UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

[X] ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31 2017, 2023

or

[ ] ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission file number 001-32146

DSS, INC.

DOCUMENT SECURITY SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

200 Canal View Boulevard275 Wiregrass Pkwy

Suite 300

Rochester, Henrietta, New York 1462314586

(Address of principal executive offices)

(585) 325-3610

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

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 newsnew 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 ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐

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 suchat which the common stock was last sold, as reported on the NYSE American LLC exchange on June 30, 2017,2023 was $9,498,688$20,278,452.

The number of shares of the registrant’s common stock outstanding as of March 1, 2018,2024, was 16,599,327.7,066,772.

DOCUMENTS INCORPORATED BY REFERENCE

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.

DOCUMENT SECURITY SYSTEMS,DSS, INC. & SUBSIDIARIES

Table of Contents

PART I

ITEM 1 - BUSINESS

Overview

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 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.

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 referred to herein as “DSS,” “we,” “us,” “our” or the “DSS Plastics Group”. In 2008, we“Company”, currently operates five distinct business lines operate around the globe with primary operations in North America and Asia. The six divisions are:

Each of these business lines are in various stages of development, growth, and income generation. Due to these variations in the business cycle, including differences in revenue and assets acquired, DPIthe company is currently reporting financial information for five of Rochester, LLC, a privately held commercial printerthese 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.

Our divisions, their business lines, subsidiaries, and operating territories:

2023 RECAP

The following is a summary of the DSS reported transactions and investments since January 2023 that reflect the active advancements and investments in these business lines:

On April 17, 2023, DSS, Inc.. announced today that Jason Grady, Chief Operating Officer of DSS, will be presenting at the Emerging Growth Virtual Conference on Wednesday, April 19 from 1:45-2:15 PM.

On April 19, 2023, DSS, Inc. announced that the Company plans to distribute to its stockholders common stock of Sharing Services Global Corporation (“Sharing Services” or “SHRG”) that is beneficially held by DSS, directly and through its subsidiary, Decentralized Sharing Systems, Inc. (“DSSI”). Sharing Services is a diversified direct marketing company that is currently listed on the OTC (OTC: SHRG) and is in the process of up-listing to Nasdaq.

On May 1, 2023, DSS, Inc. announced today the distribution date for the common stock of Sharing Services Global Corporation (“Sharing Services” or “SHRG”) that is beneficially held by DSS, directly and through its subsidiary, Decentralized Sharing Systems, Inc. (“DSSI”). As previously announced, DSS Inc., together with its subsidiary DSSI, distributed (the “Distribution”) approximately 280 million shares of Sharing Services’ common stock beneficially held by DSS and DSSI in a distribution to holders of DSS common stock, par value $0.02 per share (“DSS Common Stock”) as of April 28, 2023. Each share of DSS Common Stock outstanding as of 5:00 p.m., New York referredCity time, held on April 28, 2023, will entitle the holder thereof to hereinreceive two (2) SHRG common stock shares to be distributed on May 4, 2023.

On May 16, 2023, DSS, Inc reported earnings results for the First Quarter Ended March 31, 2023. Premier Packaging division had a stellar quarter in booking a 72% increase in revenues in the first quarter compared to the First Quarter of 2022 as “Secuprint”a result of our capital investments completed over the past year.”

On June 26, 2023, DSS, Inc Announces Record and Distribution Date for Impact BioMedical Spin-Off Special Dividend. DSS, Inc. has filed for the distribution of a special stock dividend to DSS Inc. shareholders of record on June 30th for distribution on July 14, 2023. DSS shareholders of record as of 4:00 p.m. ET on June 30, 2023 (the “record date”) will receive four (4) shares of Impact Biomedical, Inc. for every one (1) share of DSS.

On June 30, 2023, DSS, Inc announced updated shareholder of record date for Spin-Off of Impact BioMedical, Inc. DSS, Inc. filed for the distribution of a special stock dividend of Impact Biomedical Inc. to DSS Inc. shareholders of record on July 10, 2023, pending SEC clearance. DSS shareholders of record as of 5:00 p.m. ET on July 10, 2023 (the “record date”) were entitled to four (4) shares of Impact Biomedical Inc. for every one (1) share of DSS on the distribution date.

On July 31, 2023, DSS, Inc. announced today the distribution date for the previously announced stock dividend of Impact BioMedical Inc. DSS Inc. shareholders of record on July 10, 2023 will be entitled to four (4) shares of Impact Biomedical Inc. for every one (1) share of DSS to be distributed on August 8, 2023.

On October 23, 2023, DSS, Inc. announced that a registration statement on Form S-1 was filed with the U.S. Securities and Exchange Commission (“SEC”) relating to the proposed initial public offering of DSS’s wholly-owned subsidiary, Impact Biomedical.

On October 26, 2023, DSS, Inc. announced that the Company received a letter (the “Letter”) from the staff of NYSE American LLC (the “Exchange”) stating that the Company’s securities have been selling for a low price per share for a substantial period of time and, pursuant to Section 1003(f)(v) of the NYSE American Company Guide. The Company’s continued listing is predicated on it effecting a reverse stock split of its common stock or “DSS Printing Group”otherwise demonstrating sustained price improvement within a reasonable period of time, which the Exchange has determined to be no later than April 20, 2024.

On November 8, 2023, Impact BioMedical Inc. (“Impact”) filed a Current Report on Form 8-K with the Securities and Exchange Commission on November 6, 2023, disclosing that Impact effected a reverse stock split of its issued and outstanding common stock by a ratio of 1 for 55. Impact did not effectuate a reverse split of its authorized capital stock and no amendment to the articles of incorporation or bylaws was made. Impact received approval from its majority stockholder and the Company’s Board of Directors to effectuate the reverse split.

On November 14, 2023, DSS, Inc. announced that, in a unanimous decision, the Court of Appeals for the Federal Circuit (CAFC) rejected Nichia Corp.’s challenge to U.S. Patent No. 6,879,040 (the ‘040 Patent). In 2010,U.S. Chief Circuit Judge Kimberly Moore, who authored the opinion, and U.S. Circuit Judges Kara Stoll and Tiffany Cunningham sat on the panel for the Federal Circuit.

On November 28, 2023, Premier Packaging, a Wholly-Owned Subsidiary of DSS, Inc., Secures Contract Extension with Major Retailer Worth Up to $15 Million over Four Years. DSS, Inc. announced today that its wholly-owned subsidiary, Premier Packaging signed a contract extension with an existing client for the next three years totaling a minimum of $12 Million with a fourth year extension option bringing the potential total revenue to over $15 Million.

On December 22, 2023, DSS, Inc. announced that it will proceed with a 1-for-20 reverse stock split (the “Reverse Split”) of its issued and outstanding shares of common stock, par value $0.02, following authorization by its Board of Directors and majority shareholders to effect a reverse split by a ratio of not less than 1-for-20 and not more than 1-for-40 (the “Reverse Split Range”), at any time on or before April 20, 2024, with the Board having the discretion as to whether or not the Reverse Split is to be effected, and with the exact ratio to be set at a whole number within the Reverse Split Range as determined by the Chief Executive Officer in his discretion. The reverse split was effective January 8, 2024.

STRATEGIC BUSINESS PLAN AND 2023 PROGRESSION

Here we acquiredhighlight three specific developments:

We are preparing for an Initial Public Offering (“IPO”) of our majority owned subsidiary, Impact Biomedical, Inc. (“IBIO”), after distributing four shares of IBIO for every share of DSS held as of the record date of July 10, 2023.

Once the IPO has been completed, these stock dividend shares will not be eligible for resale until 180 days from the effective date of the IPO, a restriction that can be lifted at the discretion of IBIO. The structure of this spinoff is designed for DSS to maintain the consolidation of IBIO’s financials, ensuring our shareholders receive the benefits of IBIO’s success on a go forward basis. Our license agreement with ProPhase Labs (Nasdaq: PRPH) is resulting in promising clinical advancement in the development of our Linebacker and Equivir assets. Impact Biomedical is actively considering various ways to maximize the value of its investments and assets. The company is excited about the opportunities that the IPO will create and is looking forward to introducing its shareholders to subsequent spinoffs or similar liquidity events.

Turning to our product packaging division, Premier Packaging Corporation, a privately held packaging company located in Victor, New York.Inc., net income increased 126% year over year. Premier Packaging Corporation is also referredexperiencing a positive trend in its financial performance, thanks to herein as “Premier Packaging” orstrategic investments and operational improvements.

Our commitment to reinforcing our leadership dynamics is evident in the “DSS Packaging Group.”recent enhancement of the management team at DSS Wealth Management, Inc. This deliberate move is aimed at fostering a legacy of investment excellence and scaling our assets under management. We are planning to launch a Total Return Bond Fund, to capitalize on the prevailing higher interest rates.

Three-Stage Development for Exponential Growth

For every completed acquisition, and taking into consideration market conditions and other constraints, we adhere to a well-structured three-stage development process with the goal of maximizing value creation and propelling our growth by expanding our capabilities, strength, and scale.

Stage 1: Asset Acquisition and Organizational Development In May 2011, we acquired ExtraDev, Inc. a privately held information technologythis initial phase, our focus lies in identifying 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 hereinacquiring assets, vehicles, asset structures, and assembling the necessary talent and organizations. This strategic step serves as the “DSS Digital Group”.strong foundation upon which we build future growth.

