a stock purchase agreement (“Sentinel Agreement”) to acquire a 24.9% equity position of Sentinel Brokers Company, Inc. (“Sentinel”), a company registered in the state of New York, for the purchase price of $300,000. During the three months ended September 30, 2021, the Company contributed an additional $750,000 capital into Sentinel, increasing its total capital investment to $1,050,000. Under the terms of this agreement, the Company as the option to purchase an additional 50.1% of the outstanding Class A Common Shares. Upon the exercising of this option, but no earlier than one year following the effective date the Sentinel Agreement, Sentinel has the option to sell the remaining 25% to the Company. In consideration of purchase price investment in Sentinel, the Company is entitled to an additional 50.1% of the net profits of Sentinel. The Company currently accounts for its investment in Sentinel using the equity method in accordance with ASC Topic 323, Investments—Equity Method and Joint Ventures recognizing our share of Sentinel’s earnings and losses within our consolidated statement of operations. The Company’s portion of net income in Sentinel for the year ended December 31, 2021, was not significant.

Sentinel is a broker-dealer operating primarily as a fiduciary intermediary, facilitating intuitional trading of municipal and corporate bonds as well as preferred stock, and is registered with the Securities and Exchange Commission, is a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”), and is a member of the Securities Investor Protection Corporation (“SIPC”).

In September 2021, the SHRG, Stemtech Corporation (“Stemtech”) and Globe Net Wireless Corp. (“GNTW”) entered into a Securities Purchase Agreement (the “SPA”) pursuant to which the SHRG invested $1.4 million in Stemtech in exchange for: (a) a Convertible Promissory Note in the amount of $1.4 million in favor of the SHRG (the “Convertible Note”) and (b) a detachable Warrant to purchase shares of GNTW common stock (the “GNTW Warrant”). Stemtech is a subsidiary of GNTW. As an inducement to enter into the SPA, GNTW agreed to pay to the SHRG an origination fee of $500,000, payable in shares of GNTW’s common stock. The Convertible Note matures on September 9, 2024, bears interest at the annual rate of 10%, and is convertible, at the option of the holder, into shares of GNTW’s common stock at a conversion rate calculated based on the closing price per share of GNTW’s common stock during the 30-day period ended September 19, 2021. The GNTW Warrant expires on September 13, 2024 and conveys the right to purchase up to 1.4 million shares of GNTW’s common stock at a purchase price calculated based on the closing price per share of GTNW’s common stock during the 10-day period ended September 13, 2021. In September 2021, GNTW issued to the SHRG 154,173 shares of its common stock, or less than 1% of the shares of GNTW then issued and outstanding, in payment of the origination fee.

The SHRG carries its investment in the Convertible Note, the GNTW Warrant and the shares of GNTW common stock at fair value in accordance with U.S. GAAP. During the three and nine months ended December 31, 2021, the SHRG recognized unrealized gains, before income tax, of $1.2 million and $3.3 million, respectively, in connection with its investment in the Convertible Note, the GNTW Warrant and the shares of GNTW common stock.

In September 2021, the SHRG entered into a Membership Unit Purchase Agreement pursuant to which the SHRG acquired a 30.75% equity interest in MojiLife, LLC, a limited liability SHRG organized in the State of Utah, in exchange for $1,537,000. MojiLife is an emerging growth distributor of technology-based consumer products, such as cordless scent diffusers, for the home and the car, as well as proprietary home cleaning products and accessories. During the nine months ended December 31, 2021, the SHRG recognized equity in losses of $59,629, before income tax, in connection with its investment in MojiLife.

On March 3, 2020, the Company, via its subsidiary DSS Securities, entered into a share subscription agreement and loan arrangement with LiquidValue Asset Management Pte Ltd., AMRE Asset Management, Inc. and American Medical REIT Inc. under which it acquired a 52.5% controlling ownership interest in AMRE Asset Management Inc. (“AAMI”) which currently has a 93% equity interest in American Medical REIT Inc. (“AMRE”). AAMI is a real estate investment trust (“REIT”) management company that sets the strategic vision and formulate investment strategy for AMRE. It manages the REIT’s assets and liabilities and provides recommendations to AMRE on acquisition and divestments in accordance with the investment strategies. AMRE is a Maryland corporation, 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. AMRE was formed to originate, acquire, and lease a credit-centric portfolio of licensed medical real estate. AMRE is planned to qualify as a Real Estate Investment Trust for federal income tax purposes, which will provide. AMRE’s investors the opportunity for direct ownership of Class A licensed medical real estate.

Effective on March 3, 2020, the Company entered into a Promissory Note with AMRE, pursuant to which AMRE has issued the Company a promissory note for the principal amount of $800,000 (the “Note”). The Note matures on March 3, 2022and accrues interest at the rate of 8.0% per annum and shall be payable in accordance with the terms set forth in the Note. Under the Note, AMRE may prepay or repay all or any portion of the Note at any time, without a premium or penalty. If not sooner prepaid, the entire unpaid principal balance of the Note including accrued interest will be due and payable in full on March 3, 2022. The Note also provides the Company an option to provide AMRE an additional $800,000 on the same terms and conditions as the Note, including the issuance of warrants as described below. As further incentive to enter into the Note, AMRE issued the Company warrants to purchase 160,000 shares of AMRE common stock (the “Warrants”). The Warrants have an exercise price of $5.00 per share, subject to adjustment as set forth in the Warrants, and expire on March 3, 2024. Pursuant to the Warrants, if AMRE files a registration statement with the Securities and Exchange Commission for an initial public offering (“IPO”) of AMRE’s common stock and the IPO price per share offered to the public is less than $10.00 per share, the exercise price of the Warrants shall be adjusted downward to 50% of the IPO price. The Warrants also grants piggyback registration rights to the Company as set forth in the Warrants. As of December 31, 2021, this Note had outstanding principal and interest of approximately $914,000. Upon consolidation this Note is eliminated. AMRE entered into a $200,000 unsecured promissory note with LiquidValue Asset Management Pte Ltd (“LVAMPTE”). The Note calls for interest to be paid annually on March 2 with interest fixed at 8.0%. See Note 11 for further details. LVAMPTE is majority owned subsidiary of Alset International Limited whose Chief Executive Office and largest shareholder is Heng Fai Ambrose Chan, the Chairman of the Board and largest shareholder of the Company.

On June 18, 2021, AMRE Shelton, LLC. (“AMRE Shelton”), a subsidiary of AMRE financed the purchase of a 40,000 square foot, 2.0 story, Class A+ multi-tenant medical office building located on a 13.62-acre site in Shelton, Connecticut (See Note 11) for the purchase price of $7,150,000. In accordance with Topic 805, the acquisition of the medical facility has been determined to be an acquisition of assets as substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. These assets are classified as investments, real estate on the consolidated balance sheet. The purchase price has been allocated as $4,640,000, $1,600,000, and $325,000 for the facility, land and tenant improvements respectively. Also include in the value of the property is $585,000 of intangible assets with an estimated useful life approximating 3 years. All assets were allocated on a relative fair value basis. Contained within the sale-purchase agreement for this facility, is a $1,500,000 earnout due to the seller if certain criteria are met. As of December 31, 2021, no liability has been recorded for this earnout.

On November 4, 2021, AMRE LifeCare Portfolio, LLC. (“AMRE LifeCare”), a subsidiary of AMRE, acquired three medical facilities located in Fort Worth, Texas, Plano, Texas, and Pittsburgh, Pennsylvania for a purchase price of $62,000,000. In accordance with Topic 805, the acquisition of the medical facility has been determined to be an acquisition of assets as substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. These assets are classified as investments, real estate on the consolidated balance sheet. The purchase price has been allocated as $32,100,000, $12,100,000, and $1,500,000 for the facility, land and site improvements respectively. Also include in the value of the property is $15,901,000 of intangible assets with estimated useful lives ranging from 1 to 11 years. All assets were allocated on a relative fair value basis.

On December 21, 2021, AMRE Winter Haven, LLC. (“AMRE Winter Haven”), a subsidiary of AMRE, acquired a medical facility located in Winter Haven, Florida for a purchase price of $4,500,000. In accordance with Topic 805, the acquisition of the medical facility has been determined to be an acquisition of assets as substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. These assets are classified as investments, real estate on the consolidated balance sheet. The purchase price has been allocated as $3,200,000, $1,000,000, and $222,000 for the facility, land and site and tenant improvements respectively. Also include in the value of the property is $29,000 of intangible assets with an estimated useful life of approximating 5 years. All assets were allocated on a relative fair value basis.

During the year ended December 31, 2021, AMRE had net losses of $2,835,000 of which $138,000and is attributable to the non-controlling interest.

On August 21, 2020, the Company, completed its acquisition of Impact BioMedical, Inc. (“Impact”), pursuant to a Share Exchange Agreement by and among the Company, DSS BioHealth, and related parties Alset Intl (formally Singapore eDevelopment Limited), and Global Biomedical Pte Ltd. (“GBM”) which was previously approved by the Company’s shareholders (the “Share Exchange”).Under the terms of the Share Exchange, the Company issued 483,334 shares of the Company’s common stock, par value $0.02 per share, nominally valued at $6.48 per share, and 46,868 newly issued inshares of the ~~transaction, which was determined to have the most readily determinable fair value. In making this assessment, the Company determined, that the SED shares trade on the Singapore~~Company’s Series A Convertible Preferred Stock ~~Exchange and had~~(“Series A Preferred Stock”), with a ~~market~~stated value of ~~$900,112~~$46,868,000, or $1,000 per share, for a total consideration of $50 million to acquire 100% of the outstanding shares of Impact. The acquisition was done to add assets and a foundation of products with international market opportunities and demand, and which can be structured into long- term scalable, reoccurring license revenue within the ~~warrant had an aggregate intrinsic~~DSS BioHealth line of business. Due to several factors, including a discount for illiquidity, the value of the Series A Preferred Stock was discounted from $46,868,000 to $35,187,000, thus reducing the final consideration given to approximately ~~$1,343,000 based on a share price~~$38,319,000. The Company incurred approximately $295,000 in cost associated with the acquisition of ~~SGD $0.057 (US$ 0.042)~~Impact Biomedical which were recorded as ~~of December 31, 2017. However, the Company determined that these values did not represent a readily determinable fair value due to a potential lack of liquidity of the SED shares~~general and ~~warrants due to a low average trading volume of the SED shares.~~administrative expenses. As a result of the Share Exchange, Impact Biomedical is now a wholly owned subsidiary of DSS BioHealth, the Company’s wholly owned subsidiary and operating results of the acquisition are included in the Company’s financial statements beginning August 21, 2020. Impact BioMedical has several subsidiaries that are not wholly owned by Impact Biomedical and have an ownership percentage ranging from 63.6% to 100%. During the year ended December 31, 2021, Impact has incurred approximately $2,535,000 of net losses, of which $407,000 of loss incurred is attributable to non-controlling interest. Although Impact historically, and to date has not generated any revenues, the acquisition of Impact meets the definition of a business with inputs, processes and outputs, and therefore, the Company has concluded to account for this transaction in accordance with the acquisition method of accounting under Topic 805

On September 9, 2021, the Company finalized a stock purchase agreement (the “SPA”) with American Pacific Bancorp (“APB”), which provided for an investment of $40,000,000 by the Company into APB for an aggregate of 6,666,700 shares of the APB’s Class A Common Stock, par value $0.01 per share. Subject to the terms and conditions contained in the SPA, the shares issued at a purchase price of $6.00 per share. As a result of this transaction, DSS owns approximately 53% of APB, and as a result its operating results have been included in the Company’s financial statements beginning September 9, 2021. The Company incurred approximately $36,000 in cost associated with the acquisition of APB which were recorded as general and administrative expenses. The acquisition of APB meets the definition of a business with inputs, processes and outputs, and therefore, the Company has concluded to account for this transaction in accordance with the acquisition method of accounting under Topic 805. Since acquisition, APB has incurred approximately $194,000 of net losses, of which approximately $96,000 of loss incurred is attributable to non-controlling interest. The next largest shareholder of APB is Alset EHome International, Inc. (“AEI”). AEI’s Chairman and CEO, Heng Fai Chan, and a member of the AEI’s Board of Directors, Wu Wai Leung William, each serve on both the AEI Board and the Board of the Company. The CEO of the Company, Mr. Frank D. Heuszel, also has an approximate 2% equity position of APB.

The following summary, prepared on a proforma basis, combines the consolidated results of operations of the Company with those of APB as if the acquisition took place on January 1. The pro forma consolidated results include the impact of certain adjustments.

The Company has completed the valuation of good will and non-controlling interest, which approximate $29,744,000 and $33,099,000, respectively. Goodwill is driven by other intangible assets that do not qualify for separate recognition and is not deductible for tax purposes. Net assets acquired were approximately $3,400,000 and included approximately $1,250,000 in cash, $1,900,000 in marketable securities, $330,000 in notes receivable and $101,000 of accounts payable and accrued liabilities. APB and the company in which APB owns marketable securities share a common director.

As of and through June 30, 2020, the Company classified its investment in Sharing Services Global Corp. (“SHRG”), a publicly traded company, as marketable equity security and measured it at fair value with gains and losses recognized in other income. In July 2020, through continued acquisition of common stock, as detailed below, the Company obtained greater than 20% ownership of SHRG, and thus has the ability to exercise significant influence over it. The Company currently accounts for its investment in SHRG using the equity method in accordance with ASC Topic 323, Investments—Equity Method and Joint Ventures recognizing our share of SHRG’s earnings and losses within our consolidated statement of operations.

On July 22, 2020, Chan Heng Fai Ambrose, the Chairman of the Company’s board of directors, assigned to DSS a Stock Purchase and Share Subscription Agreement by and between Mr. Chan and SHRG, pursuant to which the Company purchased 30,000,000 shares of Class A common stock and 10,000,000 warrants to purchase Class A common stock for $3 million, causing the Company’s ownership in SHRG to exceed 20%. The warrants have an average exercise price of $0.20, immediately vested and may be exercised at any time commencing on the date of issuance and ending three years from such date. The warrants are considered an equity investment that is recorded at fair value with gains and losses recorded through earnings. These warrants have been recorded at the fair value of $324,000 as of September 30, 2021, as compared to $1,056,000 at December 31, ~~2017,~~2020 on the Company’s consolidated balance sheet and are included in “other investments” with the decrease representing an unrealized loss of $224,000 and $732,000 respectively during the three and nine months ended September 30, 2021.

As of July 22, 2020, the carrying value of the Company’s equity method investment exceeded our share of the book value of the investee’s underlying net assets by approximately $9,192,000 which represents primarily intangible assets in the form of a distributor lists and goodwill arising from acquisitions. These intangible assets have been valued at approximately $1,148,000 and $8,044,000, respectively. The intangible asset arising from the distributor list has a five-year useful life. The Company has recorded amortization of $57,000 and $287,000 for the three- and nine-months ended September 30, 2021, respectively, on the consolidated statement of operations. On April 5, 2021, a subsidiary of the Company entered into a convertible promissory note (“SHRG Note”) with SHRG (see Note 3). The Company loaned the principal sum of $30,000,000. Accordingly, in April 2021, the SHRG issued to the Company 27,000,000 shares of its Class A Common Stock, including 15,000,000 shares in payment of the loan origination fee and 12,000,000 shares in prepayment of interest for the first year. In addition, the Company received 150,000,000 warrants both issued and vested on April 5, 2021. These warrants have an exercise price of $0.22 and expire April 5, 2026. As of the date of issuance the warrants the consideration paid allocated to the warrants amounted to approximately $14,957,000. The warrants are considered an equity investment that is ~~carried~~recorded at ~~cost~~fair value with gains and losses recorded through earnings.. As of September 30, 2021, the Company held 91,460,978 class A common shares equating to a 46.8% ownership interest in SHRG. On December 23, 2021, DSS purchased 50,000,000 shares at $0.06 per share via a private placement. With this purchase, DSS increased its ownership of voting shares from approximately ~~$485,000.~~47% of SHRG to approximately 58%. The acquisition of SHRG meets the definition of a business with inputs, processes, and outputs, and therefore, the Company has concluded to account for this transaction in accordance with the acquisition method of accounting under Topic 805.

The following summary, prepared on a proforma basis, combines the consolidated results of operations of the Company with those of SHRG as if the acquisition took place on January 1. The pro forma consolidated results include the impact of certain adjustments.

We are currently in the process of completing the purchase price accounting and related allocations associated with the acquisition of SHRG. The Company is in the process of completing valuations and useful lives for certain assets acquired in the transaction. We expect the preliminary purchase price accounting to be completed during the year ending December 31, 2022.

The Company, via three (3) of the Company’s existing board members, currently holds three (3) of the seven (7) SHRG board of director seats. Mr. John “JT” Thatch, DSS’s Lead Independent Director and as well the CEO of SHRG is on the SHRG Board, along with Mr. Chan, DSS’s Executive Chairman of the board of directors (joined the SHRG Board effective May 4, 2020), and Mr. Frank D. Heuszel, the CEO of the Company (joined the SHRG Board effective September 29, 2020).

Depreciation expense for the years ended December 31, 2021 and 2020 was $1,129,000 and $710,000 respectively.

2017 2016
Estimated
Useful Life

Machinery and equipment 5-10 years $ 6,796,617 $ 5,879,958
Building and improvements 39 years 1,923,027 1,923,027
Land 185,000 185,000
Leasehold improvements See (1) 722,984 722,984
Furniture and fixtures 7 years 71,903 68,272
Software and websites 3 years 171,007 412,113

Total cost 9,870,538 9,191,354
Less accumulated depreciation 5,064,898 4,617,513

Property, plant, and equipment, net $ 4,805,640 $ 4,573,841

On January 24, 2020 and ~~2016,~~April 8, 2020, the Company ~~spent approximately $12,000 and $74,000, respectively,~~foreclosed on ~~capitalized patent prosecution costs.~~

~~On November 10, 2016,~~two separate note receivables with RBC Life Sciences, Inc. during which the Company ~~purchased a portfolio~~acquired $637,000 of ~~122 LED patents and a corresponding license from Intellectual Discovery Co. Ltd. for $3,000,000 with funds it had received from a third party, resulting in a net book value~~intangible assets as settlement of ~~$0 when purchased.~~the amounts owed. These assets are being amortized over their useful lives.

~~In May, 2016,~~On August 21, 2020, the Company ~~received proceeds~~completed its acquisition of ~~$495,000 for~~Impact BioMedical, (see Note 7) during which the ~~sale~~ Company, based on valuations performed, acquired $22,260,000 of ~~certain patents that~~developed technology assets. These assets were ~~included~~placed in service on January 1, 2021 and will be amortized over a ~~pool~~20-year useful life when placed in service.

On June 18, 2021, AMRE Shelton financed the purchase of ~~acquired patents. The Company evaluates acquired patents as related pools of assets for purposes of amortization and impairment, as well as operational evaluation and use. Accordingly,~~a 40,000 square foot, 2.0 story, Class A+ multi-tenant medical office building located on a 13.62-acre site in Shelton, Connecticut. Include in the ~~proceeds received from the sale of the patents will reduce the cost of the pool of assets until the carrying~~ value of the ~~pool~~property is ~~reduced to zero. Any excess proceeds from future sales will result~~$585,000 of intangible assets with an estimated useful life of 3 years.

On November 4, 2021, AMRE LifeCare acquired three medical facilities located in ~~a gain. The Company also considers~~Fort Worth, Texas, Plano, Texas, and Pittsburgh, Pennsylvania. Include in the ~~impact that the sale of a portion~~value of the ~~pool has on expected future recoverability on~~property is $15,901,000 of intangible assets with estimated useful lives ranging from 1 to 11 years.

On December 21, 2021, AMRE Winter Haven, LLC. (“AMRE Winter Haven”), a subsidiary of AMRE, acquired a medical facility located in Winter Haven, Florida. Include in the ~~pool. No impairment was considered necessary as a result~~value of ~~this evaluation.~~the property is $29,000 of intangible assets with an estimated useful life of approximating 5 years.

~~Amortization expense~~Amounts amortized for the year ended December 31, ~~2017 amounted to~~2021 and 2020 was approximately ~~$687,000 ($700,000 –2016).~~$3,279,000 and $374,000, respectively.

Expected amortization for each of the five succeeding fiscal years is as follows:

~~The Company performed its annual goodwill impairment test as of December 31, 2017. The Company has goodwill attributed to two of its reporting units which are its Packaging~~Accrued expenses and ~~Plastics reporting units respectively. The Company performed the first step~~deferred revenue consist of the goodwill impairment test by comparing the fair value of each of its reporting units with their carrying amounts including goodwill. In performing this step, the Company determined estimates of fair value using a discounted cash flow model for each of these reporting units. The Company determined that it’s Packaging and Plastic reporting units each had to fair values in excess of their carrying value and therefore, did not have an indication of goodwill impairment.

There are inherent assumptions and estimates used in developing future cash flows requiring management’s judgment in applying these assumptions and estimates to the analysis of identifiable intangibles and asset impairment including projecting revenues, timing and amount of claim or settlements related to patent infringement cases, royalty rates, interest rates, and the cost of capital. Many of the factors used in assessing fair value are outside the Company’s control and it is reasonably likely that assumptions and estimates will change in future periods. These changes can result in future impairments.

~~The changes in the carrying amount of goodwill~~following for the years ended December 31, ~~2017 and 2016 are as follows:~~

Revolving Credit Lines- The Company’s subsidiary Premier Packaging ~~Corporation (“Premier Packaging”)~~ has a revolving credit line with Citizens Bank (“Citizens”) of up to ~~$800,000~~ $800,000 that bears interest at 1 Month LIBOR plus ~~3.75% (5.12%~~2.0% (2.1% as of December 31, ~~2017)~~2020) and ~~matures on~~ had a maturity date of May 31, ~~2018.~~2022and was renewable annually. This renewal was not exercised by Premier Packaging. As of December 31, ~~2017 and 2016,~~2021, the revolving line had a balance of ~~$0.~~$0.