Stage 2: Revenue Generation and Operational Excellence Our second stage revolves around driving revenue through diverse channels, including revenue streams, licensing, and other scalable sources. Our primary objective during this phase is the creation of efficient and well-operating businesses that excel in operational performance. The success achieved in this stage in 2022, evidenced by substantial revenue growth, is a testament to our efforts.

On July 1, 2013, we mergedStage 3: Profitability and Positive EBITDA The third and final stage focuses on achieving positive EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and profitability. This is realized through the optimization of business operations, capitalizing on scale and efficiency to generate sustained profits.

Growth Strategies

IPOs as a Growth Strategy: Our company has plans to pursue Initial Public Offerings (IPOs) as a means to share its success with DSS Technology Management, Inc. (formerly known as Lexington Technology Group, Inc.),shareholders. We aim to take our businesses public once they reach an optimal point for effective leverage and meet internal goals and expectations.

Decentralized Sharing Model: We firmly believe in our unique decentralized sharing model, combined with the three-stage development process, to create substantial shareholder value. This model involves distributing dividends from potential IPOs directly to benefit shareholders.

In summary, our strategy delineates a private intellectual property monetization company. DSS Technology Management, Inc. is also referredmethodical approach encompassing asset acquisition, revenue generation, operational efficiency, profitability, and ultimately, taking businesses public through IPOs to herein as “DSS Technology Management” or “DSSTM”. DSS Technology Management is focusedreward our shareholders. We place a strong emphasis on extractingour decentralized sharing model, ensuring that the economic benefits of intellectual property assets through acquiring or internally developing patents or other intellectual property assets (or interests therein)our success are shared directly with our valued shareholders.

Premier Packaging Secures Contract Extension with Major Retailer

Our Premier Packaging Corporation, Inc. (“Premier”) subsidiary provides a clear example of the second stage of our development process as it began operations at its new 105,000 sq. ft. facility in Western New York in the first half of 2022. The increased production capacity at the new facility, which has enabled us to meet growing customer demand, was a key driver behind our nearly 3% year-over-year revenue growth for this segment in the most recently reported quarter as well as net income increase of 126% year over year.

Since 2019, we have accelerated the transformation of Premier’s operations, investing in state-of-the-art manufacturing equipment, people, and then monetizing such assets throughprocesses 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. Utilizing these investments, we design and manufacture folding cartons that attract the consumer’s attention when and where it matters most at the point of sale.

In 2023, Premier Packaging signed a variety of value enhancing initiatives.contract extension with an existing client for the next three years with expected revenue to approximate $12 Million with a fourth-year extension.

We doare very pleased to see that our capital investment to increase production capacity and economies of scale at Premier Packaging continues to result in satisfied clients and increasing revenues. Since inaugurating Premier’s state-of-the-art 105,000 sq. ft. facility in 2022, our packaging division has expanded its customer base and built a competitive advantage in the packaging industry. We will continue to add capabilities in key areas that increase operational efficiencies to strengthen Premier’s foundation and offerings while continuing to provide world-class service to our customers.

Premier specializes in creating innovative fiber-based, folding cartons and packaging solutions which provide a sustainable alternative to traditional plastic packaging.

Impact BioMedical Share Distribution and IPO

In the field of Biotechnology and Biomedical, Impact Biomedical Inc. is dedicated to the discovery, validation, and patenting of innovative scientific advancements and technologies that lead to new developments in human healthcare and well-being. Once these breakthroughs are ready for implementation, IBIO collaborates closely with various partners through licensing agreements, co-development initiatives, joint ventures, and other strategic relationships to facilitate the introduction of these novel healthcare solutions to the market. Their mission is to advance and bring to fruition cutting-edge innovations that have the potential to significantly impact and improve the field of human health and wellness.

In 2023, Impact BioMedical, a vital component of our BioHealth group, made significant strides in various areas. These achievements included promising initial test results related to new bioplastics, the reinforcement of intellectual property safeguards, and the establishment of licensing agreements with ProPhase Biopharma, a wholly-owned subsidiary of ProPhase Labs, Inc. (Nasdaq: PRPH). ProPhase Labs, an extensively diversified diagnostic company with a track record spanning over three decades, dedicated to enhancing wellness and improving health through both over-the-counter (OTC) and prescription products. They have shown strong belief in Impact BioMedical’s Linebacker compounds, recognizing their potential value in the multi-billion-dollar range as co-therapies for cancer. Furthermore, ProPhase Labs anticipates the launch of Equivir as an OTC supplement in late 2023. Additionally, ProPhase BioPharma is preparing to submit an Investigational New Drug (“IND”) application to the US FDA for Equivir G as a prescription antiviral.

Impact BioMedical effectively utilizes its scientific expertise and intellectual property rights to provide innovative solutions to long-standing challenges within the biomedical field. The company’s primary focus lies in dedicated research and discovery efforts aimed at developing promising products for the prevention, inhibition, and treatment of neurological, oncological, and immuno-related diseases. For further details about Impact BioMedical, you can visit their website at http://impactbiomedinc.com/.

With a strengthened foundation now in place, we expect Impact BioMedical to provide us with the first opportunity to clearly demonstrate a core tenant of our vision – sharing our success with our shareholders. In August of 2023, DSS, Inc. distributed a stock dividend of four (4) shares of Impact BioMedical Inc. to all DSS Inc. shareholders of record on July 10, 2023. Each share of Impact BioMedical distributed as part of the distribution will not be eligible for resale until 180 days from the date Impact BioMedical’s initial public offering becomes effective under the Securities Act, subject to the discretion of the Company to lift the restriction sooner.

Importantly, Impact BioMedical is just one of multiple assets we believe can have liquidity events in 2024 as we continue to diligently move our growing portfolio of businesses through our unique and strategic value creation process.

Key Upcoming Milestone for AmericaFirst Quantitative Funds

AmericaFirst Quantitative Funds, part of our Securities and Investment Management segment, showed improved performance versus benchmarks for three of the four mutual funds under management since the new investment advisory team took over in May 2023. In addition to focusing on improved relative performance, the team expects to enhance marketing and sales efforts to grow assets under management, continue to improve operational efficiencies, and plans to launch a Total Return Bond Fund in the first half of the year.

Reporting Operating Segments:

As we have reported above, we financially report business in fouroperating results on 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 2023 are as follows:

DSSPremier Packaging: (“Premier”) Premier Packaging Corporation provides custom packaging services and Printing Group - Produces custom paperboard packaging servingserves 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 secureactive and commercialintelligent packaging and document security printing services for end-user customers along with technical support for our technology licensees. Thecustomers. 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.

DSS Plastics Group - Manufactures laminatedFor over 25 years, Premier has been a market leader in providing solutions for paperboard packaging from consumer retail packaging 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)heavy mailing envelopes, to sophisticated custom folding cartons and watermarks for printedcomplex 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 documents such as ID cards, event badges, and driver’s licenses.packaging.

DSS Digital Group - Provides data center centric solutionsSince 2019, we have accelerated the transformation of Premier’s operations, investing in state-of-the-art manufacturing equipment, people, and processes to businessesincrease its capacity, improve quality and governments delivered viadelivery, and to ensure it has the “cloud”. This division developed an iPhone based application that integrates some of our traditional optical deterrent technologies into proprietary digital data security based solutions for brand protectionresources to support its growing customer base and product diversion prevention.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 ManagementCommercial Lending: - Acquires or internally develops patented technology or intellectual property assets (or interests therein), with(“Commercial Lending”) through its operating company, American Pacific Bancorp, Inc. (“APB”) represents our banking and financing business line. Looking ahead, to better meet the purposeneeds of monetizing these assets throughthe current financial market, the company is looking to transition away from certain industries like direct marketing and focus more on growing its inventory / equipment loan portfolio as well as engaging in more specialized areas of lending like broker/dealer loans. We will continue to monitor our managed loan portfolio of more than $6 million, which earns 1.25% annually in service charges, and explore future opportunities. Importantly, the equity portfolio as a varietybank holding company is anticipated to remain relatively stable, regardless of value-enhancing initiatives, including, but not limited to, investments instock market fluctuations.

Biotechnology: (“Biotech”) Impact BioMedical, Inc. targets unmet, urgent medical needs and expands the borders of medical and pharmaceutical science. Impact drives mission-oriented research, development, and commercialization of patented technologies, licensing,solutions for medical advances in human wellness and healthcare. By leveraging technology and new science with strategic partnerships, Impact BioMedical provides advances in drug discovery for the prevention, inhibition, and commercial litigation.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.

Our Technology Management BusinessImpact BioMedical has several important and valuable products, technology or compounds that are in continuing development and/or licensing stages:

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

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 lawsuits1) Impact develops valuable and unique patented technologies which have been filed by DSS Technology Managementwill be licensed to pharmaceutical, large consumer package goods companies 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 $4,500,000venture capitalists in exchange for promissory notes, fixed return interestsusage licensing and contingent interests collateralized byroyalties.

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 agreementImpact’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 fordevelop and/or acquire assets in the agreement,securities trading or management arena, and thereforeto pursue, among other product and service lines, real estate investment funds, broker dealers, and mutual funds management. This business sector has already established the following business lines/investments and associated products and services:

Direct Marketing Segment: Prior to June 2023, the Direct Marketing business segment, operated through its holding company, Decentralized Sharing Systems, Inc., along with its subsidiaries and partners, including Sharing Services Global Corporation, offered a diverse range of products and services through an extensive independent contractor network until its transition to SHRG in late 2023 to effect DSS’s refocus on core business lines.

For instance, one of Decentralized’s wholly-owned subsidiaries, HWH World, Inc., was dedicated to promoting products and services that aligned with its core values of health, wealth, and happiness. Within the HWH Marketplace and its associated brands, the primary goal was to assist customers in default for non-payment underachieving their healthiest and happiest selves. In terms of health-related offerings, the agreement. On December 2, 2016,company provided herbal alternatives, nutraceuticals, consumables, topicals, dietary supplements, beauty and skincare products, personal care items, gut health products, aloe vera-based supplements, and various wellness products. In the parties amendedwealth sector, the February 2014 agreement forcompany developed educational tools to help users manage their finances effectively and offered savings programs to assist consumers in reaching their financial goals. In pursuit of happiness, the purposescompany collaborated with partners to acquire or establish products and services that enabled consumers to enjoy a healthy lifestyle, including access to a global travel membership network.

Sharing Services Global Corporation (“SHRG”), founded in Nevada on April 24, 2015, is focused on enhancing shareholder value by developing or acquiring businesses and technologies that expand its product and services portfolio, enhance its business capabilities, and broaden its geographic presence. Sharing Services’ integrated platform harnesses the expertise of vacating DSS Technology Management’s ongoing default 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 systems and methods of using low power peripheral devices (collectively, the “BlueTooth Patents”) until the investors have received payments totaling $4,500,000 plus additional capitalized expenses of $150,000, (ii) provide the investors with additional security interestsvarious companies engaged 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 availabledirect-to-consumer product marketing through independent contractors. Their shared services platform caters to the Investors under the February 2014 agreement, as amended, is the establishment of a special purpose entity controlleddirect selling “gig economy” sector 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 ofInter 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 Products, Technology and Services

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 to security printers, corporations, consumer product companies, and governments for protection of vital records and documents, certifications, travel documents, consumer products, pharmaceutical packaging and school transcripts.

Optical deterrent featuresproviding essential services such as ours are utilized mainly by large security printers for the protection of important printed documents, such as vital records,equity and identification documents. Many of these features, such as micro-printing, were developed pre-1980 as they were designedinventory financing, advisory services, mobile application tools, merchant processing services, commercial insurance, and event planning 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 camerassmaller direct sales companies. Sharing Services, through its subsidiaries, currently markets 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 effectivedistributes health and wellness products, including subscription-based travel services, in the prevention of counterfeiting.

Unlike some of our competitors, our technologies are developed to defeat today’s modern imaging systems. Almost all of our products and processes are built to thwart scanners and digital copiers and 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.

Intellectual Property

Patents

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 our technologies and products. We dedicate two staff members 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.

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-DemandMexico, utilizing a direct selling business model. Their growth strategy involves both organic expansion and ADX, AuthentiGuard® Prism™, AuthentiGuard® Phantom™, AuthentiGuard® Survivor 21™, AuthentiGuard® VeriGlow™strategic acquisitions that complement their product range, enhance their business capabilities, and align with their overall growth objectives.

Beginning in July 2023, Direct now specializes in licensing its products and severalservices through its subsidiary HWH World, Inc. (“HWH World”) using the popular gig economic marketing strategy as a form of direct marketing. Direct’s products include, among other anti-counterfeitingthings, nutritional and authentication technologiespersonal care products sold throughout North America, Asia Pacific, Middle East, and Eastern Europe.

Intellectual Property

Patents

Impact Biomedical Inc. has nine (9) patents issued, one(1) allowed, and over forty (40) patents pending worldwide with expiration of US patents between 2029 and 2040. Pending patents could extend this exclusivity period in development. Ourall regions.

The issued and allowed patents have remaining durations ranging from 1 to 17 years.include composition and method of application for Linebacker, Equivir, 3F (Functional Fragrance), and Laetose.

Trademarks

We have registeredseveral trademarks related to our “AuthentiGuard®” mark, as well as our “Survivor 21®” electronic check icon 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.

WebsitesWebsites:

The primary corporate website we maintain is www.dsssecure.com, which describes our company, our company history, our patented document security solutions, our major product offerings, and our targeted vertical markets. The website provides detailed product offerings of each of our divisions – Printing/ Packaging, Plastics and Digital. In addition, we maintain the website www.protectedpaper.com, an e-commerce site that markets and sells our patented security paper, hand-held security verifiers and custom security documents to end users worldwide. www.dssworld.com. Our other sites are:

American Medical REIT, Inc: http://www.americanmedreit.com

DSS AmericaFirst: https://www.afcm-quant.com

American Pacific Bancorp (“APB”): https://www.ampacbancorp.com

DSS PureAir, Inc.: https://dsspureair.com/

Premier Packaging: https://www.premiercustompkg.com

Impact Biomedical: https://www.impactbiomedinc.com

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.

Markets and Competition

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.

OurProduct Packaging: Within our packaging division, competes with a significant number ofwe face competition from numerous national regional and localregional companies, many of which operate independently and are independent and privately-held.privately held. The largest competitorsmajor players in this market are primarily focused on the long-run print order market. Theyconcentrated in long-term consumer packaged goods and health and beauty sectors. These include largeprominent integrated paper companies such as Rock-Tennlike West Rock Company Caraustar Industries, Inc.,and Graphic Packaging Holding CompanyCompany.

Commercial Lending: American Pacific Bancorp, our commercial lending company, offers a comprehensive range of financial services tailored to businesses. Our services encompass commercial business lines of credit, land development financing, inventory financing, third-party loan servicing, and Mead Westvaco. Our printing divisionsolutions designed to meet the diverse financial requirements of various business sectors. In this competitive landscape, APB competes primarily with locally-based printing companiesa wide array of traditional commercial banks and investment banking firms.

Biotechnology: Impact Biomedical Inc. is dedicated to the discovery, confirmation, and patenting of unique scientific advancements and technologies, which lead to innovative solutions in the Rochesterrealm of human healthcare and Western New York markets. Mostwellness. IBIO collaborates closely with licensing partners, engages in co-development initiatives, forms joint ventures, and nurtures other valuable relationships to effectively introduce these groundbreaking solutions to the market.

Securities and Investment Management: Was established to develop and/or acquire assets in the securities trading or management arena. These efforts and established business lines compete with individual money managers, companies or organizations that engage in the business of trading securities and derivatives for the benefit of their customers. Traditional RIA’s, Brokers Dealers, REIT’s and other personal investment companies would also be considered competition.

Customers

Product Packaging: During 2023, one customer accounted for approximately 20% of our competitorsconsolidated revenue and second customer accounted for approximately 11% of our consolidated revenue. Customer diversification improvements have produced several new customers to our overall customer base and will continue to do so in these markets are privately-held, single location operations.2024.

Our plastics division competes with several companies including Bristol ID, AbNote (formerly Arthur Blanks), LaserCard Corporation and L-1 Identity Solutions. The plastics division primarily delivers its products throughCommercial Lending: Since 2021, American Pacific Bancorp, Inc. has issued nearly $26 million in new loans since September 2021 to customers across a dealer network, but also provides products to end-user customers. Competition in the plastic card industry is primarily based on production capabilities based on specialized equipment, geographic location, quality and service. In addition, competition is increasingly influenced by proprietary or niche offerings provided by competitors, such as RFID, biometric, read-write, and security features built-into the plastic card.diverse portfolio of businesses.

Securities and Investment Management: Our technologySecurities and Investment Management division also faces competition in the areahas a mixture of patent acquisitionsretail and enforcement. Entities such as Acacia, RPX, AST, Intellectual Ventures, Wi-LAN, MOSAID, Round Rock Research LLC, IPvalue Management Inc., Vringo Inc. and Pendrell Corporation compete in acquiring rights to patents.

institutional investors.

CustomersRaw Materials

During 2017, two customers accounted for 46% of the Company’s consolidated revenue. As of December 31, 2017 these two customers accounted for 38% of the Company’s trade accounts receivable balance. During 2016, these same two customers accounted for 38% of the Company’s consolidated revenue. As of December 31, 2016, these two customers accounted for 31% of the Company’s trade accounts receivable balance.

Raw Materials

Product Packaging: The primary raw materials the Company uses in its businessesbusiness 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. PaperThe good news is that while there are materials that remain challenging, raw materials have begun to improve in terms of cost and availability. The good news is that while there are materials that remain challenging, raw materials have begun to improve in terms of cost and availability in late 2023. Procurement sustainability as a crucial element and it involves not only ensuring that suppliers meet sustainability standards, but also a commitment to ongoing internal improvement in sustainability practices. Premier is proactively engaged in setting high standards and ensuring that these standards are followed by its supply chain partners, contributing to the improvement and compliance of the broader industry. During 2023, one vendor accounted for approximately 25% and second vendor accounted for approximately 13% of our paper and paperboard prices continued to increase in 2017, 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.purchases.

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 the availability of an extensive range of vitamins, minerals, botanicals, plant, and herb extracts, as well as nutritional supplements.

Environmental Compliance

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.

Government Regulation

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.Government Regulation

Our patent monetizationbiotechnology 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 ofseveral 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.