On July 26, 2017, Premier Packaging entered into a ~~Modification and Extension~~Loan Agreement and accompanying Term Note Non-Revolving Line of Credit Agreement with Citizens ~~Bank~~ pursuant to which Citizens ~~agrees~~agreed to lend up to ~~$1,200,000 for the purpose of enabling~~$1,200,000 to permit Premier Packaging to purchase equipment from time to time that it may need for use in its business. The aggregate principal balance outstanding under the Equipment Acquisition Line of Credit shall bear interest thereon at a per annum rate of 2% above the LIBOR Advantage Rate until the Conversion Date (as defined in the Term Note Non-Revolving Line of Credit). Effective on the Conversion Date, the interest shall be adjusted to a fixed rate equal to 2% above the bank’s Cost of Funds, as determined by Citizens. Current maturities of long-term debt are based on an estimated 48-month amortization which will be adjusted upon conversion. As of December 31, 2020, the ~~date of this report, the revolving line~~Term Note had a balance of ~~$0.~~$771,000. The Term Note was paid in full in July 2021.

Equipment Line of Credit - On ~~December 1, 2017, the Company’s subsidiary Plastic Printing Professionals~~July 31, 2020, Premier Packaging entered into a Loan Agreement and accompanying Term Note Non-Revolving Line of Credit Agreement with Citizens ~~Bank~~ pursuant to which Citizens agreed to lend up to ~~$800,000 for the purpose of enabling Plastic Printing Professionals~~$900,000 to permit Premier Packaging to purchase equipment from time to time that it may need for use in its business. ~~Advances may be made under this Equipment Acquisition Line of Credit, from time to time, from December 1, 2017 until December 1, 2018.~~ The aggregate principal balance outstanding under the Equipment Acquisition Line of Credit ~~bears~~shall bear interest thereon at 2%a per annum rate of 2% above the LIBOR Advantage Rate until the Conversion Date (as defined in the ~~Agreement) (3.44% at December 31, 2017) until converted.~~Term Note Non-Revolving Line of Credit). Effective on ~~conversion,~~the Conversion Date, the interest ~~rate payable on the aggregate principal balance outstanding~~ shall be adjusted to a fixed rate equal to 2%2% above ~~Citizens’ cost~~the bank’s Cost of ~~funds~~Funds, as determined by Citizens. Prior to conversion, interest on the outstanding principal is payable in arrears monthly.After conversion, the aggregate principal balance may be repaid in (i) up to 84 installments comprised of principal and interest for new equipment or (ii) up to 60 installments comprised of principal and interest for used equipment. An initial advance was made under the Equipment Acquisition Line of Credit on December 1, 2017, in the amount of $522,000, to fund the purchase of a used 6-color commercial press.

~~Long-Term Debt~~- On December 30, 2011, the Company issued a $575,000 convertible note that was initially due on December 29, 2013, and carries an interest rate of 10% per annum, The note is secured by the assets of Company’s wholly-owned subsidiary, Secuprint Inc. Interest is payable quarterly, in arrears. In conjunction with the issuance of the convertible note, the Company determined a beneficial conversion feature existed amounting to approximately $88,000, which was recorded as a debt discount to be amortized over the term of the note. On May 24, 2013, the Company amended the convertible note to extend the maturity date of the note from December 29, 2013 to December 29, 2015. The change in the fair value of the embedded conversion option exceeded 10% of the carrying value of the original debt and, therefore, the Company accounted for this restructuring as an extinguishment in accordance with FASB ASC 470-50 “Debt Modifications and Extinguishments”. The note was written up to its fair value on the date of modification of approximately $650,000 and the premium recorded in excess of its face value was amortized over the remaining life of the note. On February 23, 2015, the Company entered into Convertible Promissory Note Amendment No. 2 to extend the maturity date to December 30, 2016, eliminate the conversion feature, and to institute principal payments in the amount of $15,000 per month plus interest through the extended maturity date, and a balloon payment of $230,000 due on the extended maturity date. On April 12, 2016, the Company entered into Convertible Promissory Note Amendment No. 3 to extend the maturity date to May 31, 2017 and change the balloon payment to $155,000 due on the extended maturity date. On May 31, 2017, the Company entered into Convertible Promissory Note Amendment No. 4 to extend the maturity date to April 30, 2018 at which point the note is scheduled to be paid in full. In exchange for the extension, the Company also issued the lender an additional consideration of 18,000 shares of the Company’s common stock which had a fair value of $17,640. As of December 31, ~~2017, the balance of the term loan was $50,000 ($230,000 at December 31, 2016).~~

On May 24, 2013, the Company entered into a promissory note in the principal sum of $850,000 to purchase three printing presses that were previously leased by the Company’s wholly-owned subsidiary, Secuprint Inc., and carries an interest rate of 9% per annum. The note is secured by the assets of Company’s wholly-owned subsidiary, Secuprint Inc. Interest is payable quarterly, in arrears. The Company also issued the lender as additional consideration a five-year warrant to purchase up to 60,000 shares of the Company’s common stock at an exercise price of $3.00 per share. The warrant was valued at approximately $69,000 using the Black-Scholes-Merton option pricing model with a volatility of 60.0%, a risk free rate of return of 0.89% and zero dividend and forfeiture estimates. In conjunction with the issuance of the warrants, the Company recorded a discount on debt of approximately $69,000 that was amortized over the original term of the note. The note was set to mature on May 24, 2014, but its maturity date was extended on May 2, 2014 to May 24, 2015 by the lender. In exchange for the extension, the Company also issued the lender as additional consideration a five-year warrant to purchase up to 40,000 shares of the Company’s common stock at an exercise price of $1.50 per share. The warrant was valued at approximately $29,000 using the Black-Scholes-Merton option pricing model with a volatility of 70.0%, a risk free rate of return of 1.53% and zero dividend and forfeiture estimates. In conjunction with the issuance of the warrants, the Company recorded expense for modification of debt of approximately $29,000. On February 23, 2015, the Company entered into Promissory Note Amendment No. 2 to extend the maturity date to May 31, 2016 and to institute principal payments in the amount of $15,000 per month plus interest through the extended maturity date, and a balloon payment of $610,000 due on the extended maturity date. On April 12, 2016, the Company entered into Promissory Note Amendment No. 3 to extend the maturity date to May 31, 2017 and change the balloon payment to $430,000 due on the extended maturity date. On May 31, 2017, the Company entered into Convertible Promissory Note Amendment No. 4 to extend the maturity date to December 31, 2018 at which point the note is scheduled to be paid in full. In exchange for the extension, the Company also issued the lender as additional consideration 18,000 shares of the Company’s common stock which had a fair value of $17,640. As of December 31, 2017, the balance of the term loan was $325,000 ($505,000 at December 31, 2016).

~~Term Loan Debt~~- On July 19, 2013, Premier Packaging entered into an equipment loan with People’s Capital and Leasing Corp. (“Peoples Capital”) for a printing press. The loan is secured by the printing press. The loan was for $1,303,900, repayable over a 60-month period which commenced when the equipment was placed in service in January 2014. The loan bears interest at 4.84% and is payable in equal monthly installments of $24,511. As of December 31, 2017,2020, the loan had a balance of ~~$286,560 ($559,609 at December 31, 2016)~~$0.

~~On April 28, 2015,~~ Premier Packaging ~~entered into a term note with Citizens for $525,000, repayable over a 60-month period. The loan bears interest at 3.62% and is payable in equal monthly installments~~did not exercise its right to renew this line of ~~$9,591 until April 28, 2020.~~credit.

Promissory Notes - On June 27, 2019, Premier Packaging ~~used~~refinanced and consolidated the ~~proceeds of~~outstanding principal associated with the ~~term note to acquire a HP Indigo 7800 Digital press. The loan is secured by the printing press. As of December 31, 2017, the loan had a balance of $257,007 ($360,611 at December 31, 2016).~~

~~Promissory Notes~~~~- On August 30, 2011, Premier Packaging purchased the~~two promissory notes for its packaging plant ~~it occupies~~located in Victor, New York, for ~~$1,500,000, which was partially financed~~ $1,200,000 with ~~a $1,200,000 promissory note obtained from~~ Citizens ~~Bank (“Promissory Note”).~~Bank. The new Promissory Note calls for monthly payments of ~~principal and interest in the amount of $7,658,~~$7,000, with interest ~~calculated as 1 Month LIBOR plus 3.15% (4.51%~~fixed at ~~December 31, 2017)~~4.22%. ~~Concurrently with the transaction, the Company entered into an interest rate swap agreement to lock into a 5.87% effective interest rate for the life of the loan.~~ The new Promissory Note matures ~~in August 2021~~on June 27, 2029, at which time a balloon payment of ~~the remaining principal balance will be~~$708,000 is due. As of December 31, ~~2017,~~2020, the new, consolidated Promissory Note had a balance of ~~$915,107 ($966,786 at December 31, 2016)~~$1,100,000.

~~On December 6, 2013,~~ In July of 2021, Premier Packaging ~~entered into a Construction to Permanent Loan with~~repaid this note in full.

The Citizens ~~Bank for up to $450,000 that was converted into a promissory note upon the completion and acceptance of building improvements~~credit facilities to the Company’s packaging plant in Victor, New York. In May 2014, the Company converted the loan into a $450,000 note payable in monthly installments over a 5 year period of $2,500 plus interest calculated at a variable rate of 1 Month Libor plus 3.15% (4.52% at December 31, 2017), which payments commenced on July 1, 2014. The note matures in July 2019 at which time a balloon payment of the remaining principal balance of $300,000 is due. As of December 31, 2017, the note had a balance of $345,000 ($375,000 at December 31, 2016).

~~The Citizens Bank credit facilities to each of the Company’s subsidiaries,~~subsidiary Premier Packaging, ~~and Plastic Printing Professionals,~~ contain various covenants including fixed charge coverage ratio, tangible net worth and current ratio ~~covenants.~~covenants which are tested annually at December 31. For the year ended December 31, ~~2017, both~~2020, Premier Packaging ~~and Plastic Printing Professionals were~~was in compliance with the annual covenants.

On March 2, 2020, AMRE entered into a $200,000 unsecured promissory note with LVAMPTE. The Note calls for interest to be paid annually on March 2 with interest fixed at 8.0%. As of December 31, 2020, accrued interest is included in the outstanding balance. If not paid sooner, the entire unpaid principal balance is due in full on March 2, 2022. As further incentive to enter into this Note, AMRE granted LVAMPTE warrants to purchase shares of common stock of AMRE (the “Warrants”). The amount of the warrants granted is the equivalent of the Note Principal divided by the Exercise Price. The Warrants are exercisable for four years and are exercisable at $5.00 per share (the “Exercise” Price). The value of the warrants is not considered to be material. The holder is a related party owned by the Chairman of the Company’s board of directors. As of December 31, 2021, the new promissory note, inclusive of unpaid interest, had a balance of $230,000 and is included in current portion of long-term debt, net on the consolidated balance sheet.

During Q2 2020, the Company received loan proceeds for Premier Packaging, DSS Digital, and AAMI in the amount of approximately $1,078,000 under the Paycheck Protection Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. These funds were used for payroll, benefits, rent, mortgage interest, and utilities. As of August 4, 2020, pursuant to the terms of the SBA PPP program, the Company submitted applications for Premier Packaging and DSS Digital for a requested 100% loan forgiveness. During the fourth quarter 2020, both these notes approximating $969,000 were forgiven in full and recognized as a gain on the extinguishment of debt on the accompanying consolidated financial statements as of December 31, 2020. AAMI, pursuant to the terms of the SBA PPP program, submitted its application for 100% loan forgiveness in October 2020, and received confirmation of forgiveness in January 2021.

On May 20, 2021, Premier Packaging entered into master loan and security agreement (“BOA Note”) with Bank of America, N.A. (“BOA”) to secure financing approximating $3,700,000 to purchase a new Heidelberg XL 106-7+L printing press. The aggregate principal balance outstanding under the BOA Note shall bear interest at a variable rate on or before the loan closing. At closing, the interest rate shall be fixed for the duration of the Loan. As of December 31, 2021, the outstanding principal on the BOA Note was $3,339,000 and had an interest rate of 3.35%, and is included in Long-term debt, net on the consolidated balance sheet.

On June 18, 2021, AMRE Shelton entered into a loan agreement (“Shelton Agreement”) with Patriot Bank, N.A. (“Patriot Bank”) in an amount up to $6,155,000, with the amount financed approximating $5,105,000. The Shelton Agreement contains monthly payments of principal and an initial interest 4.25%. The interest will be adjusted commencing on July 1, 2026 and continuing for the next succeeding 5 year period shall be determined one month prior to the change date and shall be an interest rate equal to two hundred fifty (250) basis points above the Federal Home Loan Bank Boston 5-Year/25-Year amortizing advance rate, but in no event less than 4.25% for the term of 120 months with a balloon payment approximating $2,829,000due at term end. This agreement contains certain covenants that are analyzed on an annual basis, starting December 31, 2021. The funds borrowed were used to purchase a 40,000 square foot, 2.0 story, Class A+ multi-tenant medical office building located on a 13.62 acre site. Of the total financed, approximately $192,000 is classified as current portion of long-term debt, net, and the remaining balance of approximately $4,673,000 recorded as long-term debt, net of $180,000 in deferred financing costs.

On October 13, 2021, LVAM entered into loan agreement with BMIC (“BMIC Loan”), whereas LVAM borrowed the principal amount of $3,000,000, with interest to be charged at a variable rate to be calculated at the maturity date. The BMIC Loan matures on October 12, 2022 and contains an auto renewal period of three months. As of December 31, 2021, $3,000,000 is included in current portion of long-term debt, net on the consolidated balance sheet.

On November 2, 2021, AMRE LifeCare entered into a loan agreement (“LifeCare Agreement”) with Pinnacle Bank, (“Pinnacle Bank”) in the amount of $40,300,000. The LifeCare Agreement calls for the principal amount of the in equal, consecutive monthly installments based upon a twenty-five (25) year amortization of the original principal amount of the LifeCare Agreement at an initial rate of interest equal to the interest rate determined in accordance as of July 29, 2022 provided, however, such rate of interest shall not be less than 4.28%, with the first such installment being payable on August 29, 2022 and subsequent installments being payable on the first day of each succeeding month thereafter until the maturity date, at which time any outstanding principal and interest is due in full. The maturity date of November 2, 2023 may be extended to November 2, 2024. As of December 31, 2021, the outstanding principal and interest of the LifeCare agreement approximates $39,448,000, net of deferred financing costs of $1,002,000. Of this, $381,000 is included in current portion of long-term debt, net and $39,067,000 is included in long-term debt, net on the consolidated balance sheet.

In October 2017, SHRG issued a Convertible Promissory Note in the principal amount of $50,000 (the “Note”) to HWH International, Inc (“HWH International” or the”Holder”). HWH International is affiliated with Heng Fai Ambrose Chan, who became a Director of SHRG April 2020. The Note is convertible into 333,333 shares of SHRG Common Stock. Concurrent with issuance of the Note, SHRG issued to HWH International a detachable warrant to purchase up to an additional 333,333 shares of SHRG Common Stock, at an exercise price of $0.15 per share. Under the terms of the Note and the detachable stock warrant, the Holder is entitled to certain financing rights. If SHRG enters into more favorable transactions with a third-party investor, it must notify the Holder and may have to amend and restate the Note and the detachable stock warrant to be identical.

In December 2019, SHRG and the holder of the SHRG $100,000 convertible note dated April 13, 2018 (the “April 2018Note”) entered into an amendment to the underlying promissory note. Pursuant to the amendment, the parties extended the maturity date of the note to April 2021. In addition, after giving effect to the amendment, the April 2018 Note is non-interest bearing. All other terms of the April 2018 Note remain unchanged. As of the date of this report, this note is currently in default.. SHRG and the holder of the note are discussing options, which may include the conversion in full or in part of the note, and the repayment of any remainder of the note. SHRG intends to conclude these discussions and to settle the April 2018 Note in the foreseeable future.

A summary of scheduled principal payments of long-term debt, not including revolving lines of credit, ~~and other debt which can be settled with non-monetary assets and net of deferred financing costs,~~ subsequent to December 31, ~~2017~~2021 are as follows:

~~Other Debt~~ - On February 13, 2014, the Company’s subsidiary, DSS Technology Management, Inc. (“DSSTM”), entered into an Investment Agreement (the “Agreement”) dated February 13, 2014 (the “Effective Date”) with Fortress Credit Co LLC, as collateral agent (the “Collateral Agent” or “Fortress”), and certain investors (the “Investors”), pursuant to which DSSTM contracted to receive a series of advances up to $4,500,000 (collectively, the “Advances”). Under the terms of the Agreement, on the Effective Date, DSSTM issued and sold a promissory note in the amount of $1,791,000, fixed return equity interests in the amount of $199,000, and contingent equity interests in the amount of $10,000, to each of the Investors, and in return received $2,000,000 in proceeds. To secure the Advances, DSSTM placed a lien in favor of the Investors on ten semi-conductor patents (the “Patents”) and assigned to the Investors certain funds recoverable from successful patent litigation involving these Patents, including settlement payments, license fees and royalties on the Patents. DSSTM is a plaintiff in various ongoing patent infringement lawsuits involving certain of the Patents.

On March 27, 2014, DSSTM received an additional $1,000,000 under the Agreement comprised of a promissory note for $900,000 and fixed and contingent equity interests of $100,000. On September 5, 2014, DSSTM received the remaining $1,500,000 under the Agreement comprised of a promissory note for $1,350,000 and fixed and contingent return interests of $150,000. On May 23, 2016, DSSTM remitted $495,000 in proceeds received from the sale of patent assets (Note 6) to Fortress under the terms of the Agreement. On September 20, 2016, DSSTM remitted $125,250 in proceeds received from a settlement to Fortress as repayment of the note principal balance under the terms of the Agreement.

The Agreement defines certain events as Events of Default, one of which is the failure by DSSTM, on or before the second anniversary of the Effective Date, to make payments to the Investors equal to the outstanding Advances. On February 13, 2016, being the second anniversary date of the Effective Date, DSSTM had failed to make these payments and was therefore in default of the Agreement. On December 2, 2016, the parties entered into a First Amendment to Investment Agreement and Certain Other Documents (the “Amendment”). The purpose of the Amendment was to vacate DSSTM’s ongoing non-payment default under the Agreement, and to amend certain provisions of the Agreement.

The Agreement was amended to add expenses in the amount of $150,000 to DSSTM’s payment obligation, payable on the Maturity Date. This amount was recorded as debt issuance costs and is being amortized on a straight line basis through the amended maturity date of February 13, 2018. The Amendment added a provision whereby DSSTM is required to deposit $300,000 on or before March 2, 2017 and (ii) a further sum of $300,000 on or before March 2, 2018, into a deposit account (collectively, the “Deposit”). The March 2, 2017 deposit was made in a timely manner. The Deposit funds will be restricted to pay certain expenses, consisting of out-of-pocket expenses incurred in connection with certain existing patent litigation matters and other patent litigation matters which may occur after the Amendment Effective Date (the “Qualified Expenses”). In the Event of Default, the Investors may apply the then remaining Deposit to the then outstanding Obligations, if any.

Additionally, per the Amendment, DSSTM agrees to pay to the Investors an amount equal to 25% of any amounts received by DSSTM for any and all types of monetization activities related to certain of its patents covering systems and methods of using low power wireless peripheral devices (collectively, “BlueTooth Patents”), but only until the Investors have received payments under the Agreement totaling the sum of (i) the Capitalized Expenses plus (ii) payments of principal and interest on the Notes totaling the sum of (x) $4,500,000 (consisting of the previously made Advances) plus (y) additional amounts, if any, advanced by the Investors pursuant to the Agreement. In addition to the monetization interest granted the Investors in the BlueTooth Patents, DSSTM also granted the Collateral Agent and the Investors a security interest in certain of DSSTM’s unencumbered semiconductor patents to further collateralize the amounts owed under the Agreement.

As of December 31, 2017, DSSTM has made aggregate principal payments of $770,250 on the notes. As of December 31, 2017, $3,702,129 is recorded as a short-term debt under the arrangement, which includes $281,500 of accrued interest, less unamortized debt issuance costs of $29,994. In addition, as of December 31, 2017, $459,000 of fixed and contingent equity interests is recorded in other short-term liabilities. On February 13, 2018, the Maturity Date, DSS Technology Management again defaulted by failing to pay the investors an amount equal to (x) two times the aggregate amount of all advances made by the investors as of such date plus (y) the Capitalized Expenses. The sole recourse available to the investors under the agreement is the establishment of a special purpose entity controlled by the investors which would take ownership of the collateral consisting of the patents covered under the agreement, as amended. Each of the investors and the collateral agent have contractually agreed that they will not, individually or collectively, seek to enforce any monetary judgment with respect to or against any assets of the Company other than the patents and the monetization payments and the remaining deposit.

On November 14, 2016, the Company entered into a Proceeds Investment Agreement (the “Agreement”) with Brickell Key Investments LP (“BKI”). Pursuant to the Agreement, BKI financed an aggregate of $13,500,000 in a patent purchase and monetization program to be implemented and managed by the Company (the “Financing”). Pursuant to the Agreement. $3,000,000 of the Financing was used to cover the Company’s purchase of a portfolio of U.S. and foreign LED patents and a license from Intellectual Discovery Co., Ltd., a Korean company (collectively, the “LED Patent Portfolio”), resulting in a basis in these assets of $0. A total of $6,000,000 of the Financing was directed by BKI to attorneys to cover anticipated attorneys’ fees and out-of-pocket expenses for legal proceedings that may transpire relating to enforcement of the LED Patent Portfolio. This amount is not included in the Company’s financial statements as the Company has no control over these funds, which are segregated and escrowed in the attorneys’ trust account.