Corporate History

The Company, was incorporated in the state of New York in May 1984 and changed itshas 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 acquiredsole purpose of effecting a plastics card manufacturer,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 updated its CUSIP number to 26253C-102. In   January 2024, in conjunction with a printing company, a packaging company, an IT services company, and an intellectual property monetization company.reverse split, DSS now operates under the CUSIP 26253C 201. See the “Overview” section above for further details about our acquisitions.

Employees

Human Capital Resources

As of March 1, 2018, weDecember 31, 2023, DSS, Inc. had a total of 98 full-time employees. It is important that we95 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.

Available information

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.

ITEM 1A – RISK FACTORS

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.

We have a history of losses.

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, 20172023, we had approximately $3.7$20.2 million of net intangible assets. Approximately $18.9 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 millionacquired in the transaction as well as 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 ourthe 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 litigationmay be unable to continuesatisfy our obligations to be time-consumingpay interest and costly,principal thereon when due or negotiate acceptable extensions or settlements.

We have outstanding indebtedness (described below), most of which may adversely affectis secured by assets of various DSS subsidiaries and guaranteed by the Company. Given our financial conditionhistory 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 unableable to achieverepay 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, or resultsand operating results.

As of operations,December 31, 2023, we had the following significant amounts of outstanding indebtedness:

Both the Winter Haven and there can be no assurancesLifeCare agreements contain various covenants which are tested annually as of December 31. For the success of any such litigation.year ended December 31, 2023, AMRE Winter Haven and LifeCare were not in compliance with the annual covenants and these loans are in default.

A significant amount of our revenue is derived by two customers.

As of December 31, 2022, two customers accounted for approximately 14% and 6% of our consolidated revenue and these two customers accounted for approximately 36% and 17% of our consolidated trade accounts receivable balance. As of December 31, 2023, two customers accounted for approximately 20% and 11% of our consolidated revenue and 39% and 30% of our trade accounts receivable balance. If we were to lose this customer or if the amount of business we do with this customer declines significantly, our business would be 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.

OverWe’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 ofbio-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 deliveredbio-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 marketmarkets in which we operate isare 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 ismarkets 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 expandBreaches in security, whether cyber or physical, and other disruptions and/or our sales force, we may be unableinability to increaseprevent or respond to such breaches, could diminish our revenues.ability to generate revenues or contain costs, compromise our assets, and negatively impact our business in other ways.

We must expandface 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 sizeoperation of our marketing activitiesbusiness and sales forceessential 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, 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 investments in Asia are subject to unique risks and uncertainties, including tariffs and trade restrictions.

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 revenuesearnings and growhave 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 meetmanage our sales growth targets. Further, we may not generate sufficient sales to offset the increased expense resulting from expanding our sales force or we may be unable to manage a larger sales force.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.

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.

The success of our pending legal proceedings and future legal proceedings depends in part upon our ability to retain experts and legal counsel on a favorable basis to represent us in such litigation. The retention of such experts and legal counsel is expensive and we may not be able to retain such experts and legal counsel on favorable economic terms. Therefore, an inability to retain experts and legal counsel to represent us in our litigation could have a material adverse effect on our business.

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 hashad concluded this year that we did not maintain a sufficient complement of qualified accounting personnel andour controls associated with segregationmay not prevent or detect misstatements. Projections of duties, andany 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 ourdegree of compliance with the policies or procedures may deteriorate. All internal control oversystems, 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 controlsstatement 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 pay cash dividends.

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, partPart 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 of 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 addressesLow 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 tradingwere no longer listed on the NYSE American, exchange underinvestors 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 AmericanOTC 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 publicThe trading market for our common stock will be influenced by the warrantsresearch 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 issuedcould lose visibility in the Fallfinancial 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 1,2024, our directors, executive officers and principal stockholders (those beneficially owning in excess of 5%), and their respective affiliates, beneficially own approximately 59% 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 expectbe available on terms acceptable to us, or at all. If we 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 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 financing arrangements may include negative covenants or other 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 unable to successfully execute our business plan.

ITEM 1B – UNRESOLVED STAFF COMMENTS

None.

ITEM 1C - CYBERSECURITY

We have a marketrange of security measures that are designed to develop.protect against the unauthorized access to and misappropriation of our information, corruption of data, intentional or unintentional disclosure of confidential information, or disruption of operations. These security measures include controls, security processes and monitoring of our manufacturing systems. We have cloud security tools and governance processes designed to assess, identify and manage material risks from cybersecurity threats. In addition, we do not intendmaintain an information security training program designed to applyaddress phishing and email security, password security, data handling security, cloud security, operational technology security processes, and cyber-incident response and reporting processes.

Our Company is committed to maintaining the highest standards of cybersecurity to protect our data, intellectual property, and customer information from cyber threats. As part of this commitment, we leverage a sophisticated cybersecurity framework that integrates the robust capabilities of the Microsoft cloud ecosystem with the specialized services of a leading third-party cybersecurity service provider.

The Microsoft cloud ecosystem, including Microsoft 365, Azure, SharePoint Online, Microsoft Defender, and Microsoft InTune, forms the backbone of our cybersecurity infrastructure. These platforms offer advanced security features such as data encryption in transit and at rest, network security controls, identity and access management, and threat protection capabilities. Microsoft’s constant investment in cybersecurity research and development ensures that we benefit from cutting-edge security technologies and practices.

In addition to utilizing the Microsoft cloud ecosystem, we have engaged a third-party service provider to enhance our cybersecurity posture further. This provider brings additional layers of security through services including:

Our approach to cybersecurity is proactive and multifaceted, combining the scalability and reliability of the Microsoft cloud services with the agility and expertise of our third-party cybersecurity partner. Together, these resources form a comprehensive defense mechanism against a wide range of cyber threats, from phishing and malware attacks to sophisticated nation-state sponsored cyber-attacks. We continuously evaluate and adapt our cybersecurity strategy to respond to evolving threats and to align with best practices and regulatory requirements. Our commitment to cybersecurity is integral to our business operations, and we believe our strategic investments in this area significantly mitigate the risk of cybersecurity incidents that could impact our company’s reputation, financial position, or operational capabilities.

Governance

The management of the Company is responsible for listingoverseeing risk for the Company and has delegated to the VP, Engineering & Technology (“VPE&T”) the responsibility for overseeing the cybersecurity risk management strategy for the Company. Management receives regular updates on our cybersecurity risk management process from the VPE&T. The VPE&T reviews our comprehensive cybersecurity framework, including reviewing our cybersecurity reporting protocol that provides for the notification, escalation and communication of those warrants on any national securities exchange or other nationally recognized trading system. Without an active market,significant cybersecurity events to the liquiditymanagement team.

The Company’s cybersecurity program is overseen by our VPE&T, who is responsible for global information technology, including cybersecurity. Our VPE&T, is primarily responsible for assessing and managing material risks from cybersecurity threats, including monitoring the measures used for prevention, detection, mitigation and remediation of those warrants will be limited.cybersecurity incidents. The information security organization is comprised of internal IBIO employees and external security suppliers who provide security monitoring and response.

ITEM 2 - PROPERTIES

OurThe corporate group and digitalthe packaging division together occupyhas occupied an approximate 105,000 square foot leased facility, located at 275 Wiregrass Parkway, Henrietta, New York since March 2022. This lease expires twelve years and 3 months later. Base rents escalate from $61,000 per month in year one to $78,000 per month in year twelve. In March 2021, the Company leased Suite 100 for approximately 5,7003,800 sq. ft. in Houston for approximately $4,400 per month, in October 2022 the Company expanded the space by acquiring neighboring Suite 130. The Company currently leases both Suite 100 and Suite 130 at approximately 3,855 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$5,000 per month. The Company’s Technologyoffice is in Houston, Texas at 1400 Broadfield Blvd., Suite 100 and Suite 130, for corporate offices and subsidiary expansion. Ate 30 Old Kings Highway South in Darien, CT we have a flexible executive office suite facility that we use for DSS Wealth 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,Office. The cost for approximately $1,200 per this service is nominal at only $85/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.

ITEM 3 - LEGAL PROCEEDINGS

On November 26, 2013, DSS Technology Management filed suit against Apple,February 15, 2021, Maiden Biosciences, Inc. (“Apple”Maiden”) commenced an action against DSS, Inc. (“DSS”), Decentralized Sharing Systems, Inc. (“Decentralized”), HWH World, Inc. (“HWH”), RBC Life International, Inc. (RBC International) (together, the “DSS Defendants”), Frank D. Heuszel (“Heuszel”), RBC Life Sciences, Inc (“RBC”), Steven E. Brown, Clinton Howard, and Andrew Howard (collectively, “Defendants”). The lawsuit is currently pending in the United States District Court for the EasternNorthern District of Texas, for patent infringement (the “Apple Litigation”). The complaint alleges infringementDallas Division, and is styled and numbered Maiden Biosciences, Inc. v. Document Security Stems, Inc., et al., Case No. 3:21-cv-00327.