~~In addition, on November 14, 2016, the Company received $4,500,000 of the Financing, which was required to be used by the Company to pay for the defense of~~~~Inter Partes Review~~ or other similar proceedings that may be filed from time to time by defendants with the U.S. Patent & Trademark Office relating to the LED Patent Portfolio, with excess amounts available for general working capital needs. As of December 31, 2017, an aggregate of approximately $3,447,000 is recorded as other liabilities by the Company, of which approximately $2,062,500 is classified as short-term. Of this amount, the Company allocated $2,500,000 which it subsequently adjusted to $1,500,000 for the payment of estimated future~~Inter Partes Review~~ ~~costs. The Company will reduce this liability as it pays legal and other expenses related to the~~~~Inter Partes Review~~ matters involving the LED Patent Portfolio as incurred. The remaining $1,997,000 in other liabilities is allocated to working capital, which the Company is amortizing this amount on a pro-rata basis over the expected remaining life of the monetization period of the LED Patent Portfolio through November 31, 2019. For this amount, the Company reduced the liability with an offset to selling, general and administrative costs by $47,500 per month from January 2017 through July 2017 and $80,000 per month for the remainder of 2017. During the year ended December 31, 2017, there was $30,000 of~~Inter Partes Review~~ ~~costs and an aggregate of $732,500 was recorded as a reduction of the liability allocated to working capital.~~

On July 8, 2013, the Company’s subsidiary, DSS Technology Management, purchased two patents for $500,000 covering certain methods and processes related to Bluetooth devices. In conjunction with the patent purchases, DSS Technology Management entered into a Proceed Right Agreement with certain investors pursuant to which DSS Technology Management initially received $250,000 of a total of $750,000 which it will ultimately receive thereunder, subject to certain payment milestones, in exchange for 40% of the proceeds which it receives, if any, from the use, sale or licensing of the two patents. As of December 31, 2017, the Company had received an aggregate of $650,000 ($650,000 in 2016) from the investors pursuant to the agreement of which approximately $432,000 was in other liabilities in the consolidated balance sheets ($467,000 as December 31, 2016). The Company will reduce the liability as it pays legal and other expenses related to its litigation involving the Bluetooth patents, for which the amount is available to be used for 50% of all such expenses.

As described in Note 7, On February 13, 2014, the Company’s subsidiary, DSSTM entered into an Investment Agreement with Fortress pursuant to which DSSTM contracted to receive a series of advances up to $4,500,000. Under the terms of the Agreement, on the Effective Date, DSSTM issued and sold a promissory note in the amount of $1,791,000, fixed return equity interests in the amount of $199,000, and contingent equity interests in the amount of $10,000. On March 27, 2014, DSSTM received an additional $1,000,000 under the Agreement comprised of a promissory note for $900,000 and fixed and contingent equity interests of $100,000. On September 5, 2014, DSSTM received the remaining $1,500,000 under the Agreement comprised of a promissory note for $1,350,000 and fixed and contingent return interests of $150,000. The $495,000 of aggregate fixed and contingent equity interests received are recorded in other liabilities. The Company will reduce the liability upon payment to the Investor from available proceeds from litigation, or if none by the maturity date of February 13, 2018, then such amounts will be reversed from other liabilities and recorded as other income sometime in 2018.

On August 26, 2016, the Company affected a one-for-four reverse stock split of the Company’s common stock. All references in this report to the number of shares of our common stock and to related per-share prices (including references to periods prior to the effective date of the reverse stock split) reflect this reverse stock split.

Sales of Equity –On ~~August 30, 2017,~~February 20, 2020, the Company ~~sold 1,200,000~~ entered into an underwriting agreement (the “Underwriting Agreement #1”) with Aegis Capital Corp. (the “Underwriter”), which provided for the issuance and sale by the Company and the purchase by the Underwriter, in a firm commitment underwritten public offering (the “Feb. 2020 Offering”), of 740,741 shares of ~~unregistered~~the Company’s common stock, $0.02 par value per share. Subject to the terms and ~~five-year warrants~~conditions contained in the Underwriting Agreement #1, the shares were sold to the Underwriter at a public offering price of $5.40 ($0.18 per shares pre-reverse stock split) per share, less certain underwriting discounts and commissions. The Company also granted the Underwriters a 45-day option to purchase up to ~~an aggregate of 240,000~~ 111,111 additional shares of the Company’s common stock on the same terms and conditions for the purpose of covering any over-allotments in connection with the Feb. 2020 Offering which were exercised. The net offering proceeds to the Company from the Feb. 2020 Offering were approximately $4 million, after deducting estimated underwriting discounts and commissions and other estimated offering expenses. The offering was closed on February 25, 2020. Heng Fai Ambrose Chan, the Chairman of the Company’s Board of Directors, purchased $2 million of shares in the Feb. 2020 Offering.

On May 15, 2020, the Company entered into an underwriting agreement (the “Underwriting Agreement #2”) with the Underwriter, which provided for the issuance and sale by the Company and the purchase by the Underwriter, in a firm commitment underwritten public offering (the “May 2020 Offering”), of 769,230 shares of the Company’s common stock, $0.02 par value per share. Subject to the terms and conditions contained in the Underwriting Agreement #2, the shares were sold to the Underwriter at ~~an exercise~~a public offering price of ~~$1.00 to~~$7.80 per share, less certain underwriting discounts and commissions. The Company also granted the Underwriters a total of two related party accredited investors for an aggregate purchase price of $900,000, of which $300,000 was receivable as of December 31, 2017. On September 7, 2017, the Company sold 133,333 shares of unregistered common stock and five-year warrants45-day option to purchase up to ~~an aggregate of 26,667~~115,384 additional shares of the Company’s common stock ~~at an exercise price~~on the same terms and conditions for the purpose of ~~$1.00~~covering any over-allotments in connection with the May 2020 Offering which was exercised. The net offering proceeds to ~~two related party accredited investors for an aggregate purchase price of $100,000. In conjunction with these transactions,~~ the Company ~~recorded $62,000 in related costs~~from the May 2020 Offering were approximately $6.2 million, after deducting estimated underwriting discounts and commissions and other estimated offering expenses. The May 2020 Offering was closed on June 26, 2020.

On July 7, 2020, the Company entered into an underwriting agreement (the “Underwriting Agreement #3”) with the Underwriter, which provided for ~~placement agent fees~~the issuance and ~~stock listing fees. The warrants had an estimated aggregate fair value of approximately $112,000 which was determined~~sale by ~~utilizing the Black-Scholes-Merton option pricing model with a volatility of 89.3%, a risk free rate of return of 1.7% and zero dividend and forfeiture estimates.~~

~~On September 12, 2017,~~ the Company and ~~Hengfai Business Development Pte Ltd. (“HBD”) entered into~~the purchase by the Underwriter, in a Securities Exchange Agreement whereby the Company agreed to issue and sell to HBD 683,000 shares of its common stock, which had a market value on that date of $484,930, in exchange for 21,196,552 ordinary shares and an existing three-year warrant to purchase up to 105,982,759 of common shares at an exercise price of SGD$0.040 (US$0.0298) per share of Singapore eDevelopment Limited (“SED”firm commitment underwritten public offering (the “July 2020 Offering”), ~~a company incorporated in Singapore and publicly-listed on the Singapore Exchange Limited. The SED~~of 1,028,800 shares ~~and warrants were owned by HBD. The cost of the investment was the fair value~~ of the Company’s common stock, ~~issued~~$0.02 par value per share. Subject to the terms and conditions contained in the ~~transaction which was determined~~Underwriting Agreement #3, the shares were sold to ~~have~~ the ~~most readily determinable fair value. In conjunction with these transactions,~~Underwriter at a public offering price of $6.25 per share, less certain underwriting discounts and commissions. The Company also granted the ~~Company recorded $13,660 in stock listing fees. As of December 31, 2017, the investment is carried at cost of approximately $485,000.~~

~~On November 1, 2017, the Company issued 500,000 shares of its common stock, and~~Underwriters a ~~three-year warrant~~45-day option to purchase up to ~~125,000~~154,320 additional shares of the Company’s common stock ~~at an exercise price of $1.00 per share, along with a cash payment of $125,000, to Nix, Patterson & Roach LLP (“NPR”), a law firm,~~on the same terms and conditions for the purpose of ~~settling all accrued and outstanding billed and unbilled invoices for expenses owed by the Company to NPR of approximately $714,000~~covering any over-allotments in connection with ~~various litigation matters handled by NPR on behalf of~~ the ~~Company. The warrants had an estimated aggregate fair value of approximately $40,000~~July 2020 Offering which was ~~determined by utilizing~~exercised. The net offering proceeds to the ~~Black-Scholes-Merton option pricing model~~Company from the July 2020 Offering were approximately $6.7 million. The July 2020 Offering was closed on July 10, 2020.

On July 28, 2020, the Company entered into an underwriting agreement (the “Underwriting Agreement #4”) with ~~a volatility of 89.1%, a risk free rate of return of 2.0%~~the “Underwriter, which provided for the issuance and zero dividend and forfeiture estimates. The aggregate estimated fair value of the cash payment and equity instruments issued to NPR was approximately $495,000 which resulted in a reduction of approximately $219,000 of legal expense recordedsale by the Company and ~~presented~~the purchase by the Underwriter, in ~~general and administrative expenses on~~a firm commitment underwritten public offering (the “July 2020 Offering #2”), of 453,333 shares of the Company’s ~~financial statements, in conjunction with the agreement.~~

~~On December 29, 2016, the Company completed the sale of 300,000 shares of its~~ common stock, $0.02 par value per share. Subject to the terms and conditions contained in the Underwriting Agreement #4, the shares were sold to the Underwriter at a ~~warrant~~public offering price of $7.50 per share, less certain underwriting discounts and commissions. The Company also granted the Underwriters a 45-day option to purchase up to ~~200,000~~38,533 additional shares of the Company’s common stock on the same terms and conditions for the purpose of covering any over-allotments in connection with the July 2020 Offering #2. The net offering proceeds to the Company from the July 2020 Offering #2 were approximately $3.3 million, after deducting estimated underwriting discounts and commissions and other estimated offering expenses. The initial July 2020 Offering #2 was closed on July 31, 2020, and the overallotment was exercised on August 7, 2020.

In connection with the Share Exchange for Impact BioMedical described in Note 7, on August 18, 2020, the Company filed a Certificate of Amendment of its Certificate of Incorporation (the “Certificate of Amendment”) to increase the number of authorized shares of the Company, including 47,000 shares of Preferred Stock, with a par value of $0.02, of which 47,000 shares were designated Series A Preferred Stock. The Certificate of Amendment, the form of which was previously disclosed in a Schedule 14A Definitive Proxy Statement filed with the Securities and Exchange Commission on July 14, 2020. As described in Note 7, this transaction is a related party transaction.

Holders of the Series A Preferred Stock have no voting rights, except as required by applicable law or regulation, and no dividends accrue or are payable on the Series A Preferred Stock. The holders of Series A Preferred Stock are entitled to a liquidation preference at a liquidation value of $1,000 per share aggregating to $46,868,000, and the Company has the right to redeem all or any portion of the then outstanding shares of Series A Preferred Stock, pro rata among all holders, at a redemption price per share equal to such liquidation value per share. The Series A Preferred Stock ranks senior to Common Stock and any other class of securities that is specifically designated as junior to the Series A Preferred Stock with respect to rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, in respect of a liquidation preference equal to its par value of $1,000. A holder of Series A Preferred Stock has the option to convert each share of Series A Preferred Stock into a number of common shares in the Company equal to the $1,000 liquidation preference divided by a conversion price of $6.48 or 154.32 shares subject to a Beneficial Ownership Limitation of 19.99%, as defined in the Share Exchange Agreement. Additionally, the Company has the option to require conversion of all outstanding Series A Preferred Stock into common stock at any time, subject to the Beneficial Ownership Limitation discussed. In aggregate the Series A Preferred Shares are convertible into 7,232,670 shares of the Company’s common stock at ~~an exercise price~~the date of $1.00 per share for an aggregate purchase price of $225,000 pursuant to a securities purchase agreement. The warrants had an estimated aggregate fair value of approximately $87,000 which was determined by utilizing the Black-Scholes-Merton option pricing model with a volatility of 86.4%, a risk free rate of return of 1.96% and zero dividend and forfeiture estimates.issuance. The Company ~~was assessed $25,000~~evaluated the classification of the Series A Preferred Shares under the guidance enumerated in ~~listing fees by~~ASC 470, 480, and 815 and determined that based on the ~~NYSE American~~features noted above the instruments are accounted for ~~equity issuances during 2016.~~

as permanent equity. On October 16, 2020, GBM converted 4,293 shares of the Series A Convertible Preferred Stock ~~Warrants~~ ~~– During 2017, the Company received an aggregate of approximately $336,000 in proceeds from the exercise of warrants for 394,091~~into 662,500 shares of the Company’s common ~~stock.~~A Shares. On ~~November 29, 2016, in consideration~~May 28, 2021, GBM converted 35,316 shares of the ~~financing described in Note 8~~Series A Convertible Preferred Stock into 5,450,000 shares of the Company’s common A Shares. On June 21, 2021, GBM converted 7,259 shares of the Series A Convertible Preferred Stock into 1,120,170 shares of the Company’s common A Shares.

On January 19, 2021, the Company ~~issued~~entered into an underwriting agreement, as amended by Amendment No. 1 effective as of January 19, 2021 (the “Jan. 2021 Underwriting Agreement”), with Aegis Capital Corp., as representative of the underwriters, which provided for the issuance and sale by the Company and the purchase by the underwriters, in a ~~five-year warrant to purchase up to 750,000~~ firm commitment underwritten public offering (the “Jan. 2021 Offering”), of 6,666,666 shares of the Company’s common stock, $0.02 par value per share. Subject to the terms and conditions contained in the Jan. 2021 Underwriting Agreement, the shares were offered in a public offering at ~~an exercise~~a price of ~~$1.00~~ $3.60 per share. The warrants had an estimated aggregate fair value of approximately $199,000 which was determined by utilizing the Black-Scholes-Merton option pricing model with a volatility of 86.4%, a risk free rate of return between of 1.78%share, less certain underwriting discounts and ~~zero dividend and forfeiture estimates.~~commissions. The Company ~~recorded $198,000 of stock based compensation in~~also granted the ~~fourth quarter of 2016 in conjunction with these warrants.~~

~~The Company issued five-year warrants~~underwriters a 45-day option to purchase up to ~~200,000~~1,000,000 additional shares of the Company’s common stock on the same terms and conditions for the purpose of covering any over-allotments in connection with the Jan. 2021 Offering. This overallotment was exercised in full. The net offering proceeds to the Company from the Jan. 2021 Offering are approximately $24.0 million, after deducting estimated underwriting discounts and commissions and other estimated offering expenses

On February 4, 2021, the Company entered into an underwriting agreement (the “Feb. 2021 Underwriting Agreement”) with Aegis Capital Corp., as ~~part~~representative of the ~~December 29, 2016 equity~~underwriters named therein, which provided for the issuance and sale by the Company and the purchase by the underwriters, in a firm commitment underwritten public offering (the “Feb. 2021 Offering”), of 12,319,346 shares of the Company’s common stock, $0.02 par value per share. Subject to the terms and conditions contained in the Feb. 2021 Underwriting Agreement, the shares were sold at ~~an exercise~~a public offering price of ~~$1.00~~$2.80 per share, less certain underwriting discounts and commissions. The Company also granted the underwriters a 45-day option to purchase up to 1,847,901 additional shares of the Company’s common stock on the same terms and conditions for the purpose of covering any over-allotments in connection with the Feb. 2021 Offering, which over-allotment option was exercised in full on February 9, 2021. The net offering proceeds to the Company from the Feb. 2021 Offering are approximately $39.7 million, including the exercise of the underwriter’s over-allotment option, and after deducting estimated underwriting discounts and commissions and other estimated offering expenses.

On May 26, 2021, the Company entered into an underwriting agreement (the “May 2021 Underwriting Agreement”) with Aegis Capital Corp., as representative of the underwriters named therein, which provided for the issuance and sale by the Company and the purchase by the underwriters, in a firm commitment underwritten public offering (the “May 2021 Offering”), of 29,000,000 shares of the Company’s common stock, $0.02 par value per share. Subject to the terms and conditions contained in the May 2021 Underwriting Agreement, the shares were sold at a public offering price of $1.50 per share, less certain underwriting discounts and commissions. The Company also granted the underwriters a 45-day option to purchase up to 4,350,000 additional shares of the Company’s common stock on the same terms and conditions for the purpose of covering any over-allotments in connection with the May 2021 Offering, which over-allotment option was exercised in full on June 16, 2021. The net offering proceeds to the Company from the May 2021 Offering are approximately $45.75 million, including the exercise of the underwriter’s over-allotment option, and after deducting estimated underwriting discounts and commissions and other estimated offering expenses.

On September 3, 2021, DSS entered into a subscription agreement (the “AEI Subscription Agreement”) with AEI, which provided for an investment of up to $15,000,000 by AEI into the Company in exchange of an aggregate of 12,156,000 shares of the Company’s common stock, $0.02 par value per share. Subject to the terms and conditions contained in the AEI Subscription Agreement, the shares were issued at a purchase price of $1.234 per share. Prior to this transaction, AEI indirectly held a significant investment in the Company through majority-owned subsidiaries. AEI’s Chairman and CEO, Heng Fai Chan, and a member of the AEI’s Board of Directors, Wu Wai Leung William, each serve on both the AEI Board and the Board of the Company.

Stock Warrants – The following is a summary with respect to warrants outstanding and exercisable atas of December 31, ~~2017~~2021 and ~~2016~~2020 and activity during the years then ended:

Stock Options- On June 20, 2013, the Company’s shareholders adopted the 2013 Employee, Director and Consultant Equity Incentive Plan (the “2013 Plan”). The 2013 Plan provides for the issuance of up to a total of ~~1,500,000~~50,000 shares of common stock authorized to be issued for grants of options, restricted stock and other forms of equity to employees, directors and consultants. Under the terms of the 2013 Plan, options granted thereunder may be designated as options which qualify for incentive stock option treatment (“ISOs”) under Section 422A of the Internal Revenue Code, or options which do not qualify (“NQSOs”). As of December 31, 2021, no shares remained available under this plan.

On December 9, 2019, the Company’s shareholders adopted the 2020 Employee, Director and Consultant Equity Incentive Plan (the “2020 Plan”). The 2020 Plan provides for the issuance of an initial 241,204 shares of common stock authorized to be issued for grants of options, restricted stock and other forms of equity to employees, directors and consultants. In addition, on the first day of each calendar year, for a period of not more than ten (10) years, commencing January 1, 2021, or the first business day of the calendar year if the first day of the calendar year falls on a Saturday or Sunday, the shares available under this plan will automatically increase in an amount equal to the lesser of (i) five percent (5%) of the total number of shares of Common Stock outstanding as of December 31 of the preceding fiscal year or (ii) such number of shares of Common Stock as determined by the Board of Directors. Under the terms of the 2020 Plan, options granted thereunder may be designated as options which qualify for incentive stock option treatment (“ISOs”) under Section 422A of the Internal Revenue Code, or options which do not qualify (“NQSOs”). As of December 31, 2021, there are 483,125 shares available under this plan.

The following is a summary with respect to options outstanding atas of December 31, ~~2017~~2021 and ~~2016~~2020 and activity during the years then ended:

There were no options granted in 2017. The weighted-average grant date fair value of options granted during the year ended December 31, 2016 was $0.10. The aggregate grant date fair value of options that vested during 2017 was approximately $417 ($71,000 -2016). There were no options exercised during 2017 or 2016.

The fair value of each option award is estimated on the date of grant utilizing the Black-Scholes-Merton Option Pricing Model. The Company ~~estimated~~estimates the expected volatility of the Company’s common stock at the grant date using the historical volatility of the Company’s common stock over the most recent period equal to the expected stock option term. ~~In March 2016, three~~

The aggregate grant date fair value of ~~the Company’s senior management voluntarily cancelled an aggregate of 75,000~~ options to purchase shares of the Company’s common stock with exercise prices of $12.00 per share, of which 41,667 of the options were unvested on the date of cancellation resulting in a reversal of previously recognized stock based compensation expense ofthat vested during 2021 and 2020 was approximately ~~$36,000.~~

~~The following table shows our weighted average assumptions used to compute the share-based compensation expense for stock options~~$2,000 and ~~warrants granted during the year ended December 31, 2016.~~$100,000, respectively. There were no options exercised during 2021 or ~~warrants granted for compensation during the year ended December 31, 2017.~~2020.

~~Volatility~~	~~85.6~~	%
~~Expected option term~~	~~3.5 years~~
~~Risk-free interest rate~~	~~1.3~~	%
~~Expected forfeiture rate~~	~~0.0~~	%
~~Expected dividend yield~~	~~0.0~~	%

Restricted Stock - Restricted common stock may be issued under the Company’s 2013 or 2020 Plan for services to be rendered which may not be sold, transferred or pledged for such period as determined by our Compensation Committee and Management Resources. Restricted stock compensation cost is measured as the stock’s fair value based on the quoted market price at the date of grant. The restricted shares issued reduce the amount available under the employee stock option plans. Compensation cost is recognized only on restricted shares that will ultimately vest. The Company estimates the number of shares that will ultimately vest at each grant date based on historical experience and adjust compensation cost and the carrying amount of unearned compensation based on changes in those estimates over time. Restricted stock compensation cost is recognized ratably over the requisite service period which approximates the vesting period. An employee may not sell or otherwise transfer unvested shares and, ~~in the event that~~if employment is terminated prior to the end of the vesting period, any unvested shares are surrendered to us. The Company has no obligation to repurchase any restricted stock.