This lawsuit relates to two promissory notes executed by 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 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 issueRBC in the case. The PTAB instituted the IPRs on June 25, 2015. The California District Court then stayed the case pending the outcome4^th quarter of those IPR proceedings. Oral arguments of the IPRs took place on March 15, 2016, and on June 17, 2016, PTAB ruled2019 in favor of Apple on both IPR petitions. DSS Technology Management then filed an appeal withDecentralized and HWH, totaling approximately $1,000,000. Maiden, a 2020 default judgment creditor of RBC, in the U.S. Courtprincipal amount of Appeals$4,329,000, now complains about those notes, the funding of those notes, the subsequent default of those notes by RBC, and HWH and Decentralized’s subsequent Article 9 foreclosure or deed-in-lieu debt conveyances. In the instant lawsuit, Maiden first asserted claims against Defendants for unjust enrichment, fraudulent transfer under the Federal Circuit (the “Federal Circuit”Texas Uniform Fraudulent Transfer Act (“TUFTA”) seeking reversal, and violation of the PTAB decisions. Oral arguments forRacketeer Influenced and Corrupt Organizations Act (“RICO”). Maiden also sought a judgment from the appeal were held on August 9, 2017,court declaring: “(1) Defendants lacked a valid security interest in RBC and RBC Subsidiaries’ assets and therefore lacked the appeal is still pending asauthority to sell the assets during the public foreclosure sale; (2) Defendant Heuszel’s low bid at the public foreclosure sale was invalid and void; (3) the public foreclosure sale was conducted in a commercially unreasonable manner; and (4) Defendants do not have the legal authority to transfer RBC and RBC’s Subsidiaries assets to Heuszel and HWH.” Maiden sought to recover from Defendants: (1) treble damages or, alternatively, damages in the amount of their underlying judgment plus the other creditors’ claims or the value of the date of this Report. The patent assets underlying this matter had no carrying value as of the date of the PTAB decisiontransferred, whichever is less, plus punitive or exemplary damages; (2) pre- and therefore, there were no impairment considerations as a result of the decision.

On February 16, 2015, DSS Technology Management filed suit 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,post-judgment interest; and AT&T, Inc. The complaint alleges patent infringement(3) attorneys’ fees 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 decision relating to U.S. Patent 6,784,552 with the Federal Circuit. The Intel litigation has been stayed by the District Court pending final determination of the IPR proceedings.

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.cost.

On April 13, 2017, Document Security Systems, Inc. (“DSS”)March 30, 2021, Defendants DSS, Decentralized, HWH, RBC International, and Heuszel filed a patent infringement lawsuitmotion to dismiss seeking to dismiss Maiden’s unjust enrichment, exemplary damages, and RICO claims against Seoul Semiconductor Co.DSS, Decentralized, HWH, RBC Life International, Inc., Ltd. and Seoul Semiconductor, Inc. (collectively, “Seoul Semiconductor”)Heuszel, as well as Maiden’s fraudulent transfer claims against DSS and RBC International. On August 9, 2021, the Court then entered an order granting in part the United States Districtmotion to dismiss filed on behalf of DSS, Decentralized, HWH, RBC International, and Heuszel. Among other things, the Court held that Maiden failed to plausibly plead certain causes of action, including (1) the civil RICO claim against DSS, Decentralized, HWH, RBC International, and Heuszel, (2) the TUFTA claim against DSS, and (3) the unjust enrichment claim against DSS and RBC International. Notably, the Court declined the request to dismiss the TUFTA claim against RBC International. On September 3, 2021, Maiden filed its first amended complaint, asserting a single cause of action against the DSS Defendants, Heuszel, and RBC for an alleged TUFTA violation.

Generally, Maiden sought the Eastern Districtsame relief requested in its original complaint. Maiden, however, abandoned its request for treble damages. On September 17, 2021, the DSS Defendants filed a motion to dismiss the amended complaint seeking to dismiss Maiden’s TUFTA claim to the extent it seeks to avoid a transfer of Texas, alleging infringementassets owned by any of certain of DSS’s Light-Emitting Diode (“LED”) patents. DSS is seeking a judgement for infringement of the patents along with other reliefRBC’s subsidiaries, including but not limited to money damages, costsRBC Life Sciences USA, Inc. (“RBC USA”). Further, the motion to dismiss sought the dismissal of Maiden’s TUFTA claim against Heuszel. On November 19, 2021, the Court granted the motion to dismiss in part, dismissing Maiden’s claim against Heuszel and disbursements. On June 7, 2017, DSS refiled its patent infringement complaint against Seoul Semiconductor indetermined Maiden failed to plead that it was a creditor of RBC USA or RBC’s other subsidiaries. However, the United States District Court for the Central District of California, Southern Division. The case is currently pending. permitted Maiden to replead once again.

On December 3, 2017, Seoul Semiconductor17, 2021, Maiden filed an IPR challengingits second amended complaint which asserted a single TUFTA claim against only the validityDSS Defendants, RBC, and RBC USA. During the discovery period, the Parties conducted written discovery, production of certain claimsdocuments, and depositions of U.S. Patent No. 6,949,771. On December 21, 2017, Seoul Semiconductor filed an IPR challengingfact witnesses and expert witnesses. The discovery period closed on August 9, 2022. The DSS Defendants have engaged Stout Risius Ross, LLC (“Stout”) to provide expert opinions regarding the 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 mattervalue of the infringement lawsuit which is still pending asassets at issue.

The trial in this matter began on December 12, 2022. The Company vigorously defended its position that Maiden should recover nothing on its TUFTA claim. The DSS Defendants’ experts at Stout provided expert opinions regarding the value of the dateassets at issue and the deficiencies with Maiden’s designated expert’s opinions. The jury returned a verdict in favor of this Report.

                On April 13, 2017,Maiden, and the Court entered a judgment on December 20, 2022. The DSS Defendants 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 ispost-judgment motions seeking a judgement for infringementreversal 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 infringementseveral reasons, including that: (1) the evidence does not support Maiden’s claim against the Company; (2) recovery of exemplary damages under TUFTA is unsupported; and (3) the patents alongevidence established that the DSS Defendants are entitled to judgment in their favor on their affirmative defenses. After the DSS Defendants filed their post-judgment motions, the case was settled for $8.75 million, the Court’s December 20, 2022 judgment was vacated, and the case was dismissed with 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.prejudice.

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 4 - MINE SAFETY DISCLOSURES

Not applicable.

Part II

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 sharesHolders of our Common Stock, for the periods indicated.

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

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

Issued and Outstanding

Our certificate of incorporation authorizes 200,000,000 shares of common stock, par value $0.02. As of March 1, 2018,2024, 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.

Recent Issuances of Unregistered Securities

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.

Stockholders

As of March 1, 2018, we had 238310 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.

Dividends

We did not pay dividends during 2017 or 2016. We anticipate that2022. In 2023, we will retain any earnings and otherdid not pay cash resourcesdividends. In April 2023, DSS distributed to its shareholders two (2) shares of its beneficially owned common stock of Sharing Services Global Corporation (OTC: SHRG) for investment in our business. each share of DSS common stock owned. In August of 2023, the Company issued four (4) shares of Impact BioMedical, Inc., formerly a wholly-owned subsidiary of the Company, to its shareholders of record on July 10, 2023.

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.

Securities Authorized for Issuance Under Equity Compensation Plans

As of December 31, 2023, 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:

Recent Issuances of Unregistered Securities

Information regarding any equity securities we have sold during the period covered by this Report that were not registered under the Securities Act of 1933, as amended, and was not included in a quarterly report on Form 10-Q or in a current report on Form 8-K, is set forth below. Each such transaction was exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) of the Securities Act or Rule 506 of Regulation D promulgated by the SEC, unless otherwise noted. Unless stated otherwise: (i) the securities were offered and sold only to accredited investors; (ii) there was no general solicitation or general advertising related to the offerings; (iii) each of the persons who received these unregistered securities had knowledge and experience in financial and business matters which allowed them to evaluate the merits and risk of the receipt of these securities, and that they were knowledgeable about our operations and financial condition; (iv) no underwriter participated in, nor did we pay any commissions or fees to any underwriter in connection with the transactions; and, (v) each certificate issued for these unregistered securities contained a legend stating that the securities have not been registered under the Securities Act and setting forth the restrictions on the transferability and the sale of the securities.

Shares Repurchased by the Registrant

We did not purchase or repurchase any of our securities in the fiscal year ended December 31, 2017, including the fourth quarter.2023.

ITEM 6 - SELECTED FINANCIAL DATA

Not applicable.

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

Cautionary Statement Regarding Forward-Looking StatementsFORWARD-LOOKING STATEMENTS

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-lookingCertain statements that may appear incontained herein this Annual Report, including without limitation, statements related toreport constitute “forward-looking statements” within the Company’s plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisionsmeaning of the Private Securities Litigation Reform Act and containof 1995 (the “1995 Reform Act”). Except for the historical information contained herein, this report contains forward-looking statements (identified by words “believes,” “anticipates,” “expects,” “plans,” “intends”such as “estimate”, “project”, “anticipate”, “plan”, “expect”, “intend”, “believe”, “hope”, “strategy” and similar wordsexpressions), which are based on our current expectations and phrases.speak only as of the date made. These forward-looking statements are subject to various risks, uncertainties, and uncertaintiesfactors, that could cause actual results to differ materially from the results projected in any forward-looking statement. In addition to the factors specifically notedanticipated 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.

Overview

The following discussionCompany, which was incorporated in the state of New York in May 1984, previously conducted its business under the name of Document Security Systems, Inc On September 16, 2021, our board of directors approved an agreement and analysis provides information that our management believes is relevant to an assessment and understandingplan of our resultsmerger with a wholly owned subsidiary, DSS, Inc. This subsidiary, incorporated in August 2020, was created for the sole purpose 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.