On ~~January 12, 2017,~~April 3, 2020, the Company issued an aggregate of ~~150,000~~ 5,833 shares of fully vested restricted stock to members of the Company’s management team of ~~which 100,000 vested on May 17, 2017~~with a two-year lock-up period and had an aggregated grant date fair value of approximately ~~$126,000. The remaining 50,000 vested if~~$38,000 which is included in stock-based compensation for the Company achieved adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of at least $500,000 and a stock trading price of at least $1.00 per share by the close of the fourth quarter of 2017, both of which were achieved.

During 2016, the Company issued 6,250 shares of restricted common stock to a consultant providing marketing services to the Company. The restricted shares vested on May 2, 2016 and had an aggregate grant date fair value of approximately $6,250. In addition, during 2016 the Company issued an aggregate of 224,750 shares of restricted stock to members of the Company’s management which will vest on May 17, 2017 and had an aggregated grant date fair value of approximately $124,000.

~~The following is a summary of activity of restricted stock during the years~~year ended at December 31, ~~2017 and 2016:~~2020.

Stock-Based Compensation -– The Company records stock-based payment expense related to ~~these~~ options and warrants based on the grant date fair value in accordance with FASB ASC 718. Stock-based compensation includes expense charges for all stock-based awards to employees, directors and consultants. Such awards include option grants, warrant grants, and restricted stock awards. During ~~2017,~~the year ended December 31, 2021, the Company had stock compensation expense of approximately ~~$215,000~~ $46,000 or ~~$0.01~~ less than $0.01 basic and diluted earnings per shares ($188,000, or $0.05 basic and $0.03 diluted earnings per share ~~($329,000; $0.03 basic earnings~~for the corresponding year ended December 31, 2020, respectively).

On April 3, 2020, by unanimous written consent, the Board of Directors authorized the Company to issue individual stock grants of the Company’s common stock, pursuant to the Company’s 2020 Employee, Director and Consultant Equity Incentive Plan, to certain managers and directors in the amount of 8,900 shares, at $6.60 per share ~~- 2016)~~which were immediately vested and issued. 5,800 of these shares where were fully vested restricted stock to members of the Company’s management team with a two-year lock-up period.

On June 4, 2020, the Company entered into an agreement with an investor relations firm to provide services over a 14-month period in exchange for 21,000 shares of common stock. The shares were issued on the date of the agreement and were valued by the Company at $210,000. ~~As of~~The value assigned to the shares is included in other assets on the accompanying consolidated balance sheets and will be expensed as marketing expense as it is earned. The Company recognized $105,000 for the year ended December 31, ~~2017, there was approximately $1,700~~2021.

On September 23, 2020, by written consent of ~~total unrecognized compensation costs related~~the Chief Executive Officer and the Chairman of the board, the Company to ~~options and restricted~~issue individual stock ~~granted under~~grants of the Company’s common stock, ~~option plans, which~~pursuant to the Company’s 2020 Employee, Director and Consultant Equity Incentive Plan, to a consultant of the Company ~~expects~~in the amount of 20,000 shares, at $4.48 per share which were immediately vested.

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities. Deferred tax assets are reduced, if deemed necessary, by a valuation allowance for the amount of tax benefits which are not expected to ~~recognize over the weighted average period of six months.~~be realized.

~~Following~~The following is a summary of the components giving rise to the income tax ~~expense~~provision (benefit) for the years ended December 31:

The ~~expense~~provision (benefit) for income taxes consists of the following:

Individual components of deferred ~~taxes~~tax assets and liabilities are as follows:

~~On December 22,~~The 2017 ~~the U.S. government enacted comprehensive tax legislation commonly referred to as the~~ Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35 percent to 21 percent; (2) elimination of the corporate alternative minimum tax (AMT) and changing how existing AMT credits can be realized; and (3) changing rules related to usage and limitation of net operating loss carryforwards created in tax years beginning after December 31, 2017, The effect of the rate change attributable to the Tax Act on the Company’s effective tax rate was 11.5% (or $68,818) decrease in the net deferred tax liability.

~~The Tax~~ Act repeals the corporate alternative minimum tax (AMT) and permits existing minimum tax credits carryovers to offset the regular tax liability for any tax year. Further, the credit is refundable for any tax year beginning after December 31, 2017 and before December 31, 2020 in an amount equal to 50 percent of the excess of the minimum tax credit over regular liability. Any remaining credit will be fully refundable for the year ended December 31, 2021. As of December 31, ~~2017,~~2021 and 2020, the Company had ~~$93,201~~ $0 of minimum tax credit ~~recorded as~~included in prepaids and other current assets in the accompanying consolidated balance sheet.

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (the “Act”). The legislation significantly changed U.S. tax law by, among other things, lowering corporate income tax rates, implementing a ~~deferred~~territorial tax ~~asset, which was reclassified as~~system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The Act permanently reduced the U.S. corporate income tax rate from a maximum of 35% to a ~~current~~21% rate, effective January 1, 2018

Pretax losses from the Company’s foreign subsidiaries amounted to $0.7 million and ~~non-current receivable~~$0.4 million for 2021 and 2020, respectively. The balance of ~~46,600~~pretax earnings or loss for each of those years were domestic.

While the Tax Cuts and ~~46,601 respectively.~~Jobs Act provides for a territorial tax system, beginning in 2018, it includes the foreign-derived intangible income (“FDII”) and global intangible low-taxed income (“GILTI”) provisions. The Company elected to account for GILTI tax in the period in which it is incurred. The GILTI provisions require the Company to include in its U.S. income tax return foreign subsidiary earnings from its Controlled Foreign Corporations (“CFCs”) in excess of an allowable return on the foreign subsidiary’s tangible assets. The FDII provisions allow for a deduction equal to a percentage of the foreign-derived intangible income of a domestic corporation. As a result of these provisions, the Company did not have any additional tax expense or benefit from either GILTI or FDII.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the economic uncertainty resulting from the COVID-19 pandemic. The CARES Act includes many measures to assist companies, including temporary changes to income and non-income based laws, some of which were enacted as part of the Tax Cuts and Jobs Act of 2017 (“TCJA”). Some of the key changes include eliminating the 80% of taxable income limitation by allowing corporate entities to fully utilize NOLs to offset taxable income in 2019, 2020 and 2021, allowing NOLs originating in 2019, 2020 and 2021 to be carried back five years, enhanced interest deductibility, and retroactively clarifying the immediate recovery of qualified improvement property costs rather than over a 39-year recovery period.During the year ended December 31, 2021, the Company was not able to benefit from these provisions. The Company will continue to monitor additional guidance issued and assess the impact that various provisions will have on its business.

At December 31, 2021 and 2020, the Company has approximately ~~$47.2~~ $58.5 million and $56.7 million in federal net operating loss carryforwards (“NOLs”), respectively, available to reduce future taxable ~~income, which will expire at various dates from 2022 through 2036. Due to~~income. Under the ~~uncertainty as to~~provisions of the ~~Company’s ability to generate sufficient taxable income in~~Internal Revenue Code, the ~~future and utilize the NOLs before they expire and any other deferred tax assets, the Company has recorded a valuation allowance accordingly. The Company’s NOLs~~net operating losses are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Certain tax attributes are subject to an annual ~~limitations~~limitation as a result of certain cumulative changes in ownership interest of significant shareholders which could constitute a change ~~in its equity~~of ownership as defined under ~~the~~ Internal Revenue Code Section 382. ~~These limitations, as applicable, could further limit the use~~The Company has completed a full analysis of historical ownership changes and determined that a portion of the ~~NOLs.~~ net operating losses have a limitation on future deductibility. Approximately $43.8 million of net operating losses incurred prior to 2020 will be unable to offset future taxable income and have been reserved via a valuation allowance to reduce the deferred tax asset to the expected realizable amount, leaving $2.9M available for use which expire at various dates through 2038 and the residual which never expire. Additionally, at December 31, 2021 and 2020, the Company had approximately $6.4 million and $6.9 million, and $2.1 million and $2.2 million, of California and Illinois NOL carry-forwards, respectively, which expire through 2041. The NOL carry-forwards may be limited in certain circumstances, including ownership change and have been fully reserved via a valuation allowance.

The valuation allowance for deferred tax assets ~~decreased by~~increased approximately ~~$6.9 million~~ $2,739,000 in the year ended December 31, ~~2017. The decreases~~2021 and decreased by $1,543,000 (net of $671,000 acquired with Impact BioMedical) in the year ended December 31, 2020. The valuation allowance ~~was primarily due to the revaluation of the~~for deferred ~~taxes due to the enactment of the Tax Cuts and Jobs Act.~~

~~The Company has adopted the provisions of ASU 2016-09 as of the beginning of~~tax liability increased approximately $2,853,000 in the year ~~which requires recognition through opening retained earnings of any pre-adoption date NOL carryforwards from nonqualified stock options~~ended December 31,2021 and other employee share-based payments (e.g., restricted shares and share appreciation rights), as well as recognition of all income tax effects from share-based payments arising on or after January 1, 2017 (our adoption date) in income tax expense. In light ofincreased approximately $3,455,000 for the Company’s valuation allowance on its deferred tax assets there was no adjustment required to its retained earnings nor was there any windfall tax benefit to recognize in the Company’s income tax provision.year ended December 31, 2020.

The differences between the United States statutory federal income tax rate and the effective income tax rate in the accompanying consolidated statements of operations are as follows:

The Company recognizes interest accrued and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, ~~2017~~2021 and ~~2016,~~2020 the Company recognized no 0interest and penalties.

The Company files income tax returns in the U.S. federal jurisdiction and various states. The tax years ~~2014-2017~~2017-2020 generally remain open to examination by major taxing jurisdictions to which the Company is subject.

The Company maintains a qualified employee savings plans (the “401(k) Plan”) that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code and which covers all eligible employees. Employees generally become eligible to participate in the 401(k) Plan two months following the employee’s hire date. Employees may contribute a percentage of their earnings, subject to the limitations of the Internal Revenue Code. Until December 31, 2017, the Company matched up to 50% of the employee’s contribution up to a maximum match of 3%. The total matching contributions for 2017 were approximately $103,000 ($101,000 -2016). Commencing on January 1, 2018, the Company ~~will match 100%~~matched 100% of the first 1%1% of employee contributions, then ~~50%~~50% of additional contributions up to an aggregate maximum match of ~~3.5%~~3.5%. The total matching contributions for 2021 and 2020 were approximately $99,000 and $117,000, respectively.

~~Facilities~~- Our corporate group and digital division together occupy approximately 5,700 square feet of commercial office space located at 200 Canal View Boulevard, Rochester, New York under a lease that expires in December 2020, at a rental rate of approximately $6,100 per month. Our Plastics division leases approximately 15,000 square feet under a lease that expires December 31, 2018 for approximately $13,000 per month. In addition, the Company owns a 40,000 square foot packaging and printing plant in Victor, New York, a suburb of Rochester, New York. The Company’s Technology Management division leases executive office space in Reston, Virginia under a month-to-month lease for approximately $600 per month. The Company’s Technology Management division also leases a sales and research and development facility in Plano, Texas under a renewable 12-month lease that expired in December 2017 for approximately $1,200 per month. The Company renewed the Plano lease for an additional 12 months until December 21, 2018 for approximately $1,300 per month. The Company believes that it can negotiate renewals or similar lease arrangements on acceptable terms when our current leases expire. We believe that our facilities are adequate for our current operations.

~~Equipment Leases~~– From time to time, the Company leases certain production and office equipment, digital and offset presses, laminating and finishing equipment for its various printing operations. The leases may be capital leases orhas operating leases ~~and are generally~~predominantly for ~~a term of 36 to 60 months.~~operating facilities. As of December 31, ~~2017~~2021, the remaining lease terms on our operating leases range from one to sixty-three months. Termination options are not reasonably certain of exercise by the Company. There is no transfer of title or option to purchase the leased assets upon expiration. There are no residual value guarantees or material restrictive covenants. There are no significant finance leases as of December 31, 2021. Rent expense for the year ended December 31, 2021 and ~~2016, the Company did not have any capitalized leases.~~December 31, 2020 was approximately $190,000 and $217,000 respectively.

~~The following table summarizes the Company’s~~Future minimum lease ~~commitments.~~payments as of December 31,2021 are as follows:

Employment Agreements- The Company has employment or severance agreements with ~~five~~ members of its management ~~team with terms ranging from one to five years through December 2019.~~team. The employment or severance agreements provide for severance payments in the event of termination for certain causes. As of December 31, ~~2017,~~2021 and 2020, the Company accrued approximately $7,276,000 and $4,300,000, respectively, for Mr. Heng Fai Ambrose Chan, an executive of the Company’s DSS Cyber Security Pte. Ltd subsidiary in accordance with the terms of his employment contract. Also, as of December 31, 2021, the minimum ~~annual~~ severance payments under these employment agreements are, in aggregate, approximately ~~$735,000.~~$220,000.

On November 26, 2013, DSS Technology Management, Inc. (“DSSTM”) filed suit against Apple, Inc. (“Apple”) in the United States District Court for the Eastern District of Texas, for patent infringement (the “Apple Litigation”). The complaint alleges infringement by Apple of ~~DSS Technology Management’s~~DSSTM’s patents that relate to systems and methods of using low power wireless peripheral devices. ~~DSS Technology Management~~DSSTM is seeking a judgment for infringement, injunctive relief, and compensatory damages from Apple. On October 28, 2014, the case was stayed by the District Court pending a determination of Apple’s motion to transfer the case to the Northern District of California. On November 7, 2014, Apple’s motion to transfer the case to the Northern District of California was granted. On December 30, 2014, Apple filed two Inter Partes Review (“IPR”) petitions with the Patent Trial and Appeal Board (“PTAB”) for review of the patents at issue in the case. The PTAB instituted the IPRs on June 25, 2015. The California District Court then stayed the case pending the outcome of those IPR proceedings. Oral arguments of the IPRs took place on March 15, 2016, and on June 17, 2016, PTAB ruled in favor of Apple on both IPR petitions. ~~DSS Technology Management has~~DSSTM then filed an appeal with the U.S. Court of Appeals for the Federal Circuit (the “Federal Circuit”) seeking reversal of the PTAB decisions. Oral arguments for the appeal were held on August 9, ~~2017, and~~2017. On March 23, 2018, the ~~appeal is still pending as~~Federal Circuit reversed the PTAB, finding that the PTAB erred when it found the claims of U.S. Patent No. 6,128,290 to be unpatentable. The Federal Circuit affirmed its decision on July 12, 2018, when it denied Apple’s petition for panel rehearing of the Federal Circuit’s Opinion and Judgment issued on March 23, 2018. On July 27, 2018, the District Court judge lifted the Stay resuming the litigation, which had a trial date set for the week of ~~this Report. The patent assets underlying this matter had no carrying value as of~~February 24, 2020. On January 14, 2020, the ~~date of~~Court in the ~~PTAB decision and therefore, there were no impairment considerations as a result of the decision.~~

~~On February 16, 2015,~~case DSS Technology Management, Inc. v. Apple, Inc., 4:14-cv-05330-HSG pending in the Northern District of California issued an order that denied DSS’ motion to amend its infringement contentions. In the same order, the Court granted Apple’s motion to strike DSS’ infringement expert report. DSS filed ~~suit in~~a motion for leave to file a motion for reconsideration of the Court’s order denying DSS the right to amend its infringement contentions and motion to strike DSS infringement expert report. On February 18, 2020, the Court denied DSS’s motion for leave to file a motion for reconsideration. On February 24, 2020, the Court signed a Final Judgment stipulating that Apple was “entitled to a judgment of non-infringement of U.S. Patent No. 6,128,290 as a matter of law.” On March 10, 2020, DSS filed an appeal of this Final Judgment to the United States ~~District~~ Court ~~Eastern District~~ of Texas, against defendants Intel Corporation, Dell, Inc., GameStop Corp., Conn’s Inc., Conn Appliances, Inc., NEC Corporation of America, Wal-Mart Stores, Inc., Wal-Mart Stores Texas, LLC, and AT&T, Inc. The complaint alleges patent infringement and seeks judgmentAppeals for ~~infringement of two of DSSTM’s patents, injunctive relief and money damages. On December 9, 2015, Intel filed IPR petitions with PTAB for review of~~ the ~~patents at issue in the case. Intel’s IPRs were instituted by PTAB on June 8, 2016. On June 1, 2017, the PTAB ruled in favor of Intel for all the challenged claims. On July 28, 2017,~~Federal Circuit under DSS Technology Management ~~filed~~v. Apple, Federal Circuit Docket no. 2020-1570. On April 27, 2021, the Court of Appeals heard oral argument, and on April 30, 2021, the Court affirmed the District Court’s judgment. After considering all factors the Company has elected to not pursue any further appeals on this matter. Case is deemed closed.

In April 2019 DSS commenced an action in New York State Supreme Court, Monroe County, Index No. E2019003542, against Jeffrey Ronaldi, our former Chief Executive Officer. This New York action seeks a ~~notice~~declaratory judgment that, contrary to informal claims made by him, Mr. Ronaldi’s employment agreement with us expired by its terms and that he is not entitled to any cash bonuses or other unpaid amounts. The lawsuit also seeks an injunction against Mr. Ronaldi from interfering with any of ~~appeal~~DSS’ IP litigation. Mr. Ronaldi subsequently commenced an action against DSS in the Superior Court of California, County of San Diego, on November 8, 2019, under case number 37-2019-00059664-CU-CO-CTL, in which he alleged that DSS terminated his employment in April 2019 in order to avoid paying him certain employment-related amounts. DSS was successful in dismissing the ~~PTAB’s decision relating to U.S. Patent 6,784,552~~California case and consolidating it with the ~~Federal Circuit. The Intel litigation has been stayed by~~action pending in Monroe County, New York. Mr. Ronaldi asserted counterclaims in the ~~District Court pending final determination~~Monroe County, New York action similar to those he originally brought in California. Mr. Ronaldi claims that his termination violated an alleged employment agreement or implied-in-fact employment agreement and that he should have remained employed through 2019. Mr. Ronaldi seeks to recover: (i) $144,658 in wages from April 11, 2019 through December 31, 2019; (ii) $769 in alleged unpaid based salary for time worked before April 11, 2019; (iii) $15,385 in alleged paid time off compensation; (iv) $3,077 in alleged unpaid sick time compensation; (v) $26,077 in waiting-time penalties; (vi) $91,000 in unspecified expense reimbursement; (vii) $300,000 in alleged cash bonuses ($100,000 per year) based on DSS’s performance in 2017, 2018 and 2019; and (viii) a $450,000 performance bonus based on the result of ~~the IPR proceedings.~~

~~On July 16, 2015,~~certain alleged net proceeds from patent infringement litigation. He further claims an interest in any recovery in DSS Technology Management v. Apple, Inc., Case No. 4:14-cf05330-HSG. The court recently ordered Mr. Ronaldi to produce several categories of documents that he sought to withhold. Discovery is ongoing.

Additionally, on March 2, 2020 DSS and DSSTM filed ~~three separate lawsuits~~a second litigation action against Jeffrey Ronaldi in the State of New York, Supreme Court, County of Monroe, Document Security Systems, Inc. and DSS Technology Management, Inc. vs. Jeffrey Ronaldi, Index No.: 2020002300, alleging acts of self-dealing and conflicts of interest while he served as CEO of both DSS and DSS TM. Mr. Ronaldi filed a Notice of Removal of this civil litigation to the United States District Court for the ~~Eastern~~Western District of ~~Texas alleging infringement~~New York where it was assigned Case No. 6:20-cv-06265-EAW. Mr. Ronaldi filed a motion seeking to compel DSS to advance his legal fees to defend the action, which motion was fully briefed as of ~~certain~~June 30, 2020 and remains pending and undecided. On March 16, 2021 the Western District of ~~its semiconductor patents. The defendants~~New York granted Mr. Ronaldi’s motion to have his defense costs advanced to him during the pendency of the action as they are ~~SK Hynix et al., Samsung Electronics et al., and Qualcomm Incorporated. Each respective complaint alleges patent infringement and seeks judgment~~incurred. On March 26, 2021 Mr. Ronaldi applied to the court for ~~infringement, injunctive relief and money damages. On~~reimbursement of $160,896.25 in legal fees which was subsequently reduced to $159,771.25. A second application was filed on November 12, ~~2015, SK Hynix filed~~2021 seeking $121,672.51 in fees for a total demand of $281,443.76. The Company has objected to the size of those bills as they were based on out-of-town billing rates and the result of an ~~IPR petition with PTAB for review~~excessive number of hours spent on litigation. The parties now engaged in discovery, awaiting a decision on the Company’s objection to Mr. Ronaldi’s fee applications. The parties engaged in court-ordered mediation on June 17, 2021, but the matter did not resolve. Following mediation the Company moved to stay the federal court action pending the outcome of the ~~patent at issue in their case. SK Hynix’s IPR~~state court action to avoid inconsistent rulings on common issues of law and fact. The motion to stay was ~~instituted by the PTAB on May 11, 2016. On August 16, 2016, DSS Technology Management and SK Hynix entered into a confidential settlement agreement ending the litigation between them.~~denied. The pending SK Hynix IPR was then terminated by mutual agreement of the parties on August 31, 2016. On March 18, 2016, Samsung also filed an IPR petition, which was instituted by the PTAB. On September 20, 2017, PTAB ruled in favor of Samsung for all the challenged claims relatingCompany intends to ~~U.S. Patent 6,784,552. DSS Technology Management then appealed~~vigorously prosecute this PTAB ruling to the Federal Circuit on November 17, 2017. The Federal Circuit joined this appeal with the Intel appeal effective on December 7, 2017. The appeal is still pending as of the date of this Report. Qualcomm filed its IPR proceeding on July 1, 2016, which was then later joined with Intel’s IPRs in August 2016 by PTAB. On June 1, 2017, the PTAB ruled in favor of Intel/Qualcomm for all the challenged claims. On July 28, 2017, DSS Technology Management filed a notice of appeal of the PTAB’s decision relating to U.S. Patent 6,784,552 with the Federal Circuit. As indicated above, this joint appeal is still pending as of the date of this Report.action.