Overview

facilitating a transformational name change from Document Security Systems, Inc. to DSS, Inc. This significant shift in our identity became official on September 30, 2021. With the name change, DSS, Inc. retained its trading symbol, “DSS,” and is currently trading under its CUSIP number to 26253C 201. This change reflects not only our evolution as a company but also our commitment to adapting and growing in an ever-changing business landscape. DSS, Inc. (referred to herein as “DSS,” “we,” “us,” or “our”) now operates across five distinct business lines, each with its own unique scope and presence on a global scale. These business lines encompass a wide range of industries and sectors, including:

Product Packaging: Our involvement in this report as “Document Security Systems”, “DSS”, “we”, “us”, “our” or “Company”) was formedproduct packaging represents our dedication to delivering innovative and sustainable packaging solutions that meet the evolving needs of various markets.

Biotechnology: In the field of biotechnology, we are focused on pioneering scientific advancements and technologies that have the potential to transform human healthcare and wellness.

Direct Marketing: Our direct marketing endeavors involve strategic efforts to engage with customers and clients, providing tailored solutions and services that enhance their experiences.

Commercial Lending: We are actively engaged in commercial lending, offering a suite of financial services that cater to the unique needs of businesses, ranging from commercial lines of credit to land development financing.

Securities and Investment Management: In the world of securities and investment management, we aim to provide expertise and guidance to help our clients navigate the complexities of the financial markets and achieve their investment goals.

Each of these business lines is at a different stage of development, growth, and income generation, reflecting the diversity of our operations. This multi-faceted approach allows us to adapt to changing market conditions and explore new opportunities for expansion and success. We are committed to our continued evolution and to delivering value to our stakeholders across these diverse business lines.

The Company, initially incorporated in the state of New York in 1984. We specializeMay 1984, had historically conducted its business under the name Document Security Systems, Inc. However, on September 16, 2021, our board of directors approved an agreement and plan of merger with a wholly owned subsidiary, DSS, Inc. (incorporated in fraudAugust 2020). The primary purpose of this merger was to affect a name change from Document Security Systems, Inc. to DSS, Inc., which officially took effect on September 30, 2021. This change did not affect our trading symbol, which remained as “DSS,” and counterfeit protection for all formsis currently trading under its CUSIP number to 26253C 201.

Diverse Business Lines and Global Presence:

Under the banner 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,DSS, Inc., we have a digital division which provides cloud computing services fordiversified our customers, including disaster recovery, back-upoperations into nine distinct business lines, each with its own unique scope and data security services.geographical footprint. These business lines include:

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 referred to herein as the “DSS Plastics Group”. In 2008, we acquired DPI of Rochester, LLC, a privately held commercial printer located in Rochester, New York, referred to herein as “Secuprint” or “DSS Printing Group”. In 2010, we acquiredProduct Packaging: Led by Premier Packaging Corporation, a privately held packaging company located in Victor, New York. Premier Packaging Corporation is also referred to herein as “Premier Packaging” or the “DSS Packaging Group.” In May 2011, we acquired ExtraDev, Inc. (“Premier”), a privately held information technologyNew York corporation, this segment specializes in paperboard and cloud computing company locatedfiber-based folding carton manufacturing, consumer product packaging, and document security printing. Premier is headquartered in its newly established facility in Rochester, New York. In 2016, ExtraDev, Inc. changed its name to DSS Digital Inc., and is also referred to herein asNY, primarily serving the “DSS Digital Group”.US market.

On July 1, 2013, we mergedBiotechnology: This business line is dedicated to investing in or acquiring companies in the BioHealth and BioMedical fields, focusing on drug discovery, prevention, treatment of various diseases, and open-air defense initiatives against infectious diseases.

Direct Marketing: Operating under the umbrella of Decentralized Sharing Systems, Inc. (“Decentralized”), this division provides services to companies in the emerging growth “Gig” business model of peer-to-peer decentralized sharing marketplaces. It specializes in marketing and distributing products and services across North America, Asia Pacific, Middle East, and Eastern Europe.

Commercial Lending: American Pacific Bancorp, Inc. (“APB”) represents our banking and financing business line. During 2023, APB issued more than $14 million in new loans, and over $4 million in renewal loan to customers with DSS Technology Management, Inc. (formerly knownstrong credit quality across a diverse portfolio of businesses. Looking ahead, to better meet the needs of the current financial market, the company is looking to transition away form certain industries like direct marketing and focus more on growing its inventory / equipment loan portfolio as Lexington Technology Group, Inc.), a private intellectual property monetization company. DSS Technology Management, Inc. is also referredwell as engaging in more specialized areas of lending like broker/dealer loans. We will continue to monitor our managed loan portfolio of more than $6 million, which earns 1.25% annually in this report as “DSS Technology Management” or “DSSTM”. DSS Technology Management is focused on extractingservice charges, and explore future opportunities. Importantly, the economic benefits of intellectual property assets through acquiring or internally developing patents or other intellectual property assets (or interests therein) and then monetizing such assets through a variety of value enhancing initiatives. In July 2013, we completed the merger with Lexington Technology Group which was accounted forequity portfolio as a business combination in accordance with FASB ASC 805 Business Combinations.bank holding company is anticipated to remain relatively stable, regardless of stock market fluctuations.

We do businessSecurities and Investment Management: This division focuses on acquiring assets in four operating segments packagingthe securities trading and printing; plastics;management arena, including broker-dealers and mutual funds management. It also oversees a real estate investment trust (REIT) that acquires hospitals and care centers.

Alternative Trading: Established to acquire assets and investments in the securities trading and funds management arena, this segment, in partnership with recognized global leaders, intends to operate a blockchain-based Alternative Trading System (“ATS”) for digital asset securities, exempt from registration. The ATS aims to provide T+0 settlement and technology management, which includesfoster liquidity for middle-market companies.

Digital Transformation: This division serves as a Preferred Technology Partner and Application Development Solution for mid-cap brands, enhancing marketing, communications, and operational processes through custom software development. Digital Transformation was headquartered in Hong Kong until its discontinuation in 2023.

Secure Living: Focused on creating fully sustainable, secure, connected, and healthy living communities, this division designs advanced technology-infused, energy-efficient homes for new construction and renovations, catering to single and multi-family residential housing. Secure Living was headquartered in Houston, Texas, until it was wound down in 2023.

Alternative Energy: Alset Energy, Inc., our IP monetization business.holding company for this group, and its subsidiary Alset Solar, Inc., pursue utility-scale solar farms to serve regional power grids and provide microgrids for independent energy. The group is dedicated to environmentally responsible and sustainable energy solutions. Alset Energy was headquarters in Houston, Texas until its discontinuation in 2023.

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

Revenue

Revenue -For the year ended December 31, 2017,2023, revenue wasdecreased 36% to approximately $18.7$30.3 million a decreaseas compared to revenues of 3% fromapproximately $47.3 million for the year ended December 31, 2016.2022. Printed products sales, which include sales of packaging and printing and plastic products, decreased 1%increased 3% in 20172023 as compared to 2016, driven by a decrease in the sales of printing and packaging products of 3% and offset by an increase2022. The increases in sales were due primarily to the addition of plastic card productsseveral new customers during 2023 as well as key customers returned to pre-Covid 19 pandemic numbers. Net investment income of 3%.$385,000 as of December 31, 2023 decreased 39% from $630,000 as of December 31, 2022 due to a number of notes receivable deemed uncollectible and impaired during 2023. Rental income decreased 42% due a tenant at our AMRE LifeCare subsidiary not making rent payments. The Company’s technology sales, services and licensingDirect Marketing revenues decreased 14%72% in 2017,2023 as compared to 2016, because2022 primarily to due to the deconsolidation of decreasesSHRG financial in licensing royalties and recurring IT services, offset by anApril 2023. Commission revenue, associated with Sentinel Brokers Company subsidiary, increase 458% due to consolidating a full year of result in revenue from the Company’s AuthentiGuard product line.2023 versus 1 month in 2022.

Costs and Expenses

Costs of revenue sold, exclusive of depreciation and amortization includes all direct costcosts of the Company’s printed products, including its packaging and printing sales and plastic ID cardits 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 resultbecause of technology licenses or settlements, if any. CostsCost of revenue for our REIT line of business includes all direct cost associated with the maintenance and upkeep of the related facilities, depreciation, amortization and the costs to acquire the facilities. Our Commercial Lending operating segment has costs of revenue associated with the impairment of notes receivable for those amounts at risk of collection. Total costs of revenue decreased 1%34% in 20172023 as compared to 2016. This decrease correlates2022, primarily due to the deconsolidation of SHRG financial results beginning in April 2023, offset by 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%68% in 20172023 as compared to 2016,2022, primarily due to the impactdeconsolidation of $732,500 of compensation cost sharing amounts received by the CompanySHRG financial results beginning in conjunction with an intellectual property monetization program management arrangement the Company entered intoApril 2023.

Professional fees decreased 60% in November of 2016 for which the Company received funds2023 as compared to offset certain of its compensation expenses2022, primarily due to a decrease in legal fees associated with the monetization program. This amount more than offset increases in compensation costs of approximately $292,000direct marketing segment, accounting fees, and due diligence fees related to increases in marketing and sales personnel at the Company’s Digital division, and general annual incremental wage increases throughout the Company’s divisions.potential acquisitions.