On ~~April 13, 2017, Document Security~~February 15, 2021, Maiden Biosciences, Inc. (“Maiden”) commenced an action against DSS, Inc. (“DSS”), Decentralized Sharing Systems, Inc. (“~~DSS”~~Decentralized”) ~~filed a patent infringement~~, HWH World, Inc. (“HWH”), RBC Life International, Inc., RBC Life Sciences, Inc (“RBC”)., Frank D. Heuszel (“Heuszel”), Steven E. Brown, Clinton Howard, and Andrew Howard (collectively, “Defendants”). The lawsuit ~~against Seoul Semiconductor Co., Ltd. and Seoul Semiconductor, Inc. (collectively, “Seoul Semiconductor”)~~is currently pending in the United States District Court ~~for the Eastern~~Northern District of Texas, ~~alleging infringement~~Dallas Division, and is styled and numbered Maiden Biosciences, Inc. v. DSS, Inc., et al., Case No. 3:21-cv-00327.

This lawsuit relates to two promissory notes executed by RBC in the 4^th quarter of 2019 in favor of Decentralized and HWH, totaling approximately $800,000. Maiden, a 2020 default judgment creditor of RBC, in the principal amount of $4,329,000, now complains about those notes, the funding of those notes, the subsequent default of those notes by RBC, and HWH and Decentralized’s subsequent Article 9 foreclosure or deed-in-lieu debt conveyances. In the instant lawsuit, Maiden asserts claims against Defendants for unjust enrichment, fraudulent transfer under the Texas Uniform Fraudulent Transfer Act, and violation of the Racketeer Influenced and Corrupt Organizations Act. Maiden also seeks a judgment from the court declaring: “(1) Defendants lacked a valid security interest in RBC and RBC Subsidiaries’ assets and therefore lacked the authority to sell the assets during the public foreclosure sale; (2) Defendant Heuszel’s low bid at the public foreclosure sale was invalid and void; (3) the public foreclosure sale was conducted in a commercially unreasonable manner; and (4) Defendants do not have the legal authority to transfer RBC and RBC’s Subsidiaries assets to Heuszel and HWH.” Maiden seeks to recover from Defendants: (1) treble damages or, alternatively, damages in the amount of their underlying judgment plus the other creditors’ claims or the value of the assets transferred, whichever is less, plus punitive or exemplary damages; (2) pre and post-judgment interest; and (3) attorneys’ fees and cost.

On March 30, 2021, Defendants DSS, Decentralized, HWH, RBC Life International, Inc., and Heuszel filed a motion to dismiss seeking to dismiss Maiden’s unjust enrichment, exemplary damages, and RICO claims against DSS, Decentralized, HWH, RBC Life International, Inc., and Heuszel, as well as Maiden’s fraudulent transfer claims against DSS and RBC International, Inc. On August 9, 2021, the Court then entered an order granting in part the motion to dismiss filed on behalf of DSS, Decentralized, HWH, RBC Life International, Inc., and Heuszel. Among other things, the Court held that Maiden failed to plausibly plead certain causes of ~~DSS’s Light-Emitting Diode (“LED”) patents.~~action, including (1) the civil RICO claim against DSS, Decentralized, HWH, RBC Life International, Inc., and Heuszel, (2) the TUFTA claim against DSS, and (3) the unjust enrichment claim against DSS and RBC Life International, Inc. Notably, the Court declined the request to dismiss the TUFTA claim against RBC Life International, Inc. The Court granted Maiden leave to file an amended complaint. Maiden’s deadline to do so is Monday, September 6, 2021. The Company intends to vigorously defend its position. On September 3, 2021, Maiden filed its amended complaint, asserting a single cause of action against the DSS Defendants and RBC for an alleged TUFTA violation. Generally, Maiden is seeking the same relief requested in its original complaint. Maiden, however, has abandoned its request for treble damages. On September 17, 2021, the DSS Defendants filed a ~~judgement for infringement~~motion to dismiss the amended complaint seeking to dismiss Maiden’s TUFTA claim to the extent it seeks to avoid a transfer of ~~the patents along with other relief~~assets owned by any of RBC’s subsidiaries, including but not limited to ~~money damages, costs and disbursements. On June 7, 2017,~~RBC Life Sciences USA, Inc. Further, the motion to dismiss also seeks the dismissal of Maiden’s TUFTA claim against Heuszel. The DSS ~~refiled its patent infringement~~Defendants’ motion to dismiss the amended complaint ~~against Seoul Semiconductor in the United States District Court~~will be ripe for ~~the Central District of California, Southern Division. The case~~determination on or after October 22, 2021. Trial is currently ~~pending. On~~set for December ~~3, 2017, Seoul Semiconductor filed an IPR challenging~~5, 2022 on the validity of certain claims of U.S. Patent No. 6,949,771. On December 21, 2017, Seoul Semiconductor filed an IPR challenging the validity of certain claims of U.S. Patent No. 7,256,486. On January 25, 2018, Seoul Semiconductor filed an IPR challenging the validity of certain claims of U.S. Patent No. 7,524,087. These challenged patents the patents that are the subject matter of the infringement lawsuit, and are still pending as of the date of this Report.Court’s two-week docket.

On April 13, 2017, DSS filed a patent infringement lawsuit against Everlight Electronics Co., Ltd. and Everlight Americas, Inc. (collectively, “Everlight”) in the United States District Court for the Eastern District of Texas, Marshall Division, alleging infringement of certain of DSS’s LED patents. DSS is seeking a judgement for infringement of the patents along with other relief including, but not limited to, money damages, costs and disbursements. On June 8, 2017, DSS refiled its patent infringement complaint against Everlight in the United States District Court for the Central District of California. The case is currently pending as of the date of this Report.

On April 13, 2017, DSS filed a patent infringement lawsuit against Cree, Inc. (“Cree”) in the United States District Court for the Eastern District of Texas, Marshall Division, alleging infringement of certain of DSS’s LED patents. DSS is seeking a judgement for infringement of the patents along with other relief including, but not limited to, money damages, costs and disbursements. On June 8, 2017, DSS refiled its patent infringement complaint against Cree in the United States District Court for the Central District of California, and thereafter filed a first amended complaint for patent infringement against Cree in that same court on July 14, 2017. The case is currently pending as of the date of this Report.

On July 13, 2017, DSS filed a patent infringement lawsuit against Osram GMBH, Osram OPTO Semiconductors GMBH & Co., and Osram Sylvania Inc. (collectively, “Osram”) in the United States District Court for the Central District of California, alleging infringement of certain of DSS’s LED patents. DSS is seeking a judgment for infringement of the patents along with other relief including, but not limited to, money damages, costs and disbursements. On February 21, 2018, DSS and Osram executed a confidential settlement agreement ending the litigation between them.

Contingent Litigation Payments – The Company retains the services of professional service providers, including law firms that specialize in intellectual property licensing, enforcement and patent law. These service providers are often retained on an hourly, monthly, project, contingent or a blended fee basis. In contingency fee arrangements, a portion of the legal fee is based on predetermined milestones or the Company’s actual collection of funds. The Company accrues contingent fees when it is probable that the milestones will be achieved, and the fees can be reasonably estimated. As of December 31, ~~2017,~~2021, the Company had not accrued any contingent legal fees pursuant to these arrangements.

Contingent Payments – The Company is party to certain agreements with funding partners who have rights to portions of intellectual property monetization proceeds that the Company receives. As of December 31, ~~2017,~~2021, there are no contingent payments due.

On August 14, 2020, the Company entered into a final Asset Purchase Agreement to sell substantially all of the assets of Plastic Printing Professionals, Inc. and the Company terminated its production and office personnel and maintained only a few employees to assist in and facilitate the sale of its assets. The financial results for these subsidiaries have been presented as discontinued operations in the accompanying consolidated financial statements.

The consideration paid to the Company under the Asset Purchase Agreement for the sale of the assets included a one-time cash payment of $683,000 and an additional contingent earn-out payment of an aggregate amount of up to $517,000 based on future quarterly gross revenue of the business to be conducted by the buyer with the sold assets. Consistent with the Company’s policy for accounting for gain contingencies, the earn out will be recorded when determined realizable. As of December 31, 2020, the Company had recognized $390,000 of this earn out. NaN earnout was recognized during the year ended December 31, 2021. The net effect of all assets disposed of resulted in a net loss of $111,000 000 during the year ended December 31, 2020. These amounts are included in Loss from Discontinued Operations. Included in its Right-of-use assets is the lease of the Company’s facility in Brisbane, Ca. In April 2021, the Company terminated this lease with the landlord effective March 31, 2021, and therefore, wrote off the asset and corresponding liability associated with the lease at March 31, 2021. As of December 31, 2020, $744,000 was record as non-current asset held for sale – discontinued operations on the consolidated balance sheet. Also recorded was $240,000 of current liabilities held for sale – discontinued operations and $505,000 of non-current liabilities held for sale – discontinued operations. The Company has incurred $204,000 of cost associated with wind-down activities for the year ended December 31, 2021.

On May 7, 2021, the Company completed the sale of 100% of the capital stock of DSS Digital Inc., the Company’s wholly-owned subsidiary (“DSS Digital”), to Proof Authentication Corporation (the “Buyer”) pursuant to a stock purchase agreement (the “Digital Purchase Agreement”). Pursuant to the terms of the Digital Purchase Agreement, the Buyer purchased DSS Digital for a purchase price of $5,000,000, consisting of $3 million in cash; $1.5 million in potential earn-out if certain performance targets are met during an earn-out period commencing on the one-year anniversary of the closing and ending the day before the six-year of the closing; and $0.5 million in trade credit or license fee rebates. Consistent with the Company’s policy for accounting for gain contingencies, the earn out will be recorded when determined realizable which did not occur during the twelve-months ended December 31, 2021. Also, the Company has not utilized the $0.5 million trade credit as of December 31, 2021. The net effect of sale of DSS Digital, inclusive of income tax, is a net gain of $2,333,000. This amount is included in Income (loss) from Discontinued Operations on the accompanying consolidated statement of operations.

The following tables show the major classes of assets and liabilities held for sale and results of operations of the discontinued operation.

The Company’s nine businesses lines are organized, managed and internally reported as ~~four~~ five operating segments. ~~Two~~One of these operating segments, Product Packaging, is the Company’s packaging and ~~Printing and Plastics, are engaged~~printing group. Product Packaging operates in the paper board folding carton, smart packaging, and document security printing markets. It markets, manufactures, and ~~production~~sells mailers, photo sleeves, sophisticated custom folding cartons, and complex 3-dimensional direct mail solutions. These products are designed to provide functionality and marketability while also providing counterfeit protection. A second, Biotechnology, invests in, or acquires companies in the biohealth and biomedical fields, including businesses focused on the advancement of ~~paper, cardboard~~drug discovery and ~~plastic documents~~prevention, inhibition, and treatment of neurological, oncological, and immune related diseases. This division is also developing open-air defense initiatives, which curb transmission of air-borne infectious diseases, such as tuberculosis and influenza. Biotechnology is also targeting unmet, urgent medical needs. A third operating segment, Securities and Investment Management (“Securities”) was established to develop and/or acquire assets and investments in the securities trading and/or funds management arena. Further, Securities, in partnership with recognized global leaders in alternative trading systems, intends to own and operate in the US a ~~wide range~~single or multiple vertical digital asset exchanges for securities, tokenized assets, utility tokens, stable coins and cryptocurrency via a digital asset trading platform using blockchain technology. The scope of ~~features, including~~services within this section is planned to include asset issuance and allocation (securities and cryptocurrency), FPO, IPO, ITO, PPO, STO and UTO listings on a primary market(s), asset digitization/tokenization (securities, currency and cryptocurrency), and the listing and trading of digital assets (securities and cryptocurrency) on a secondary market(s). Also in this segment is the Company’s ~~patented technologies and trade secrets designed~~real estate investment trust (“REIT”), organized for the ~~protection~~purposes of ~~documents against unauthorized duplication~~acquiring hospitals and ~~altering.~~other acute or post-acute care centers from leading clinical operators with dominant market share in secondary and tertiary markets, and leasing each property to a single operator under a triple-net lease. the REIT was formed to originate, acquire, and lease a credit-centric portfolio of licensed medical real estate. The ~~two~~fourth segment, Direct, provides services to assist companies in the emerging growth gig business model of peer-to-peer decentralized sharing marketplaces. It specializes in marketing and distributing its products and services through its subsidiary and partner network, using the popular gig economic marketing strategy as a form of direct marketing. Direct marketing products include, among other things, nutritional and personal care products sold throughout North America, Asia Pacific and Eastern Europe. The fifth business line, Commercial Banking, is organized for the purposes of being a financial network holding company, focused providing commercial loans and on acquiring equity positions in (i) undervalued commercial bank(s), bank holding companies and nonbanking licensed financial companies operating in the United States, South East Asia, Taiwan, Japan and South Korea, and (ii) companies engaged in—nonbanking activities closely related to banking, including loan syndication services, mortgage banking, trust and escrow services, banking technology, loan servicing, equipment leasing, problem asset management, SPAC (special purpose acquisition company) consulting, and advisory capital raising services. From this financial platform, the Company shall provide an integrated suite of financial services for businesses that shall include commercial business lines of credit, land development financing, inventory financing, third party loan servicing, and services that address the financial needs of the world Gig Economy.

Our segment structure presented below represents a change from the prior year for the inclusion of our Biotechnology, Securities, and Commercial Lending segments ~~DSS~~and the removal of our Plastics segment, Digital Group and ~~DSS~~IP Technology Management ~~Inc., are engaged~~segment as the Plastics segment was discontinued in ~~various aspects of developing, acquiring, selling~~2020, DSS Digital was sold and ~~licensing technology assets~~discontinued in May 2021 and ~~are grouped into one reportable~~activities surrounding our IP Technology Management segment ~~called Technology.~~have significantly decreased. The amounts for these segments have been included in the Corporate reporting segment for the year ended December 31, 2021 and 2020, as necessary, below for reconciliation purposes.

Approximate information concerning the Company’s operations by reportable segment for the years ended December 31, ~~2017~~2021, and ~~2016~~2020 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:

International revenue, which consists of sales to customers with operations in Canada, Western Europe, Latin America, Africa, the Middle East and Asia comprised ~~3.2%~~11.0% of total revenue for ~~2017 (2%~~2021 (9.0% - ~~2016)~~2020). Revenue is allocated to individual countries by customer based on where the product is shipped. The Company had no long-lived assets in any country other than the United States for any period presented.

The following tables disaggregate our business segment revenues by major source:

On February 25, 2022, DSS, Inc. (the “Company”) entered into an assignment and assumption agreement (the “Assumption Agreement”) with Alset International Limited a Republic of Singapore limited company (“AIL”), pursuant to which DSS has agreed to purchase a convertible promissory note from AIL (the “Note”). The Note has a principal amount of $8,350,000 and accrued but unpaid interest of $415,000 through May 15, 2022. The Note was issued to American Medical REIT, Inc., a Maryland corporation, pursuant to a subscription agreement, dated as of October 29, 2021 between AIL and American Medical REIT, Inc. The consideration to be paid for the Note will be 21,366,177 shares of DSS’s common stock. The number of DSS shares to be issued as consideration was calculated by dividing $8,765,000, the aggregate of the principal amount and the accrued but unpaid interest under the Note, by $0.408 per share. The number of shares of DSS common stock to be issued as consideration may be adjusted based on the accrued interest if the parties should agree to close this transaction on a date other than the anticipated date of May 15, 2022. The closing of the Assumption Agreement and the issuance of the DSS shares described above will be subject to the approval of the NYSE American and DSS’s shareholders.

February 28, 2022, DSS entered into an Amendment to Stock Purchase Agreement (the “Amendment”) with its shareholder Alset EHome International Inc. (“AEI”), pursuant to which the Company and AEI have agreed to amend certain terms of the Stock Purchase Agreement dated January 25, 2022 (the “SPA”). Pursuant to the SPA, AEI had agreed to purchase 44,619,423 shares of the Company’s common stock for a purchase price of $0.3810 per share, for an aggregate purchase price of $17,000,000. Pursuant to the Amendment, the number of shares of the common stock of the Company that the AEI will purchase has been reduced to 3,986,877 shares for an aggregate purchase price of $1,519,000. In addition, the Company’s Executive Chairman and a largest stockholder, Heng Fai Ambrose Chan, is the Chairman, Chief Executive Officer and largest shareholder of AEI.

On February 28, 2022, the Company entered into a Stock Purchase Agreement with Alset EHome International Inc. (the “True Partner Revised Stock Purchase Agreement”), pursuant to which AEI has agreed to sell a subsidiary holding 62,122,908 shares of stock of True Partner Capital Holding Limited exchange for 17,570,948 shares of common stock of the Company (the “DSS Shares”). Previously, the Company and AEI were parties to an agreement dated as of January 18, 2022 for the sale of 62,122,908 shares of stock of True Partner International Limited; such agreement has been terminated. AEI and its various subsidiaries are collectively the largest stockholder of the Company. The Company’s Executive Chairman and a significant stockholder, Heng Fai Ambrose Chan, is the Chairman, Chief Executive Officer and largest shareholder of AEI. The issuance of the DSS Shares will be subject to the approval of the NYSE American and the Company’s shareholders.

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

On December 2, 2021, Freed Maxick CPAs, P.C. (the “Former Accountant”) resigned as our independent registered public accounting firm, and on December 3, 2021, we engaged Turner, Stone & Company, L.L.P. (the “New Accountant”) as our independent registered public accounting firm, subject to completion of Turner Stone’s standard client acceptance process and execution of an engagement letter. The engagement of the New Accountant was recommended and approved by the Audit Committee of our Board of Directors.

The Former Accountant’s audit report on our financial statements for the years ended December 31, 2020 and 2019 contained no adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles.

For the years ended December 31, 2020 and 2019, and through the interim period ended December 2, 2021, there were no “disagreements” (as such term is defined in Item 304 of Regulation S-K) with the Former Accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of the Former Accountant, would have caused them to make reference thereto in their reports on the financial statements for such periods.

For the years ended December 31, 2020 and 2019, and through the interim period ended December 2, 2021, there was the following “reportable events” (as such term is defined in Item 304 of Regulation S-K). As disclosed in Part II, Item 9A of the Company’s Form 10-K for the year ended December 31, 2020, the Company’s management determined that the Company’s internal controls over financial reporting were not effective as of the end of such period.

An evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Interim Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of ~~1934)~~1934 as of ~~the end of the year covered by this Report.~~December 31, 2021. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of December 31, 2021, to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such ~~date.~~information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there were resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Our management, including our Chief Executive Officer and ~~Principal~~Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, ~~2017.~~2021. In making this assessment, ~~our~~ management used the framework established in “Internal Control—Integrated Framework” promulgated by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, commonly referred to as the “COSO” criteria. Based on our assessment, we concluded that, as of December 31, ~~2017,~~2021, our internal control over financial reporting was not effective based on those criteria.

In connection with management’s assessment of our internal control over financial reporting described above, ~~management has identified~~ the following weakness have been identified in the Company’s internal control over financial reporting as of December 31, ~~2017:~~2021:

~~The Company did not maintain a sufficient complement of qualified accounting personnel and controls associated with segregation of duties.~~

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

InRemediation of the ~~ordinary course of business, we may routinely modify, upgrade or enhance~~Material Weaknesses

Management believes it has taken significant steps during 2021, and subsequently in 2022, to strengthen our overall internal controls and ~~procedures for financial reporting. In 2017~~eliminate the material weakness of those controls. During the 2022 fiscal year, the Company ~~hired an accountant~~will document and test the remediations put in place. Such remediation includes the following:

The Company is committed to maintaining a strong internal control environment and believes that these remediation efforts will represent significant improvements in our controls. The Company has started to implement these steps, however, some of these steps will take time to be fully integrated and confirmed to be effective and sustainable. Additional controls may also be required over time.

While changes in the Company’s internal control over financial reporting ~~process which helped~~occurred during the year ended December 31, 2021 as the Company ~~remediate many, but~~continued to implement the remediation steps described above, we have not ~~all,~~ ofbeen able to fully document and test these controls to ensure their effectiveness over financial reporting during the ~~segregation of duties issues~~quarter ended December 31, 2021, and thus cannot conclude that have materially affected, or are reasonably likely to materially affect, the ~~Company had previously identified.~~Company’s internal control over financial reporting.

Please see the disclosure related to the winding down of our intellectual property monetization business included in ITEM 1 – BUSINESS, Overview, Strategic Business Plan, Exiting Unprofitable Business Lines, which information is incorporated in this Item 9B by reference.

DSS intends to hold ~~our 2018~~its 2021 Annual Meeting of Stockholders ~~sometime between May and June~~at the end of ~~2018.~~the third quarter of 2022.

The Company’s Board of Directors currently consists of seven directors; the Board size was reduced from nine to seven persons on December 9, 2019, pursuant to an October 2019 Special Meeting of the Board, upon recommendation and approval by the Nominating and Corporate Governance Committee to do so. The Board, also upon recommendation and approval by the Nominating and Corporate Governance Committee, reduce the size of the Board to seven members effective August 2021.

Our executive officers and directors as of the date of this report are as follows:

On August 19, 2021, Lo Wah Wai resigned as a member of the Company’s Board. Mr. Lo’s resignation was accepted and became effective August 20, 2021. Mr. Lo did not resign from the Board as a result of any disagreement related to the Company’s operations, policies or practices but rather due to his “heavy workload and commitment in other corporations”.

Biographical and certain other information concerning the Company’s directors is set forth below. There are no familial relationships among any of our directors. Except as indicated below, none of our directors is a director in any other reporting companies. None of our directors has been affiliated with any company that has filed for bankruptcy within the last ten years. We are not aware of any proceedings to which any of our directors, or any associate of any such director is a party adverse to us or any of our subsidiaries or has a material interest adverse to us or any of our subsidiaries.

The ~~information required~~Company has determined that each of Mr. John “JT” Thatch, Mr. William Wu, Mr. Sassuan Lee and Mr. José Escudero qualify as independent directors (as defined under Section 803 of the NYSE American LLC Company Guide).

In the fiscal year ended December 31, 2021, each of the Company’s independent directors attended or participated in 97% or more of the aggregate of (i) the total number of meetings of the Board of Directors held during the period in which each such director served as a director and (ii) the total number of meetings held by ~~this~~all committees of the Board of Directors during the period in which each such director served on such committee. During the fiscal year ended December 31, 2021, the Board held two meetings and acted by written consent on eleven occasions.

On December 9, 2019, the Board appointed Mr. Thatch as the Lead Independent Director, Mr. Thatch will serve as the Lead Independent Director until his successor is duly appointed and qualified, or until his earlier removal or resignation or such time as he is no longer considered an independent director under the New York Stock Exchange listing standards. Mr. Thatch’s authority, responsibilities, and duties as the Lead Independent Director include the following: (i) preside at all meetings of the Board at which the Chairman of the Board is not present, at all meetings of the independent directors and at all executive sessions of the independent directors, (ii) have a reasonable opportunity to review and comment on Board meeting agendas, (iii) serve as a liaison between the Chairman of the Board and the other members of the Board, (iv) have the authority to call special meetings of the Board and of the independent directors, and (v) perform such other duties as the Board may from time to time delegate.

The Company has separately designated an Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Audit Committee held five meetings in 2021. The Audit Committee is responsible for, among other things, the appointment, compensation, removal and oversight of the work of the Company’s independent registered public accounting firm, overseeing the accounting and financial reporting process of the Company, and reviewing related person transactions. As of December 31, 2021, the Audit Committee is comprised of Mr. Thatch, Mr. Wu and Mr. Lee. Each of Mr. Wu, Mr. Thatch and Mr. Lee is qualified as a “financial expert” as defined in Item ~~will~~407 under Regulation S-K of the Securities Act of 1933, as amended. Each of the members of the Audit Committee is an independent director (as defined under Section 803 of the NYSE American LLC Company Guide). Mr. Thatch serves as Chairman of the Audit Committee. The Audit Committee operates under a written charter adopted by the Board of Directors, which can be ~~contained~~found in the Investors/Corporate Governance section of our ~~Proxy Statement~~web site, www.dssworld.com.

The purpose of the Compensation and Management Resources Committee is to assist the Board in discharging its responsibilities relating to executive compensation, succession planning for the Company’s executive team, and to review and make recommendations to the Board regarding employee benefit policies and programs, incentive compensation plans and equity-based plans. The Compensation and Management Resources Committee held two meetings in 2021.

The Compensation and Management Resources Committee is responsible for, among other things, (a) reviewing all compensation arrangements for the executive officers of the Company and (b) administering the Company’s stock option plans. The Compensation and Management Resources Committee consists of Mr. José Escudero, Mr. Wai Leung William Wu and Mr. Sassuan (Samson) Lee, with Mr. Lee as the Chairman. Each of the members of the Compensation and Management Resources Committee is an independent director (as defined under Section 803 of the NYSE American Company Guide). The Compensation and Management Resource Committee operates under a written charter adopted by the Board of Directors, which can be found in the Investors/Corporate Governance section of our ~~2018 Annual Stockholders Meeting (the “Proxy Statement”),~~web site, www.dssworld.com.

The duties and responsibilities of the Compensation and Management Resources Committee in accordance with its charter are to review and discuss with management and the Board the objectives, philosophy, structure, cost and administration of the Company’s executive compensation and employee benefit policies and programs; no less than annually, review and approve, with respect to the Chief Executive Officer and the other executive officers (a) all elements of compensation, (b) incentive targets, (c) any employment agreements, severance agreements and change in control agreements or provisions, in each case as, when and if appropriate, and (d) any special or supplemental benefits; make recommendations to the Board with respect to the Company’s major long-term incentive plans applicable to directors, executives and/or non-executive employees of the Company and approve (a) individual annual or periodic equity-based awards for the Chief Executive Officer and other executive officers and (b) an annual pool of awards for other employees with guidelines for the administration and allocation of such awards; recommend to the Board for its approval a succession plan for the Chief Executive Officer, addressing the policies and principles for selecting a successor to the Chief Executive Officer, both in an emergency situation and in the ordinary course of business; review programs created and maintained by management for the development and succession of other executive officers and any other individuals identified by management or the Compensation and Management Resources Committee; review the establishment, amendment and termination of employee benefits plans, review employee benefit plan operations and administration; and any other duties or responsibilities expressly delegated to the Compensation and Management Resources Committee by the Board from time to time relating to the Committee’s purpose.

The Compensation and Management Resources Committee may request any officer or employee of the Company or the Company’s outside counsel to attend a meeting of the Compensation and Management Resources Committee or to meet with any members of, or consultants to, the Compensation and Management Resources Committee. The Company’s Chief Executive Officer does not attend any portion of a meeting where the Chief Executive Officer’s performance or compensation is discussed, unless specifically invited by the Compensation and Management Resources Committee.

The Compensation and Management Resources Committee has the sole authority to retain and terminate any compensation consultant to be used to assist in the evaluation of director, Chief Executive Officer or other executive officer compensation or employee benefit plans, and has sole authority to approve the consultant’s fees and other retention terms. The Compensation and Management Resources Committee also has the authority to obtain advice and assistance from internal or external legal, accounting or other experts, advisors and consultants to assist in carrying out its duties and responsibilities, and has the authority to retain and approve the fees and other retention terms for any external experts, advisors or consultants.

The Nominating and Corporate Governance Committee is responsible for overseeing the appropriate and effective governance of the Company, including, among other things, (a) nominations to the Board of Directors and making recommendations regarding the size and composition of the Board of Directors and (b) the development and recommendation of appropriate corporate governance principles. The Nominating and Corporate Governance Committee consists of Mr. John “JT” Thatch, the Chairman of the committee, Mr. Sassuan (Samson) Lee and Mr. José Escudero, each of whom is an independent director (as defined under Section 803 of the NYSE American LLC Company Guide). The Nominating and Corporate Governance Committee held two meetings in 2021 and did not act by written consent. The Nominating and Corporate Governance Committee operates under a written charter adopted by the Board of Directors, which ~~we intend~~can be found in the Investors/Corporate Governance section of our web site, www.dssworld.com. The Nominating and Corporate Governance Committee adheres to ~~file with~~ the Company’s By-Laws provisions and Securities and Exchange Commission ~~within 120 days after December 31, 2017,~~rules relating to proposals by stockholders when considering director candidates that might be recommended by stockholders, along with the requirements set forth in the committee’s Policy with Regard to Consideration of Candidates Recommended for Election to the Board of Directors, also available on our website. The Nominating and Corporate Governance Committee of the Board of Directors is responsible for identifying and selecting qualified candidates for election to the Board of Directors prior to each annual meeting of the Company’s stockholders. In identifying and evaluating nominees for director, the Committee considers each candidate’s qualities, experience, background and skills, as well as other factors, such as the individual’s ethics, integrity and values which ~~will be incorporated by reference herein.~~the candidate may bring to the Board of Directors.

The Company has adopted ~~codes~~a Code of ~~business~~Ethics that establishes the standards of ethical conduct applicable to all directors, officers and ~~ethics for~~employees of the Company. A copy of the Code of Ethics covering all of our employees, ~~including our principal executive officer, principal financial officer, principal accounting officer,~~directors and ~~directors. Our codes of business conduct and ethics are~~officers, is available on the Corporate Governance section of our ~~Web~~web site at ~~www.dsssecure.com.~~www.dssworld.com.

Based solely upon a review of copies of such forms filed on Forms 3, 4 and 5, and amendments thereto furnished to us, we believe that as of the date of this Report, our executive officers, directors and greater than 10 percent beneficial owners have complied on a timely basis with all Section 16(a) filing requirements, except Mr. Sassuan (Samson) Lee, Mr. José Escudero and Mr. Wai Leung William Wu each failed to file a Form 4 with respect to individual grants of 1,020 shares of the Company’s Common Stock, pursuant to the Company’s 2020 Employee, Director and Consultant Equity Incentive Plan that each director received on April 3, 2020.

Since April 17, 2019, Frank D. Heuszel has been serving as the Chief Executive Officer and Interim Chief Financial Officer of the Company. On October 28, 2020, Mr. Heuszel became solely the CEO and transferred the Interim Chief Financial Officer title to Todd D. Macko, who became the permanent CFO on August 16, 2021. The biography for Mr. Heuszel and Mr. Macko is contained herein in the information ~~contained therein~~disclosures relating to the Company’s directors above.

On July 11, 2019, the Board appointed Mr. Jason Grady as the Company’s Chief Operating Officer, effective July 15, 2019.

None of our directors or ~~incorporated therein are not intended to be incorporated into this Annual Report on Form 10-K or our other filings with~~executive officers has been involved in any legal proceedings in the ~~SEC.~~past 10 years that would require disclosure under Item 401(f) of Regulation S-K.

The following table sets forth the compensation earned by each of the persons serving as the Company’s Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, referred to herein collectively as the “Named Executive Officers”, or NEOs, for services rendered to us for the years ended December 31, 2021 and 2020:

Mr. Frank D. Heuszel has served as the Company’s Chief Executive Officer since April 11, 2019, and also as the Company’s interim Chief Financial Officer since April 17, 2019. Upon that appointment, the Company agreed to pay Mr. Heuszel cash compensation in the amount of $7,500 per month for his combined services as interim Chief Executive Officer and Chief Financial Officer. On August 27, 2019, the Company entered into an executive employment agreement with Mr. Heuszel. Pursuant to that agreement, Mr. Heuszel received an annual base salary of $165,000, payable bi-weekly, and was eligible for an annual performance bonus in an amount up to 100% of his base salary, upon the Company’s achievement of certain net income and gross revenue milestones. Under the terms of that employment agreement, in the event of a change in control of the Company or the termination of Mr. Heuszel’s employment without cause, Mr. Heuszel would have received four-months’ salary, payable monthly. In October 2020, this employment agreement was extended on the same general terms to expire on December 31, 2020. Commencing January 1, 2021, the Company and Mr. Heuszel entered into a new three-year employment agreement scheduled to terminate on December 31, 2023. Under the terms of this new employment agreement, Mr. Heuszel shall receive an annual base salary of $260,000, payable bi-weekly, and he is eligible to an annual performance bonus in an amount up to 100% of his base salary, upon the Company’s achievement of certain net income and gross revenue milestones. As in his previous employment agreement, in the event of his termination without cause, Mr. Heuszel shall receive four-months’ salary, payable monthly.

On September 5, 2019, the Company entered in an executive employment agreement with Mr. Jason Grady, the Company’s Chief Operating Officer. Pursuant to the agreement, Mr. Grady shall receive an annual base salary of $200,000 and shall be eligible to receive an annual performance bonus, in an amount up to 100% of his base salary, upon the Company’s achievement of certain net income and gross revenue milestones. In the event of a change in control of the Company or the termination of Mr. Grady’s employment without cause, he shall be entitled to receive four-month’s base salary. Negotiations are currently in process to renew the terms of the existing contract.

On September 23, 2019, the Company entered in an executive employment agreement with Mr. Heng Fai Ambrose Chan, a director of the Company, Chief Executive Officer of the Company’s wholly-owned subsidiary DSS International Inc. and Chief Executive Officer of DSS Asia, a wholly-owned subsidiary of DSS International Inc. Pursuant to the agreement, Mr. Chan shall receive an annual base salary of $250,000, payable quarterly in either cash or common stock, subject to availability of shares under a shareholder-approved stock plan. The ~~information required by~~calculation of each quarterly payment of common stock shall be the Company’s average trading price for the last ten trading days of that quarter. Mr. Chan is also eligible to receive an annual performance bonus, in an amount up to 100% of his base salary, upon the Company’s achievement of certain net income and gross revenue milestones. Mr. Chan has the option to have the bonus paid in Company common stock. In the event of a change in control of the Company or the termination of Mr. Chan’s employment without cause, Mr. Chan shall receive four-months’ salary, payable monthly. In connection with this ~~Item will~~agreement, Mr. Chan was awarded 74,770 shares of fully vested restricted stock with a two-year lock-up period and had an aggregated grant date fair value of approximately $31,000. Mr. Chan’s employment agreement was amended on November 19, 2020, retroactive to January 1, 2020. Under the terms of this amendment, Mr. Chan’s annual salary is set at $1.00 and is eligible for bonuses based on market capitalization growth, and annual net asset change.

Mr. Todd D. Macko was promoted to Interim Chief Financial Officer on October 29, 2020. Mr. Macko’s annual base salary is $150,000 and he is eligible to receive an annual performance bonus, upon the Company’s achievement of certain net income goals, up to 50% of his annual base salary. On August 16, 2021, Mr. Macko was made the permanent CFO which resulted in an increase in base pay to $198,000 annually. In the event of a change in control of the Company or the termination of Mr. Macko’s employment without cause, he shall be entitled to receive four-month’s base salary. Negotiations are currently in process to review the other terms of his existing contract.

On July 31, 2018, the Company and Robert Bzdick entered into a Non-Compete Letter Agreement (the “Bzdick Agreement”) whereby the parties mutually agreed that Mr. Bzdick’s employment as President of the Company and Chief Executive Officer of Premier Packaging Corporation, a wholly-owned subsidiary of the Company, would terminate effective on August 1, 2018. The Bzdick Agreement voided and replaced Mr. Bzdick’s previous employment agreement with the Company, originally dated February 12, 2010, and amended on October 1, 2012, except for the non-competition and non-solicitation covenants contained therein, which were carried forward in their entirety to the new Bzdick Agreement.

Pursuant to the terms of the Bzdick Agreement, Mr. Bzdick received his regular wages and contractual bonus sum accrued through the separation date, and also receives the sum of $16,000 per month, for a period of 19 months, as consideration for the two-year non-competition and non-solicitation restrictive covenants contained in ~~our Proxy Statement and~~the Bzdick Agreement, which are identical to the restrictive covenants contained in Mr. Bzdick’s previous employment agreement, which are now incorporated by reference ~~herein.~~into the Bzdick Agreement. In addition, the Company agreed to continue to pay the cost of Mr. Bzdick’s health, dental and vision insurance coverage for a period of 19 months or until he is eligible for such benefits from another employer, whichever is shorter. In the Agreement, Mr. Bzdick specifically acknowledges that, among other remedies, the Company is entitled to cease all payments under the Bzdick Agreement and recoup all payments previously made in the event Mr. Bzdick revokes, violates or breaches the Agreement, or discontinues any promised act under the Bzdick Agreement. Moreover, the Bzdick Agreement further provides that in the event Mr. Bzdick breaches the Bzdick Agreement by bringing suit or filing a claim with an administrative agency, then he must, as a condition precedent, repay to the Company in cash all consideration received pursuant to the Bzdick Agreement. The Bzdick Agreement also contains standard mutual release and damages clauses, and a clause that provides that in any action for breach of the Bzdick Agreement, the prevailing party shall be entitled to recover attorneys’ fees from the opposing party.

As of December 31, 2021, there were no outstanding equity awards to our Named Executive Officers.

The following table sets forth cash compensation and the value of stock options awards granted to the Company’s non-employee independent directors for their service in 2021:

Each independent director (as defined under Section 803 of the NYSE MKT LLC Company Guide) is entitled to receive base cash compensation of $18,000 annually, provided such director attends at least 75% of all Board of Director meetings, and all scheduled committee meetings. Each independent director is entitled to receive an additional $1,000 for each Board of Director meeting he attends, and an additional $500 for each nominating and compensation committee meeting he attends and $750 for each audit and executive committee meeting he attends, provided such committee meeting falls on a date other than the date of a full Board of Directors meeting. Each of the independent directors is also eligible to receive discretionary grants of options or restricted stock under the Company’s 2020 Equity Incentive Plan. Non-independent members of the Board of Directors do not receive compensation in their capacity as directors, except for reimbursement of travel expenses.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth beneficial ownership of Common Stock as of March 14, 2022 by each person known by the Company to beneficially own more than 5% of the Common Stock, each director and each of the executive officers named in the Summary Compensation Table (see “Executive Compensation” above), and by all of the Company’s directors and executive officers as a group. Each person has sole voting and dispositive power over the shares listed opposite his name except as indicated in the footnotes to the table and each person’s address is c/o DSS, Inc., 275 Wiregrass Parkway, West Henrietta, New York 14586.

For purposes of this table, beneficial ownership is determined in accordance with the Securities and Exchange Commission rules, and includes investment power with respect to shares owned and shares issuable pursuant to warrants for March 14, 2022

The percentages of shares beneficially owned are based on 83,732,763 shares of our Common Stock issued and outstanding as of March 14, 2022, and is calculated by dividing the number of shares that person beneficially owns by the sum of (a) the total number of shares outstanding on March 14, 2022, plus (b) the number of shares such person has the right to acquire within 60 days of March 14, 2022.

The following table sets forth information ~~required~~about our equity compensation plans as of December 31, 2021.

Following the Board’s approval of same, the Company’s shareholders approved the 2020 Employee, Director and Consultant Equity Incentive Plan (“2020 Incentive Plan”) at the shareholder meeting held on December 9, 2019. As of the date of this Report, zero options have been issued pursuant to the 2020 Incentive Plan. Based on its provisions, there are currently 4,470,419 shares of Common Stock available for issuable under the 2020 Incentive Plan.

Purpose of the Plan. The 2020 Incentive Plan was established by ~~this Item~~the Company to (i) promote the success and enhance the value of the Company by a) linking the personal interests of participants of the 2020 Incentive Plan to those of Company stockholders and b) providing participants with an incentive for outstanding performance; and (ii) provide flexibility to the Company in its ability to motivate, attract, and retain the services of participants upon whose judgment, interest and special effort the successful conduct of its business is largely dependent.

The Board has the sole authority to implement, interpret, and/or administer the 2020 Incentive Plan unless the Board delegates (i) all or any portion of its authority to implement, interpret, and/or administer the 2020 Incentive Plan to a committee of the Board consisting of non-employee directors (the “Committee”), or (ii) the authority to grant and administer awards to non-executive employees of the Company under the 2020 Incentive Plan to an officer of the Company.

The 2020 Incentive Plan provides for the issuance of shares of Common Stock, including shares that may be issued related to the exercise of options awarded under the 2020 Incentive Plan, in an amount up to twenty percent (20%) of the total issued and outstanding shares of Common Stock as of December 31, 2019 (with additional shares to be authorized every first day of the next fiscal year in accordance with the 2020 Incentive Plan’s evergreen provision). The 2020 Incentive Plan shall be effective for 10 years, unless earlier terminated.

Employees, officers, directors, consultants and advisors of the Company or any affiliate of the Company (“Participants”) are eligible to receive an award under the 2020 Incentive Plan. The 2020 Incentive Plan provides Participants the opportunity to participate in the enhancement of shareholder value by the award of options and awards of Common Stock, granted as stock bonus awards, restricted stock awards, deferred share awards and performance-based awards, under the 2020 Incentive Plan. The 2020 Incentive Plan further provides for the Company to make payment of bonuses and/or consulting fees to certain Participants in options and Common Stock, or any combination thereof. While our directors and our executive officers may participate in the 2020 Incentive Plan, the amounts and benefits that they may receive from the 2020 Incentive Plan (if any) has not been determined and is not currently determinable.

No single participant under the 2020 Incentive Plan may receive more than 20% of all options awarded in a single year.

In the event of a corporate transaction involving the Company (including, without limitation, any merger, reorganization, consolidation, recapitalization, separation, liquidation, split-up, or share combination), the Committee shall adjust awards in any manner determined by the Committee to be an appropriate and equitable means to prevent dilution or enlargement of rights.

Under the 2020 Incentive Plan, the Company will initially reserve shares of Common Stock for issuance to eligible employees, officers, directors, consultants, and advisors of the Company and its affiliates in amount equal to twenty percent (20%) of the then issued and outstanding shares of the Company’s Common Stock as of December 31, 2019, subject to adjustment. The 2020 Incentive Plan provides that on the first day of each fiscal year of the Company during the period beginning in fiscal year 2021 and ending on the second day of fiscal year 2029, the number of shares of Common Stock authorized to be issued under the 2020 Incentive Plan will be ~~contained~~increased by an amount equal to the lesser of (i) five percent (5%) of the total number of shares of Common Stock outstanding as of December 31 of the preceding fiscal year and (ii) an amount to be determined by the Company’s Board of Directors.

The Board, or the Committee, shall have sole and absolute discretionary authority (i) to determine, authorize, and designate those persons who are to receive options under the 2020 Incentive Plan, (ii) to determine the number of shares of Common Stock to be covered by such options and the terms thereof, (iii) to determine the type of option granted (ISOs or Nonqualified Options), and (iv) to determine other such details concerning the vesting, termination, exercise, transferability and payment of such options. The Board or Committee shall thereupon grant options in accordance with such determinations as evidenced by a written option agreement.

The exercise price per share for Common Stock of options granted under the 2020 Incentive Plan shall be determined by the Board or Committee, but in no case shall be less than one hundred percent (100%) of the fair market value of the Common Stock (determined in accordance with the 2020 Incentive Plan) at the time the option is granted, provided that, with respect to ISOs granted to a person who holds ten percent (10%) or more of the total combined voting power of all classes of stock of the Company, the exercise price per share for Common Stock shall not be less than 110% of the fair market value of the Common Stock and the term of the ISO shall be no more than 5 years from date of grant. The fair market value of the Common Stock with respect to which ISOs may be exercisable for the first time by any Participant during any calendar year under all such plans of the Company and its affiliates shall not exceed $100,000, or such other amount provided in Section 422 of the Internal Revenue Code.