Depreciation and amortization includes 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. Depreciation and amortization expense increases during 2017, as compared to 2016, were due to capital expenditures for Printed products, including a die-cutter machine for packaging and printing, and security software for the plastics group.

Professional fees decreased 25% in 2017 as compared to 2016, due to a reduction in legal costs of approximately $219,000 during the fourth quarter of 2017 by the Company, as result of a payment agreement with one of its legal firms. Absent this amount, professional fees would have increased by approximately 2%.

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-basedThere was no stock based compensation costs decreased 35% in 2017 as compared to 2016 due to a general decrease induring the number and value of equity compensation awards granted by the Company since 2014.year ended December 31, 2023.

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%64% during 20172023 as compared to 2016,2022, primarily due to decreasesdecreased direct marketing distributor commissions due to the deconsolidation of SHRG financial results beginning in travel costs.April 2023 as well as the sale of our HWH World Holdings subsidiary in June 2023.

Rent and utilities increased 5%decreased 19% during 2017the year ended December 31, 2023, as compared to 2016the same period in 2022 respectively, primarily due to increasesend of the lease in rental costsTennessee for AMRE office space and California for the Company.Company’s DSS Wealth Management subsidiary as well as the deconsolidation of SHRG. The Company rented additional space at our facility leased in Houston, Texas started during the 2022 as well as Premier Packaging’s leased facility beginning in March 2022.

Research and development costs consist primarily of third-party research costs and consulting costs. During the year ended December 31, 2023, Research and development costs decreased 9% as compared to the same period in 2022 primarily due to decrease in such activities at our Impact Biomedical, Inc. subsidiary.

Other operating expenses consist primarily of equipment maintenance and repairs, office supplies, IT support, bad debt expense and insurance costs.Other During the year ended December 31, 2023, other operating expenses decreased 12% in 2017increased 65% as compared to 2016 whichthe same period in 2022, due primarily reflected decreases in insurance, office, and equipment repair costs in 2017.to the reserves put against rent receivables at our AMRE subsidiary approximating $2.4 million.

Other Income and ExpensesExpense

Interest income is recognized on the Company’s money markets, and notes receivable identified in Note 4.

Interest expense increased 339% year-over-year primarily due to the increase in debt at Premier Packaging during 2023 as well an increase in interest rate associated with the debt at LVAM.

Dividend income for the years ended December 31, 2023 and 2022 represent dividends received on certain marketable securities owned by the Company.

Other income decreased 10% in 201785% during the year 2023 as compared to 2016 reflecting2022 and is driven by origination fees, and tax benefits at SHRG associated with 2022.

Loss on investments consists of net realized and unrealized losses on marketable securities which are recognized as the reductiondifference between the purchase price and sale price of the common stock investment, and net unrealized losses on marketable securities which are recognized on the change in debt due to approximately $818,000 in debt principal payments madefair market value on our common stock investment. Also included is a loss approximating $29.2 million associated with the Deconsolidation of SHRG (see Note 2).

Impairment of investments is driven by the Company during 2017. Amortized debt discount expense isimpairment of its investment in Vivacitas approximately $4,100,000 as of December 31, 2022.

Gain (loss) from equity method investment represents the Company’s prorated portion of earnings for its investments accounted for under the equity method for the cost, including equity based cost, incurred whenyear ended December 31, 2023, and 2022.

Impairment of fixed assets as of December 31, 2022 is associated with the write down of fair value of SHRG’s Lindon, Utah property.

Impairment of investments in real estate At December 31, 2023, the Company extendedperformed an assessment of the maturity dates of certainfair value of its debt instruments during 2017.AMRE LifeCare and AMRE Winter Haven properties and determined an impairment was necessary.

Litigation loss represents the Company’s cost to settle its litigation with Maiden Biosciences litigation, which was settled, and the Court’s December 20, 2022 judgment was vacated, and the case was dismissed with prejudice (see Note 17).

Net LossImpairment of goodwill during the 4^th quarter of 2023, the Company performed qualitative and Loss Per Sharequantitative assessments of the goodwill value associated with its APB and Sentinel subsidiaries and determined that as of December 31, 2023 both assets required impairment. At December 31, 2023, the Company fully impaired the value of APB and Sentinel goodwill of approximately $29,744,000 and $1,234,000, respectively.

Provision for loan losses during the year ended December 31, 2023, the Company reviewed the entire loan portfolio and determined specific loans required an allowance for credit losses. See Note 5.

Gain on extinguishment of debtDuring 2017, the Company had a net loss of approximately $578,000 as compared to a net loss of approximately $950,000three months ended June 30, 2022, AAMI $110,000 SBA Paycheck Protection Program was forgiven in 2016, representing a 39% decrease. The decrease in net loss is primarily due to significant reductions 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 in revenue in 2017.full.

Loss on sale of assets is driven by the Company’s loss on the sale of equity of HWH Holdings Inc and loss on sale of assets of HWH World as identified in Note 7.

Liquidity and Capital Resources

The Company has historically met its liquidity and capital requirements primarily through the sale of its equity securities and debt financings.financing. As of December 31, 2017,2023, the Company had cash of approximately $4.2$6.6 million. In addition, the Company had $800,000 available to its packaging division under a revolving credit line. As of December 31, 2017,2023, 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.financing.

Operating Cash Flow - from Operating Activities

Net cash used by operating activities was approximately $19.2 million for the year ended December 31, 2023 as compared to approximately $27.0 million for the year ended December 31, 2022. This decrease is driven by a decrease in net loss from operations with adjustments to reconcile net loss from operations to net cash used by operating activities of approximately $30.8 million year over year, offset by increase in payments of accrued expenses of approximately $20.1 million and accounts payable of $1.8 million year over year.

Cash Flow from Investing Activities

Net cash provided by investing activities was approximately $8.9 million for year ended December 31, 2023 as compared to net cash used approximately $18.0 million for the year ended December 31, 2022. During 2017,the year ended December 31, 2022, we purchased $2.3 million in property, plant, and equipment, $14.9 million of marketable securities, and issued $3.6 million in new notes receivable. In comparison, the Company expendedsold $9.5 million in marketable securities and issued $1.0 million in new notes receivable for the year ended December 31, 2023.

Cash Flow from Financing Activities

Net cash used by financing activities was approximately $1.4$2.4 million for operations, which resulted from significant pay downthe year ended December 31, 2023 as compared to net cash provided $7.6 million for the year ended December 31, 2022. During the year ended December 31, 2022, we borrowed $9.6 million of accounts payablelong-term debt as compared to $1.8 million during the year ended December 31, 2023.

Continuing Operations and Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of our assets and the reductionsatisfaction of liabilities in deferred expenses forthe normal course of business. These consolidated financial statements do not include any adjustments to the Company’s patent monetization program.

Investing Cash Flow - During 2017,specific amounts and classifications of assets and liabilities, which might be necessary should we be unable to continue as a going concern. While the Company expendedhas approximately $959,000$6.6 million in cash, the Company has incurred operating losses as well as negative cash flows from operating and investing activities over the past two years.

Aside from its $6.6 million in cash as of December 31, 2023, the Company believes it can continue as a going concern, due to its ability to generate operating cash through the sale of its $10.0 million of Marketable Securities, and the anticipated receipts of principal and interest on equipment for 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.Notes receivable of approximately $8.8 million through December 31, 2024. The Company expended approximately $12,000has also taken steps to sell its real estate holdings in Utah, Texas, Pennsylvania, and Florida. These properties approximate $51.6 million in assets and are identified on patent prosecution costs during 2017.

Financing Cash Flows - During 2017, the Company made aggregate principal payments on long-term debt of approximately $818,000.accompanying balance sheet as Held for sale. In addition, the Company’s subsidiary, Plastic Printing Professionals, used $522,000 from an equipmentCompany has taken steps, and will continue to take measures, to materially reduce the expenses and cash burn at all corporate and business line of credit towardslevels. Although there are no assurances, we believe the initial payment onabove would allow us to fund our nine business lines current and planned operations for the purchase of a printing press expected to be placed in service at its facility during the first quarter of 2018. The Company also received net proceeds of approximately $951,000twelve months from the salefiling date of the Company’s common stock. During 2016,this Annual Report. Based on this, the Company made aggregate principal payments of long-term debt of approximately $1,386,000, which included a one-time payment of $495,000 to onehas concluded that substantial doubt 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.ability to continue as a going concern has been alleviated.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, an effect on our financial condition, financial statements, revenues or expenses.

Inflation

Although our operations are influenced by general economic conditions, we do not believe that inflation had a material effect on our results of operations during 20172023 or 20162022 as we are generally able to pass the increase in our material and labor costs to our customers or absorb them as we improve the efficiency of our operations.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles in the U.S. (“U.S. GAAP”)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 endedas of December 31, 20172023, describe the significant accounting policies and methods used in the preparation of the consolidated financial statements. There have been no material changes to such critical accounting policies as of the Annual Report on Form 10-K for the year ended December 31, 2022.