ISOs under the 2020 Incentive Plan may not be transferred except by will or laws of descent and, during the lifetime of the recipient of the ISO, only be exercised by such recipient. Nonqualified Options may be transferred as a gift in accordance with the applicable securities laws and regulations and with any stock option agreement. Shares issued pursuant to the exercise of options may be endorsed with a legend restricting their transfer or sale.

Each option shall terminate not more than ten years from the date of the grant or at such earlier time as the option agreement may provide. For those who own more than 10% of the total combined voting power of all classes of stock of the Company or an affiliate of the Company, each ISO shall terminate not more than five years from the date of the grant or at such earlier time as the option agreement may provide.

The Board, or the Committee, may, in its sole discretion, grant awards of Common Stock in the form of bonus awards, deferred awards, and restricted stock awards. Each stock award agreement shall be in such form and shall contain such terms and conditions as the Board, or the committee, deems appropriate. The terms and conditions of each stock award agreement may change from time to time and need not be uniform with respect to Participants, and the terms and conditions of separate stock award agreements need not be identical.

The Board, or the Committee, may authorize grants of shares of Common Stock to be awarded upon the achievement of specified performance objectives, upon such terms and conditions as the Board, or the Committee, may determine. Such awards shall be conferred upon the Participant upon the achievement of specified performance objectives during a specified performance period, such objectives being set forth in the grant and including a minimum acceptable level of achievement and, optionally, a formula for measuring and determining the number of performance shares to be issued. Each performance share award agreement shall be in such form and shall contain such terms and conditions as the Board, or the Committee, deems appropriate. The terms and conditions of each performance share award may change from time to time and need not be uniform with respect to Participants, and the terms and conditions of separate performance share award agreements need not be identical.

If the Company shall effect a subdivision or consolidation of shares or other capital readjustment, the payment of a stock dividend, or other increase or reduction of the number of shares of the Common Stock outstanding, without receiving consideration therefore in money, services or property, then (i) the number, class, and per share price of shares of Common Stock subject to outstanding options and other awards under the 2020 Incentive Plan, and (ii) the number of and class of shares then reserved for issuance under the 2020 Incentive Plan and the maximum number of shares for which awards may be granted to any Participant during a specified time period shall be appropriately and proportionately adjusted. The Board, or the Committee, shall make such adjustments, and its determinations shall be final, binding and conclusive.

If the Company is to be consolidated with or acquired by another entity in a merger, consolidation, or sale of all or substantially all of the Company’s assets other than a transaction to merely change the state of incorporation (a “Corporate Transaction”), the administrator of the 2020 Incentive Plan (the “Administrator”) or the board of directors of any entity assuming the obligations of the Company (the “Successor Board”), shall, as to outstanding options issued under the 2020 Incentive Plan, either (i) make appropriate provision for the continuation of such options by substituting on an equitable basis for the shares then subject to such options either A) the consideration payable with respect to the outstanding shares of common stock in connection with the Corporate Transaction or B) securities of any successor or acquiring entity; or (ii) upon written notice to the Participants, provide that such options must be exercised (either (A) to the extent then exercisable or, (B) at the discretion of the Administrator, any such options being made partially or fully exercisable), within a specified number of days of the date of such notice, at the end of which period such options which have not been exercised shall terminate whether or not vested; or (iii) terminate such options in exchange for payment of an amount equal to the consideration payable upon consummation of such Corporate Transaction to a holder of the number of shares of common stock into which such option would have been exercisable (either (A) to the extent then exercisable or, (B) at the discretion of the Administrator, any such options being made partially or fully exercisable) less the aggregate exercise price thereof. For purposes of determining the payments to be made pursuant to clause (iii) above, in the case of a Corporate Transaction, the consideration for which, in whole or in part, is other than cash, the consideration other than cash shall be valued at the fair value thereof as determined in good faith by the Board of Directors.

With respect to outstanding stock grants issued under the 2020 Incentive Plan, the Administrator or the Successor Board, shall make appropriate provision for the continuation of such stock grants on the same terms and conditions by substituting on an equitable basis for the Shares then subject to such stock grants either the consideration payable with respect to the outstanding shares of common stock in connection with the Corporate Transaction or securities of any successor or acquiring entity. In lieu of the foregoing, in connection with any Corporate Transaction, the Administrator may provide that, upon consummation of the Corporate Transaction, each outstanding stock grant shall be terminated in exchange for payment of an amount equal to the consideration payable upon consummation of such Corporate Transaction to a holder of the number of shares of common stock comprising such stock grant (to the extent such stock grant is no longer subject to any forfeiture or repurchase rights then in effect or, at the discretion of the Administrator, all forfeiture and repurchase rights being waived upon such Corporate Transaction).

Our Board has the authority to amend, suspend, or terminate our ~~Proxy Statement~~equity incentive plans, provided that such action does not materially impair the existing rights of any participant without such participant’s written consent. The 2020 Incentive Plan will terminate on January 1, 2030, except that awards that are granted under the 2020 Incentive Plan prior to its termination will continue to be administered under the terms of the 2020 Incentive Plan until the awards terminate, expire or are exercised.

The 2020 Incentive Plan was effective January 1, 2020, was approved by Company stockholder approval on December 9, 2019, and, ~~incorporated~~subject to the right of the Committee to amend or terminate the 2020 Incentive Plan, will remain in effect as long as any awards under it are outstanding; provided, however, that no awards may be granted under the 2020 Incentive Plan after January 1, 2030.

The Committee may, at any time, amend, suspend or terminate the Plan, and the Committee may amend any award agreement; provided that no amendment may, in the absence of written consent to the change by ~~reference herein.~~the affected participant, materially alter or impair any rights or obligations under an award already granted under the 2020 Incentive Plan.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Except as disclosed herein, no director, executive officer, shareholder holding at least 5% of shares of our common stock, or any family member thereof, had any material interest, direct or indirect, in any transaction, or proposed transaction since January 1, 2020, in which the amount involved in the transaction exceeds the lesser of $120,000 or one percent of the average of our total assets at the year-end for the last two completed fiscal years.

On February 25, 2020, the Company completed an underwritten public offering with gross proceeds of $4.6 million before deducting underwriting discounts and commissions and other estimated offering expenses. The offering included 740,741 shares of the Company’s common stock and 111,111 additional shares from the exercise of the underwriter’s purchase option to cover over-allotments, at the public offering price of $5.40 per share. Mr. Chan purchased 370,370 shares of Common Stock in the Offering, for an aggregate purchase price of $2,000,000.

On March 3, 2020, the Company entered into a binding term sheet (the “AMRE Term Sheet”) with LiquidValue Asset Management Pte Ltd (“LVAM”), AMRE Asset Management Inc. (“AAMI”) and American Medical REIT Inc. (“AMRE”), regarding a share subscription and loan arrangement. The AMRE Term Sheet sets out the terms of a proposed venture to establish a medical real estate investment trust in the United States. Pursuant to the AMRE Term Sheet, the Company subscribed for 5,250 ordinary shares of AAMI at a purchase price of $0.01 per share for total consideration of $52.50. Concurrently, AAMI issued 2,500 shares to LVAM, and 1,250 shares to AMRE Tennessee, LLC, AMRE’s executive management’s holding company. As a result, the Company holds 52.5% of the outstanding shares of AAMI, with LVAM and AMRE Tennessee, LLC, holding 35% and 12.5% of the remaining outstanding shares of AAMI, respectively. Further, pursuant to and in connection with the AMRE Term Sheet, on March 3, 2020, the Company entered into a Promissory Note with AMRE, pursuant to which AMRE will issue the Company a promissory note for the principal amount of $800,000.00 (the “AMRE Note”). The AMRE Note matures on March 3, 2022 and accrues interest at the rate of 8.0% per annum, and shall be payable in accordance with the terms set forth in the AMRE Note. The AMRE Note also provides the Company an option to provide AMRE an additional $800,000 on the same terms and conditions as the AMRE Note, including the issuance of warrants as hereinafter described. As further incentive to enter into the AMRE Note, AMRE issued the Company warrants to purchase 160,000 shares of AMRE common stock (the “AMRE Warrants”). The AMRE Warrants have an exercise price of $5.00 per share, subject to adjustment as set forth in the AMRE Warrant, and expire on March 3, 2024. Pursuant to the AMRE Warrants, if AMRE files a registration statement with the Securities and Exchange Commission for an initial public offering (“IPO”) of AMRE’s common stock and the IPO price per share offered to the public is less than $10.00 per share, the exercise price of the AMRE Warrant shall be adjusted downward to 50% of the IPO price. The AMRE Warrant also grants piggyback registration rights to the Company as set forth in the AMRE Warrant. The parties to the AMRE Term Sheet, including AMRE Tennessee, LLC, also entered into a stockholders’ agreement dated as of March 3, 2020 (the “AMRE Stockholders’ Agreement”), regarding their ownership of AAMI’s common stock to regulate certain aspects of the relationship between the stockholders and provide for certain rights and obligations with respect to such ownership, as set forth in the AMRE Stockholders’ Agreement. LVAM is an 82% owned subsidiary of Alset Intl. whose Chief Executive Office and largest shareholder is Mr. Chan. Following the consummation of the transactions contemplated by the AMRE Term Sheet, Mr. Chan and Mr. Heuszel were appointed to the board of directors of AAMI.

On August 21, 2020, the Company, completed its acquisition of Impact BioMedical, pursuant to a Share Exchange Agreement by and among the Company, DSS BioHealth, and related parties Alset Intl (formally Singapore eDevelopment Limited), and Global Biomedical Pte Ltd. (“GBM”) which was previously approved by the Company’s shareholders (the “Share Exchange”).Under the terms of the Share Exchange, the Company issued 483,334 shares of the Company’s common stock, par value $0.02 per share, nominally valued at $6.48 per share, and 46,868 newly issued shares of the Company’s Series A Convertible Preferred Stock (“Series A Preferred Stock”), with a stated value of $46,868,000, or $1,000 per share, for a total consideration of $50 million (Note 12). Due to several factors, including a discount for illiquidity, the value of the Series A Preferred Stock was discounted from $46,868,000 to $35,187,000, thus reducing the final consideration given to approximately $38,319,000. Alset Intl CEO and largest shareholder is Mr. Heng Fai Ambrose Chan, the Chairman of the Board and the largest shareholder of the Company.

As of March 31, 2020, the Company owned 83,174,129 ordinary shares of Alset International Limited (“Alset Intl”, formally Singapore eDevelopment Limited) a company incorporated in Singapore and publicly listed on the Singapore Exchange Limited, at an exercise price of SGD$0.04 (US$0.029) per share and warrants to purchase an additional 44,005,182 ordinary shares at an exercise price of SGD$0.04 (US$0.029) per share. On June 25, 2020, the Company exercised those warrants bringing its total ownership to 127,179,311 shares or approximately 7% of the outstanding shares of Alset Intl as of December 31, 2020. Historically and through June 30, 2020, the Company carried its investment in Alset Intl at cost, less impairments under the measurement alternative in ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities”. During the third quarter of 2020, the Company determined that the investments had a readily determinable fair value based on the volume of shares traded on the Singapore Exchange which evidences a ready market for shares, as well as a consistent and observable market price. Accordingly, this investment is now classified as a marketable security and is classified as long-term assets on the consolidated balance sheets as the Company has the intent and ability to hold the investments for a period of at least one year. The Chairman of the Company, Mr. Heng Fai Ambrose Chan, is the Executive Director and Chief Executive Officer of Alset Intl. Mr. Chan is also the majority shareholder of Alset Intl as well as the largest shareholder of the Company. The fair value of the marketable security as of December 31, 2020 was approximately $6,830,000 and during the year ended December 31, 2020 the Company recorded unrealized gains on this investment of approximately $3,384,200.

On July 22, 2020, Chan Heng Fai Ambrose, the Chairman of the Company’s board of directors, assigned a Stock Purchase and Share Subscription Agreement by and between Mr. Chan and SHRG, pursuant to which the Company purchased 30,000,000 shares of Class A common stock and 10,000,000 warrants to purchase Class A common stock for $3 million. The ~~information required~~warrants have an average exercise price of $0.20, immediately vested and may be exercised at any time commencing on the date of issuance and ending three year from such date. These shares and warrants are also subject to a one-year trading restriction pursuant to the terms of a Lock-Up Agreement entered into between Mr. Chan and the Company and assigned to the Company.

On or about August 28, 2020, the Company’s wholly owned subsidiary, DSS Securities, Inc. entered into a corporate venture to form and operate a real estate title agency, under the name and flagging of Alset Title Company, Inc, a Texas corporation (“ATC”). DSS Securities, Inc. shall own 70% of this venture with the other two shareholders being attorneys necessary to the state application and permitting process. ATC have initiated or have pending applications to do business in a number of states, including Texas, Tennessee, Connecticut, Florida, and Illinois. For the purpose of organization and the state application process, the Company’s CEO, who is a licensed attorney, has a stated non-compensated 15% ownership interest in the venture. There was no activity for the twelve-months ended December 31, 2020

On September 10, 2020, the Company’s wholly owned subsidiary DSS Securities, Inc. entered into membership interest purchase agreement with BMI Financial Group, Inc. a Delaware corporation (“BMIF”) and BMI Capital International LLC, a Texas limited liability company (“BMICI”) 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 in January of 2021 and increased its ownership to 24.9%. This investment is valued at cost as it does not have a readily determined fair value.

BMICI 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 Mr. Sassuan Lee, an independent board member of the Company, also have ownership interest in BMIC..

As of December 31, 2020, the Company held 64,207,378 class A common shares equating to a 32.2% ownership interest in SHRG and had recorded unrealized gains on marketable securities of approximately $6.1 million for the twelve-months then ended. As of July 22, 2020, the carrying value of the Company’s equity method investment exceeded our share of the book value of the investee’s underlying net assets by approximately $9.5 million, which represents primarily intangible assets in the form of customer and distributor lists and goodwill arising from acquisitions. The Company is still in the process of valuing the intangible assets as of December 31, 2020 and no amortization has been recorded during the period ended December 31, 2020. The aggregate fair value of the Company’s investment in SHRG at December 31, 2020 was approximately $14,774,000. DSS, via four (4) of the Company’s existing board members, currently holds four (4) of the five (5) SHRG board of director seats. Mr. JT Thatch, DSS’s Lead Independent Director and as well the CEO of SHRG is on the SHRG Board, along with Mr Chan, DSS’s Executive Chairman of the board of directors (joined the SHRG Board effective May 4, 2020), Mr. Sassuan “Sam” Lee, DSS Independent Director (joined the SHRG Board effective September 29, 2020) and Mr. Frank D. Heuszel, the CEO of the Company (joined the SHRG Board effective September 29, 2020).

On September 9, 2021, the Company finalized a stock purchase agreement (the “SPA”) with American Pacific Bancorp (“APB”), which provided for an investment of $40,000,000 by the Company into APB for an aggregate of 6,666,666 shares of the APB’s Class A Common Stock, par value $0.01 per share. Subject to the terms and conditions contained in the SPA, the shares issued at a purchase price of $6.00 per share. As a result of this ~~Item~~transaction, DSS owns approximately 53% of APB, and as a result its operating results will be included in the Company’s financial statements beginning September 9, 2021. The Company incurred approximately $36,000 in cost associated with the acquisition of APB which were recorded as general and administrative expenses. The acquisition of APB meets the definition of a business with inputs, processes and outputs, and therefore, the Company has concluded to account for this transaction in accordance with the acquisition method of accounting under Topic 805. Activity from September 9, 2021, to September 30, 2021, was not significant. The next largest shareholder of APB is Alset EHome International, Inc. (“AEI”). AEI’s Chairman and CEO, Heng Fai Chan, and a member of the AEI’s Board of Directors, Wu Wai Leung William, each serve on both the AEI Board and the Board of the Company. The CEO of the Company, Mr. Frank D. Heuszel, also has an approximate 2% equity position of APB.

In November 2021, SHRG and Hapi Café, Inc, a company affiliated with Heng Fai Ambrose Chan, a Director of the Company, entered into a Master Franchise Agreement pursuant to which Sharing Services acquired the exclusive franchise rights in North America to the brand “Hapi Café.” Under the terms, Sharing Services, directly or through its subsidiaries, has the right to operate no less than five (5) corporate-owned stores and can offer to the public sub-franchise rights to own and operate other stores, subject to the terms and conditions contained in the Master Franchise Agreement.

In October 2017, SHRG issued a Convertible Promissory Note in the principal amount of $50,000 (the “Note”) to HWH International, Inc (“HWH” or the “Holder”). HWH is affiliated with Heng Fai Ambrose Chan, who became a Director of the Company in April 2020. The Note is convertible into 333,333 shares of the Company’s Common Stock. Concurrent with issuance of the Note, the Company issued to HWH a detachable stock warrant to purchase up to an additional 333,333 shares of the Company’s Common Stock, at an exercise price of $0.15 per share. Under the terms of the Note and the detachable stock warrant, the Holder is entitled to certain financing rights. If the Company enters into more favorable transactions with a third-party investor, it must notify the Holder and may have to amend and restate the Note and the detachable stock warrant to be identical. As of the date of this Quarterly Report, the Company and HWH are jointly reviewing the Note and the detachable stock warrant. The number of shares that HWH may acquire upon conversion of the HWH Note and exercise of the detachable stock warrant may be greater than the amounts described in this paragraph, depending on the results of such review.

In the nine months ended December 31, 2021, a wholly owned subsidiary of the SHRG purchased skin care products manufactured by K Beauty Research Lab. Co., Ltd (“K Beauty”), a South Korean-based supplier of skin care products that is affiliated with Heng Fai Ambrose Chan, a Director of the Company, in the aggregate amount of $2.3 million. The Company’s affiliates operating in Asia intend to distribute skin care and other products in South Korea and other countries, including skin care products procured from K Beauty, as part of the Company’s previously announced strategic growth plans.

SHRG subleases warehouse and office space from Alchemist Holdings, LLC, a shareholder of the Company. During the nine months ended December 31, 2021, rent expense associated with such sublease agreement was $75,486. As disclosed in our ~~Proxy Statement~~Transition Report for the transition period ended March 31, 2021, in June 2020, the Company entered into a Settlement Accommodation Agreement and ~~incorporated~~an Amended and Restated Founder Consulting Agreement with a former officer of the Company who is a principal of Alchemist Holdings, LLC. The Company recognized a settlement liability of $2.0 million in connection therewith. As of December 31, 2021, the settlement liability balance is $715,596.

The Board conducts an appropriate review of and oversees all related party transactions on a continuing basis and reviews potential conflict of interest situations where appropriate. The Board has adopted formal standards to apply when it reviews, approves or ratifies any related party transaction. In addition, the Board applies the following standards to such reviews: (i) all related party transactions must be fair and reasonable and on terms comparable to those reasonably expected to be agreed to with independent third parties for the same goods and/or services at the time they are authorized by ~~reference herein.~~the Board and (ii) all related party transactions should be authorized, approved or ratified by the affirmative vote of a majority of the directors who have no interest, either directly or indirectly, in any such related party transaction.

Audit fees consist of fees for professional services rendered for the audit of the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K, the review of financial statements included in the Company’s Quarterly Reports on Form 10-Q, and for services that are normally provided by the auditor in connection with statutory and regulatory filings or engagements. The aggregate fees billed for professional services rendered by our independent public accounting firm, Turner Stone & Company, LLP, Dallas, Texas, PCAOB Auditor ID 76, for audit and review services for the fiscal year ended December 31, 2021 were approximately $75,000. The anticipated fees associated with the audit of the year ended December 31, 2021, is expected to range between $355,000 and $375,000. The aggregate fees billed for professional services rendered by our prior principal accountant, Freed Maxick CPAs, P.C., for audit and review services for the fiscal years ended December 31, 2021 and 2020 were approximately $415,000 and $370,000, respectively.

The aggregate fees billed for audit related services by our prior principal accountant, Freed Maxick CPAs, P.C., pertaining to comfort letter related to our registered offering during the years, consents for related registration statements and the audit of the Company’s employee benefit plan and review of the stand-alone financial statements for one of the Company’s subsidiaries, for the years ended December 31, 2021 and 2020 were approximately $127,000 and $98,000, respectively.

The aggregate fees billed for professional services rendered by our principal accountant, Freed Maxick CPAs, P.C., for tax compliance, tax advice and tax planning during the years ended December 31, 2021 and 2020 were approximately $52,700 and $30,000 respectively. In 2021, DSS engaged Greendyke Jencik & Associates CPAs, PLLC to render quarterly and year end tax provisions. The aggregate fees for 2021 were $6,900.

There were no fees billed for professional services rendered by our principal accountant, Freed Maxick CPAs, P.C., for other related services during the years ended December 31, 2021 and 2020.

Administration of the Engagement; Pre-Approval of Audit and Permissible Non-Audit Services

The Company’s Audit Committee Charter requires that the Audit Committee establish policies and procedures for pre-approval of all audit or permissible non-audit services provided by the Company’s independent auditors. Our Audit Committee, approved, in advance, all work performed for year ended December 31, 2020 and nine-months ended September 30, 2021, by our principal accountant, Freed Maxick CPAs, P.C. On December 2, 2021, Freed Maxick CPAs P.C. resigned as our independent registered public accounting firm, and on December 3, 2021, our Audit Committee approved Turner, Stone & Company, L.L.P. as our independent registered public accounting firm for the year ended December 31, 2021. These services may include audit services, audit-related services, tax services and other services. The Audit Committee may establish, either on an ongoing or case-by-case basis, pre-approval policies and procedures providing for delegated authority to approve the engagement of the independent registered public accounting firm, provided that the policies and procedures are detailed as to the particular services to be provided, the Audit Committee is informed about each service, and the policies and procedures do not result in the delegation of the Audit Committee’s authority to management. In accordance with these procedures, the Audit Committee pre-approved all services performed by Freed Maxick CPAs, P.C., and Turner, Stone & Company, L.L.P.

~~The information required by this Item will be contained in our Proxy Statement and incorporated by reference herein.~~

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, par value $0.02 per share		DSS		NYSE American LLC

Large Accelerated Filer ☐	Accelerated Filer ☐
Non-Accelerated Filer ☒	Smaller Reporting Company ☒
	Emerging growth company ☐

			PART I
~~ITEM 1~~	~~BUSINESS~~	3
ITEM 1	BUSINESS	3
ITEM 1A	RISK FACTORS	817
ITEM 21B	~~PROPERTIES~~UNRESOLVED STAFF COMMENTS	1724
ITEM 2	PROPERTIES	24
ITEM 3	LEGAL PROCEEDINGS	1824
ITEM 4	MINE SAFETY DISCLOSURES	1924

			PART II	20

ITEM 5	MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	2024
ITEM 6	SELECTED FINANCIAL DATA	2125
ITEM 7	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2226
ITEM 7A	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2835
ITEM 8	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	2936
ITEM 9	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	5673
ITEM 9A	CONTROLS AND PROCEDURES	5673
ITEM 9B	OTHER INFORMATION	5774

			PART III	58

ITEM 10	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	5875
ITEM 11	EXECUTIVE COMPENSATION	5882
ITEM 12	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	5885
ITEM 13	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	5889
ITEM 14	PRINCIPAL ACCOUNTANT FEES AND SERVICES	5891

			PART IV	58

ITEM 15	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	5892
ITEM 16	FORM 10-K SUMMARY	93
	SIGNATURES	6294

QUARTER ENDED	HIGH		LOW
March 31, 2017	$	1.51	$	0.66
June 30, 2017	$	1.21	$	0.78
September 30, 2017	$	0.84	$	0.62
December 31, 2017	$	2.58	$	0.61

QUARTER ENDED	HIGH		LOW
March 31, 2016	$	1.00	$	0.68
June 30, 2016	$	0.96	$	0.65
September 30, 2016	$	0.78	$	0.43
December 31, 2016	$	0.90	$	0.43

	1.	Product Packaging,
	2.	Biotechnology,
	3.	Direct Marketing,
	4.	Commercial Lending,
	5.	Securities and Investment Management,
	6.	Alternative Trading,
	7.	Digital Transformation,
	8.	Secure Living, and
	9.	Alternative Energy

	●	LineBacker: Multi-faceted therapeutic platform for metabolic, neurologic, cancer, and infectious diseases.

	●	Equivir: A polyphenol compound that is believed to be successful in antiviral infection treatments. Equivir/Nemovir technology is a novel blend of FDA Generally Recognized as Safe (“GRAS”) eligible polyphenols (e.g., Myricetin, Hesperetin, Piperine) which have demonstrated antiviral effects with additional potential application as health supplements or medication. Polyphenols are sourced from fruits, vegetables, and other natural substances. Myricetin is a member of the flavonoid class of polyphenolic compounds with antioxidant properties. Hesperitin is a flavanone and Piperine is an alkaloid, commonly found in black pepper.

	●	Procombin: Applications as food additive, and natural preservative for beauty and person care products as well as natural food preservative.

	●	VanXin: Food preservative booster made up of polyphenols that extend the shelf life.

	●	Bioplastics: Advanced bio-compatible plastics that mitigate accumulation of plastics in oceans and landfills and provide UVA and UVB protection for many types of material for including containers, hard surfaces, and fibers for clothing. The technology is presently in development and testing antimicrobial plastics for consumer products that control the spread of active pathogens such as SARS-CoV-2, Influenza, E. coli, Staph, and Rhinovirus, by exploiting key strategies found in the biological realm. These new plastics are specifically focused on solutions for common products such as cups, plates, utensils, plastic bags, and countertops. The first prototypes are currently undergoing antimicrobial resistance testing.

	●	Laetose: Laetose technology is derived from a unique combination of sugar and inositol, which demonstrates the ability to inhibit the inflammatory and metabolic response of sugar alone. A sugar alternative which is believed to lower human glycemic indexes and is believed to be a breakthrough alternative sugar aimed to combat diabetes. The use of Laetose in a daily diet, compared to sugar, could result in 30% lower sugar consumption and lower glycemic index/load.

	●	3F: A botanical compound believed to serve as an insect repellent and anti-microbial agent. 3F is a unique formulation of specialized ingredients (e.g. terpenes) from botanical sources with demonstrated effect as an insect repellent and an antimicrobial.

	●	3F Mosquito Repellent: 3F repellent contains botanical ingredients that mosquitos avoid. These ingredients are scientifically proven1 to affect the mosquito’s receptors, essentially making the insect blind to a human’s presence. This can be utilized as a stand-alone repellent or as an additive in detergents, lotions, shampoo, and other substances to provide mosquito protection.

	●	3F Antimicrobial: 3F antimicrobial contains botanical ingredients known to kill viruses. These ingredients are scientifically proven to inhibit viral replication. This can be utilized as a stand-alone antimicrobial or as an additive in detergents, lotions, shampoo, fabrics, and other substances.

	●	Quantum: The solution to the Patent Cliff accomplished by creating a new class of medicinal chemistry that uses advanced methods to increase effectiveness and persistence of natural compounds and existing drugs. The safety attributes of the original molecules are maintained. Typically, drug discovery processes modify functional groups. Quantum’s new techniques alter behavior of molecules at the sub-molecular level. It is estimated that 65% of the World Health Organization Essential Medicines List can be improved and re-patented using Quantum and these methods can be used to enhance and patent natural compounds including many substances used in traditional medicines around the world.

	●	CRST 1: Advanced adjuvant for next generation vaccine applications.

	●	Keto Sweet: Sugar that prevents muscular atrophy.

	●	Solarin: Oral capsule able to prevent sun damage to human skin.

	●	Therapix (license): BioHealth has a license for cannabinoid technology for neurological pain, sleep apnea disorders with RX/OTC potential.

	●	Bio Med (license): A probiotic gut health product that helps to regulate many physiological functions, ranging from energy regulation and cognitive processes to toxin neutralization and immunity against pathogens.

	●	REITManagement Fund: In March 2020, DSS Securities formed AMRE (“American Medical REIT”) and its management company AAMI (“AMRE Asset Management, Inc.) Through AAMI/AMRE, a medical real estate investment trust, fulfills community needs for quality healthcare facilities while enabling care providers to allocate their capital to growth and investment in their contemporary clinical and critical care businesses. Urban and suburban communities are in need of modern healthcare facilities that provide a range of medical outpatient services. The funds ultimate product is an investor opportunity in a managed medical real estate investment trust.

	●	Real Estate Title Services: Alset Title Company, Inc. provides buyers, sellers, and brokers alike confidence during big real estate transactions, not just in a transaction, but in the property itself. Through bundled services, Alset Title Company, Inc. provides it all from title searches and insurance to escrow agent assistance.

	●	Sentinel: Sentinel primarily operates as a financial intermediary, facilitating institutional trading of municipal and corporate bonds as well as preferred stock, and accelerates the trajectory of the DSS digital securities business.

	●	WestPark: WestPark is a full-service investment banking and securities brokerage firm which serves the needs of both private and public companies worldwide, as well as individual and institutional investors.

	●	BMI: BMI is a private investment bank specializing in corporate finance advising, raising equity, and venture services, providing a global “one-stop” corporate consultancy to listed companies. From corporate finance to professional valuation, corporate communications to event management, BMI services companies in the US, Hong Kong, Singapore, Taiwan, Japan, Canada, and Australia.

	●	DSS AmericaFirst: DSS AmericaFirst is a suite of mutual funds managed by DSS Wealth Management. DSS AmericaFirst expects to expand into numerous investment platforms including additional mutual funds, exchange-traded funds, unit investment trusts, and closed-end funds. DSS AmericaFirst currently consists of four mutual funds that seek to outperform their respective benchmark indices by applying a quantitative rules-based approach to security selection.

	●	$230,000 unsecured promissory note between AMRE and LiquidValue Asset Management Pte Ltd. The note calls for interest to be paid annually on March 2 with interest fixed at 8.0% and matures on March 2, 2022. The holder is a related party owned by the Chairman of the Company’s board of directors.

	●	$111,000 under the Paycheck Protection Program for AMRE, which was established as part of CARES Act, and provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. This loan calls for interest of 1.0% and has a maturity date of March 16, 2026.

	●	$203,000 unsecured promissory note between AMRE and LiquidValue Asset Management Pte Ltd. The note calls for interest to be paid annually on October 29 with interest fixed at 8.0% and matures on October 29, 2024. The holder is a related party owned by the Chairman of the Company’s board of directors.

	●	$3,339,000 master loan and security agreement between Premier and Bank of America, N.A (“BOA Note”). The aggregate principal balance outstanding under the BOA Note shall bear interest at a variable rate on or before the loan closing. At closing, the interest rate shall be fixed for the duration of the Loan.

	●	$5,045,000 loan agreement (“Shelton Agreement”) between AMRE Shelton, LLC., (“AMRE Shelton”) a subsidiary of AMRE, with Patriot Bank, N.A. (“Patriot Bank”). The Shelton Agreement contains monthly payments of principal and an initial interest 4.25%, matures on July 1, 2031, and has a balloon payment due at term end.

	●	$3,000,000 loan agreement with BMIC (“BMIC Loan”), between LVAM and BMIC with interest to be charged at a variable rate to be calculated at the maturity date. The BMIC Loan matures on October 12, 2022 and contains an auto renewal period of three months.

	●	$39,448,000, net of deferred financing costs, loan agreement (“LifeCare Agreement”) between AMRE LifeCare Portfolio, LLC (“AMRE LifeCare”) a subsidiary of AMRE, and Pinnacle Bank (“Pinnacle”). The LifeCare Agreement has a variable interest rate that shall not fall below 4.28% and matures on November 2, 2023, but can be extended to November 2, 2024.

	●
	●	we may be subject to opposition proceedings in the U.S. or foreign countries;

	●
	●	any patents that are issued to us may not provide meaningful protection;

	●
	●	we may not be able to develop additional proprietary technologies that are patentable;

	●
	●	other companies may design around technologies we have developed; and

	●
	●	enforcement of our patents may be complex, uncertain and very expensive.

	Restricted stock to be issued upon vesting		Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance (under equity compensation Plans (excluding securities reflected in column (a & b))
Plan Category	(a)		(b)		(c)		(d)

Equity compensation plans approved by security holders
2013 Employee, Director and Consultant Equity Incentive Plan		50,000		482,667	$	10.72		562,499

Equity compensation plans not approved by security holders
Contractual warrant grants for services		-		125,000	$	1.00		-

Total		50,000		607,667	$	8.72		562,499

	Restricted stock to be issued upon vesting		Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance (under equity compensation Plans (excluding securities reflected in column (a & b))

Plan Category		(a)		(b)		(c)		(d)
Equity compensation plans approved by security holders
2013 Employee, Director and Consultant Equity Incentive Plan - options		-		11,930	$	218.39		-

2013 Employee, Director and Consultant Equity Incentive Plan - warrants		-		3,556	$	30.00		-
2020 Employee, Director and Consultant Equity Incentive Plan		-		-	$	-		483,125

Total		-		15,486	$	175.13		483,125

	Year Ended December 31, 2017		Year Ended December 31, 2016		% change			Year ended December 31, 2021		Year ended December 31, 2020		% Change
Revenue
Printed products	$	17,026,000	$	17,277,000		-1	%	$	15,539,000	$	13,040,000		19	%
Technology sales, services and licensing		1,636,000		1,901,000		-14	%
Rental income									1,203,000		-		NA
Management fee income									24,000		-		NA
Net investment income									250,000		-		NA
Direct marketing									3,259,000		2,326,000		40	%

Total revenue	$	18,662,000	$	19,178,000		-3	%
Total Revenue								$	20,275,000	$	15,366,000		32	%

	Year Ended December 31, 2017			Year Ended December 31, 2016			% change

Net loss	$	(578,000	)	$	(950,000	)		-39	%

Loss per common share:
Basic and diluted	$	(0.04	)	$	(0.07	)		-43	%

Shares used in computing loss per common share:
Basic and diluted		14,424,344			13,068,329			10	%

	Page

~~Report~~Reports of Independent Registered Public Accounting Firm (PCAOB ID: 76)	3037

Consolidated Financial Statements:	31

Consolidated Balance Sheets	3139

Consolidated Statements of Operations and Comprehensive ~~Loss~~Income (Loss)	3240

Consolidated Statements of Cash Flows	3341

Consolidated Statements of Changes in Stockholders’ Equity	3442

Notes to the Consolidated Financial Statements	3543

-		Review management’s process for developing the fair value estimates.
-		Evaluating the market indicators used by management in developing their fair value estimates.
-		Review the completeness and accuracy of underlying data used in the fair value estimates.
-		Utilized an internal valuation specialist to evaluate:
	-	The methodologies used and whether they were acceptable for the underlying assets or operations and being applied correctly,
	-	The appropriateness of the discount rate used by recalculating the weighted average cost of capital, and
	-	The qualification of third-party valuation specialists engaged by the Company based on their credentials and experience.

	2017			2016
Revenue:
Printed products	$	17,026,247		$	17,277,172
Technology sales, services and licensing		1,635,625			1,900,427

Total revenue		18,661,872			19,177,599

Costs and expenses:
Cost of revenue, exclusive of depreciation and amortization		11,008,882			11,119,780
Selling, general and administrative (including stock based compensation)		6,465,016			7,326,063
Depreciation and amortization		1,413,838			1,391,815

Total costs and expenses		18,887,736			19,837,658

Operating loss		(225,864	)		(660,059	)

Other income (expense):
Interest income		4,209			-
Interest expense		(223,321	)		(248,064	)
Amortized debt discount		(154,142	)		(31,150	)
Loss before income taxes		(599,118	)		(939,273	)

Income tax expense (benefit)		(20,962	)		10,730

Net loss	$	(578,156	)	$	(950,003	)

Other comprehensive loss:
Interest rate swap gain		22,274			18,354

Comprehensive loss:	$	(555,882	)	$	(931,649	)

Loss per common share:
Basic and diluted	$	(0.04	)	$	(0.07	)

Shares used in computing loss per common share:
Basic and diluted		14,424,344			13,068,329

	Common Stock				Additional Paid-in			Subscription			Accumulated Other Comprehensive			Accumulated						Shares		Amount		Shares			Amount			Capital			Subsidiary			Deficit			Total
	Shares		Amount		Capital			Receivable			Loss			Deficit			Total			Common Stock				Preferred Stock						Additional Paid-in			Non- controlling Interest in			Accumulated
																				Shares		Amount		Shares			Amount			Capital			Subsidiary			Deficit			Total
Balance, December 31, 2015		12,970,487	$	259,410	$	103,820,170		$	-		$	(63,697	)	$	(100,328,608	)	$	3,687,275

Balance, December 31, 2020																					5,836,000	$	116,000		43,000		$	1,000		$	174,380,000		$	3,430,000		$	(101,382,000	)	$	76,545,000

Issuance of common stock, net		300,000		6,000		193,908			-			-			-			199,908			67,340,000		1,347,000		-			-			120,434,000			-			-			121,781,000
Conversion of preferred stock																					6,570,000		131,000		(43,000	)		(1,000	)		(130,000	)		-			-			-
Stock based payments, net of tax effect		231,000		4,620		323,947			-			-			-			328,567			-		-		-			-			2,000			-			-			2,000
Shares issued upon reverse stock split as a result of rounding up of fractional shares		1,166		23		(23	)		-			-			-			-
Other comprehensive gain		-		-		-			-			18,354			-			18,354
Acquisition of American Pacific Bancorp																					-		-		-			-			-			33,097,000			-			33,098,000
Acquisition of Sharing Services Global Corporation																					-		-		-			-			-			800,000			-			800,000
Acquisition of Impact Biomedical, Inc.
Acquisition of Impact Biomedical, Inc., shares
Net loss		-		-		-			-			-			(950,003	)		(950,003	)		-		-		-			-			-			(920,000	)		(31,001,000	)		(31,921,000	)
Balance December 31, 2021																					79,746,000	$	1,594,000		-		$	-		$	294,686,000		$	36,407,000		$	(132,383,000	)	$	200,304,000

Balance, December 31, 2016		13,502,653	$	270,053	$	104,338,002		$	-		$	(45,343	)	$	(101,278,611	)	$	3,284,101
Balance, December 31, 2019																					1,206,000	$	24,000		-			-		$	115,560,000			-		$	(103,281,000	)	$	12,303,000

Issuance of common stock, net		2,946,674		58,934		2,083,844			(300,000	)		-			-			1,842,778			3,434,000		68,000		-			-			20,127,000			-			-			20,195,000
Conversion of preferred stock																					663,000		13,000		(4,000	)		-			(13,000	)		-			-			-
Stock based payments, net of tax effect		150,000		3,000		211,862			-			-			-			214,862			50,000		1,000		-			-			397,000			-						398,000
Other comprehensive gain		-		-		-			-			22,274			-			22,274
Net loss		-		-		-			-			-			(578,156	)		(578,156	)

Balance, December 31, 2017		16,599,327	$	331,987	$	106,633,708		$	(300,000	)	$	(23,069	)	$	(101,856,767	)	$	4,785,859
Acquisition of Impact Biomedical, Inc.																					483,000		10,000		47,000			1,000			38,309,000			3,910,000			-			42,231,000
Net (loss) income																					-		-		-			-			-			(480,000	)		1,899,000			1,419,000
Balance December 31, 2020																					5,836,000	$	116,000		43,000		$	1,000		$	174,380,000		$	3,430,000		$	(101,382,000	)	$	76,545,000

	●	~~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.

Notional Amount				Variable Rate				Fixed Cost				Maturity Date
$	915,107				4.512	%			5.87	%		August 30, 2021

	2021			2020
Finished Goods	$	7,705,000		$	1,544,000
Work in Process		512,000			280,000
Raw Materials		2,551,000			131,000
Inventory Gross	$	10,768,000		$	1,955,000
Less allowance for obsolescence		(388,000	)		-
Inventory Net	$	10,380,000		$	1,955,000

	2021
	Adjusted Cost		Unrealized Gain		Fair Value		Cash and Cash Equivalents		Restricted Cash		Marketable Securities		Notes Receivable		Investments
Cash	$	50,286,000	$	-	$	50,286,000	$	50,286,000	$	-	$	-	$	-	$	-
Restricted Cash		-		-		-		-		-		-		-		-
Level 1
Money Market Funds		6,309,000		-		6,309,000		6,309,000		-		-		-		-
Marketable Securities		12,993,000		1,544,000		14,537,000		-		-		14,537,000		-		-
Level 2
Warrants		3,318,000		-		3,318,000		-				-		-		3,318,000
Convertible securities		1,023,000		-		1,023,000		-		-		-		-		1,023,000

Total	$	73,929,000	$	1,544,000	$	75,473,000	$	56,595,000	$	-	$	14,537,000	$	-0	$	4,341,000

	2020
	Adjusted Cost		Unrealized Gain/(Loss)		Fair Value		Cash and Cash Equivalents		Current Marketable Securities		Investment
Cash and cash equivalents	$	1,690,000	$	-	$	1,690,000	$	1,690,000	$	-	$	-
Level 1
Money Market Funds		3,493,000		-		3,493,000		3,493,000		-		-
Marketable Securities		5,641,000		3,495,000		9,136,000		-		9,136,000		-
Level 2
Warrants		700,000		356,000		1,056,000		-		-		1,056,000
Total	$	11,524,000	$	3,851,000	$	15,375,000	$	5,183,000	$	9,136,000	$	1,056,000

	2021 (unaudited)			2020 (unaudited)
Revenue	$	20,337,000		$	10,233,000
Net (loss)/income	$	(32,217,000	)	$	1,778,000
Basic (loss)/earnings per share	$	(0.63	)	$	0.63
Diluted (loss)/earnings per share	$	(0.63	)	$	0.46

	Estimated
	Useful Life	2021		2020
Machinery and equipment	5-10 years	$	7,005,000	$	6,866,000
Building and improvements	39 years		11,234,000		1,976,000
Land			185,000		185,000
Furniture and fixtures	7 years		397,000		130,000
Software and websites	3 years		1,099,000		298,000
Construction in progress			4,208,000		33,000
Total Cost			24,128,000		9,472,000
Less accumulated depreciation			6,454,000		5,372,000
Property, plant and equipment, net		$	17,674,000	$	4,100,000

		2017		2016
	Estimated Useful Life

Machinery and equipment	5-10 years	$	6,796,617	$	5,879,958
Building and improvements	39 years		1,923,027		1,923,027
Land			185,000		185,000
Leasehold improvements	See (1)		722,984		722,984
Furniture and fixtures	7 years		71,903		68,272
Software and websites	3 years		171,007		412,113

Total cost			9,870,538		9,191,354
Less accumulated depreciation			5,064,898		4,617,513

Property, plant, and equipment, net		$	4,805,640	$	4,573,841

Year	Amount
2022		8,237,000
2023		2,686,000
2024		2,142,000
2025		2,471,000
2026		2,021,000

Year	Amount

2018	$	542,089
2019	$	277,570
2020	$	183,606
2021	$	81,731
2022	$	80,102

	Packaging		Plastics		Total

Balance as of January 1, 2016
Goodwill	$	1,768,400	$	684,949	$	2,453,349
Accumulated impairment losses		-		-		-
		1,768,400		684,949		2,453,349

Balance as of December 31, 2016
Goodwill		1,768,400		684,949		2,453,349
Accumulated impairment losses		-		-		-
		1,768,400		684,949		2,453,349

Balance as of December 31, 2017
Goodwill		1,768,648		684,949		2,453,597
Accumulated impairment losses		-		-		-
	$	1,768,648	$	684,949	$	2,453,597