Use of EstimatesAllowance For Loans and Lease Losses

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requiresOn January 1, 2022, the Company adopted amended accounting guidance “ASU No.2016-13 – Credit Losses” which requires an allowance for credit losses to make estimatesbe deducted from the amortized cost basis of financial assets to present the net carrying value at the amount that is expected to be collected over the contractual term of the asset considering relevant information about past events, current conditions, and assumptionsreasonable and supportable forecasts that affect the amountscollectability of the reported and disclosedamount. In estimating expected losses in the loan and lease portfolio, borrower-specific financial statementsdata and macro-economic assumptions are utilized to project losses over a reasonable and supportable forecast period. Assumptions and judgment are applied to measure amounts and timing of expected future cash flows, collateral values and other factors used to determine the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis,borrowers’ abilities to repay obligations. After the forecast period, the Company evaluates its estimates, including those relatedutilizes longer-term historical loss experience to the accounts receivable, fair values of intangible assets and goodwill, useful lives of intangible assets and property and equipment, fair values of options and warrants to purchase the Company’s common stock, 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

Goodwill is the excess of cost of an acquired entityestimate losses over the fair value of amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill is subject to impairment testing at least annually and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. FASB ASC Topic 350 provides an entity with the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing 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, which is generally one level below the operating segment level. The test compares the fair value of an entity’s reporting units to the carrying value of those reporting units. This 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. 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 and Patent Application Costs

Other intangible assets consists of costs associated with the application for patents, acquisition of patents andremaining 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 listsloans. Prior to 2022, the allowance for credit losses represented the amount that in management’s judgment reflected incurred credit losses inherent in the loan and non-compete agreements obtainedlease portfolio as a result of acquisitions. Intangible asset amortization expensethe balance sheet date.

Fair Value of Financial Instruments

Fair value is classified as an operating expense. The Company believes that the decision to incur patent costs is discretionarydefined as the associated productsprice that would be received to sell an asset or services can be sold priorpaid 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 oftransfer 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 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 in which a conclusion is reachedliability in an enforcement action that does not yield future royalties potential.

Share-Based Payments

We measure compensation cost for stock awardsorderly transaction between market participants 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 vendors in exchange for goods and services, the Company determines the measurement date for the fair valuedate. The Fair Value Measurement Topic 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.

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.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09 (Topic 606) “Revenue from Contracts with Customer” relatedCodification (“ASC”) establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to revenue from contracts with customers. Under this standard, revenue is recognized when promised goodsunadjusted quoted prices in active markets for identical assets or services are transferredliabilities (Level 1 measurements) and the lowest priority 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.unobservable inputs (Level 3 measurements). These tiers include:

In January 2016,● Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets.

● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The carrying amounts reported in the FASB issued ASU 2016-01, “Recognitionconsolidated balance sheet of cash and Measurement of Financial Assetscash equivalents, accounts receivable, prepaids, accounts payable and Financial Liabilities”, which requires that most equity investments be measured ataccrued expenses approximate fair value with subsequent changes inbecause of the immediate or short-term maturity of these financial instruments. Marketable securities classify as a Level 1 fair value recognizedfinancial instrument. The fair value of notes receivable approximates their carrying value as the stated or discounted rates of the notes do not reflect recent market conditions. The fair value of revolving credit lines notes payable and long-term debt approximates their carrying value as the stated or discounted rates of the debt reflect recent market conditions. The fair value of investments where the fair value is not considered readily determinable, are carried at cost.

Investments

Investments in net income. Entities will no longer be able to use the cost method of accounting for equity securities. However, for equity investments withoutsecurities with a readily determinable fair values, entities may electvalue, 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 measurement alternative that will allow those investments to bereadily 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 adjusted for subsequent observable price changes. The pronouncement also impacts financial liabilities underlosses included in earnings.

For equity method investments, the Company regularly reviews its investments to determine whether there is a decline in fair value option andbelow book value. If there is a decline that is other-than-temporary, the presentation and disclosure requirementsinvestment is written down to fair value. See Note 8 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 havefurther discussion on our Consolidated Financial Statements.investments.

In February 2016,Revenue

The Company recognizes its revenue based on when the FASB issued ASU 2016-02, “Leases”, which requires thattitle passes to the customer or when the service is completed and accepted by the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for shipped product or service provided. Sales and other taxes billed and collected from customers are excluded from revenue. The Company recognizes rental income associated with its REIT, net of amortization of favorable/unfavorable lease arrangements longerterms relative to market and includes rental abatements and contractual fixed increases attributable to operating leases, where collection has been considered probable, on a straight-line basis over the term of the related lease. The Company recognizes net investment income from its investment banking line of business as interest owed to the Company occurs. The Company generates revenue from its direct marketing line of business primarily through internet sales and recognizes revenue as items are shipped.

As of December 31, 2023, the Company had no unsatisfied performance obligations for contracts with an original expected duration of greater than 12 months result in an entity recognizing anone 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 and liability. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. We have electednotthe commission paid to adopt this standard in advanceits salesforce on the sale of its required effective date.products as an incremental cost of obtaining a contract with a customer but rather recognize such commission as expense when incurred as the amortization period of the asset that the Company would have otherwise recognized is one year or less.

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.Acquisitions

In November 2016,Business combinations and non-controlling interests are recorded in accordance with FASB ASC 805 Business Combinations. Under the FASB issued ASU 2016-18, “Statement of Cash Flows”, regardingguidance, the presentation of restricted cash on the statement of cash flows. The standards update requires that the reconciliationassets and liabilities of the beginningacquired business are recorded at their fair values at the date of acquisition 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 natureall acquisition costs are expensed as incurred. The excess of the restrictions. The standards updatepurchase price over the estimated fair values 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 andrecorded as goodwill. If the fair value of the reporting unit.assets acquired exceeds the purchase price and the liabilities assumed, then a gain on acquisition is recorded. The standards update are effective for goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company is currently assessingapplication of business combination accounting requires the impact that adopting this new accounting standard will have on our Consolidated Financial Statements.use of significant estimates and assumptions.

In May 2017,Acquisition of assets are recorded at their relative fair value based on total accumulated costs of the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718) – Scopeacquisition. Direct acquisition-related costs are expensed as incurred. This includes all costs related to finding, analyzing and negotiating a transaction. The allocation of Modification Accounting”, which provides guidance about which changes to the terms or conditionspurchase 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 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 assumed liabilities established in ASU No. 2016-01,“Financial Instruments—Overall (Subtopic 825-10): Recognitionare determined based on replacement costs, appraised values, and Measurement of Financial Assetsestimated fair values using methods like those used by independent appraisers 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 securityuse appropriate discount and/or capitalization rates 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 15, 2018. The Company is currently assessing the impact that adopting this new accounting standard will have on our Consolidated Financial Statements.available market information.

Newly Adopted Accounting Pronouncements

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 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 impact to the Company’s financial statements as 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, classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for the Company on 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.

ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Financial Statements

DOCUMENT SECURITY SYSTEMS,DSS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Document Security Systems,Stockholders of DSS, Inc. and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Document Security Systems, Inc.DSS, Inc, and Subsidiariesits subsidiaries (the Company)“Company”) as of December 31, 20172023 and 2016,2022, and the related consolidated statements of operations, and comprehensive loss, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the consolidated financial statement (collectively, the financial statements)“financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20172023 and 2016,2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our 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 the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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

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

/s/ Freed Maxick CPAs, P.C.Critical Audit Matters

We have servedThe 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 Company’s auditor since 2004.critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Rochester, New YorkInvestments in real estate

March 6, 2018

DOCUMENT SECURITY SYSTEMS,As described in Note 9 to the consolidated financial statements, the Company owns real estate properties through their subsidiaries with a net book value of approximately $6,279,000, with an additional $51,530,000 classified as held for sale. We identified the value of the real estate to be a critical audit matter.

The principal consideration for our determination of management’s assessment of impairment of the real estate as a critical audit matter is the high degree of subjective auditor judgment associated with evaluating management’s determination of impairment of the real estate properties, which is primarily due to the complexity of the valuation models used and the sensitivity of the underlying significant assumptions. The key assumptions used within the valuation models included site valuations and various approaches such as cost, sales comparison, etc. The calculated fair values are sensitive to changes in these key assumptions.

How the Critical Audit Matter was addressed in the Audit

Our audit procedures related to the determination of the fair value of the real estate properties included the following, among others:

Evaluation of Intangible Assets and Goodwill for Impairment

As described in Notes 2 and 10 to the consolidated financial statements, the Company holds Intangible Assets and Goodwill through its subsidiaries with a net book value of approximately $20,193,000 and $26,862,000, respectively. We identified the value of Intangible Assets and Goodwill to be a critical audit matter.

The principal consideration for our determination of management’s assessment of impairment of the Intangible Assets and Goodwill as a critical audit matter is the high degree of subjective auditor judgment associated with evaluating management’s determination of impairment of Intangible Assets and Goodwill, which is primarily due to the complexity of the valuation models used and the sensitivity of the underlying significant assumptions. The key assumptions used within the valuation models included qualitative and quantitative assessments. The calculated fair values are sensitive to changes in these key assumptions.

How the Critical Audit Matter was addressed in the Audit

Our audit procedures related to the determination of the fair value of the Intangible Assets and Goodwill included the following, among others:

GRASSI & CO., CPAs, P.C.
We have served as the Company’s auditor since 2022.
Jericho, New York
March 27, 2024

DSS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

As of December 31,

See accompanying notes.

DOCUMENT SECURITY SYSTEMS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations and Comprehensive Loss

For the Years Ended December 31,

See accompanying notes.

DOCUMENT SECURITY SYSTEMS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the Years Ended December 31,