Dss, Inc DEFR14A, filed Jul 14, 2020

Dss, Inc. (DSS)

DEFR14A 2020-07-14

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[ ]	Preliminary Proxy Statement
[ ]	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X]	Definitive Proxy Statement
[ ]	Definitive Additional Materials
[ ]	Soliciting Material Pursuant to Rule 14a-12.

	(1)	Title of each class of securities to which transaction applies.

	(2)	Aggregate number of securities to which transaction applies:

	(3)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):

	(4)	Proposed maximum aggregate value of transaction:

	(5)	Total fee paid:

[ ]	Fee paid previously with preliminary materials.
[ ]	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
	(1)	Amount Previously Paid:

	(2)	Form, Schedule or Registration Statement No.:

	(3)	Filing Party:

	(4)	Date Filed:

	(1)	To approve the issuance of shares of DSS Common Stock and Series A Preferred Stock in connection with the acquisition of Impact BioMedical Inc., pursuant to the Share Exchange Agreement, a copy of which is attached as Appendix A to the accompanying proxy statement.

	(2)	To authorize an adjournment of the Special Meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal 1;

	(3)	To ratify the approval by our Board of Directors of an amendment to our bylaws to allow for participation in stockholder meetings by means of virtual meeting technology; and

	(4)	Transacting such other business as may properly come before the meeting or any adjournment thereof.

	1.	To approve the issuance of shares of DSS Common Stock and Series A Preferred Stock (in connection with the acquisition of Impact BioMedical Inc., a Nevada corporation (“Impact BioMedical”), pursuant to the Share Exchange Agreement, a copy of which is attached as Appendix A (the “Share Exchange Agreement”);

	2.	To authorize an adjournment of the Special Meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal 1;

	3.	To ratify the approval by our Board of Directors of an amendment to our bylaws to allow for participation in stockholder meetings by means of virtual meeting technology (the “Virtual Meeting Proposal”); and

	4.	Transacting such other business as may properly come before the meeting or any adjournment thereof.

	(1)	FOR approval of the Share Exchange;

	(2)	FOR an adjournment of the Special Meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal 1; and

	(3)	FOR the ratification of the approval by our Board of Directors the Virtual Meeting Proposal.

/s/ Heng Fai Ambrose Chan
Heng Fai Ambrose Chan
Chairman of the Board

	1.	Premier Packaging Corporation (DSS Packaging and Printing Group) operates in the paper board folding carton, smart packaging and document security printing markets.

	2.	Plastic Printing Professionals, Inc. (DSS Plastics Group) operates in the security printing and plastic ID systems market.

	These two companies develop, manufacture and sell paper and plastic products designed to protect valuable information from counterfeit, unauthorized scanning, copying, and digital imaging, and to provide intelligent, interactive, augmented packaging for the consumer.

	3.	DSS Digital Inc. (DSS Digital Group) researches, develops, markets and sells the Company’s digital products worldwide; their primary product is AuthentiGuard®, which is a brand authentication application that integrates the Company’s counterfeit deterrent technologies with proprietary digital data security-based solutions.

	4.	DSS Technology Management, Inc. (DSS Technology Management) manages, licenses and acquires intellectual property, or IP, 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 commercial litigation.

	1.	DSS Blockchain Security, Inc., intends to specialize in the development of blockchain security technologies for tracking and tracing solutions for supply chain logistics and cyber securities across global markets.

	2.	Decentralized Sharing Systems, Inc., seeks to provide services to assist companies in the new business model of the peer-to-peer decentralized sharing marketplaces and direct marketing. Direct marketing or network marketing is designed to sell products or services directly to the public through independent distributors, rather than selling through the traditional retail market. Of the newly established business lines, Decentralized is the first to establish a material gross revenue stream and we anticipate revenue growth. As a result, we have added this business line to our segment reporting.

	3.	DSS Securities, Inc., has been established to develop or to acquire assets in the securities trading or management arena, and to pursue two parallel streams of digital asset exchanges in multiple jurisdictions: (i) securitized token exchanges, focusing on digitized assets from different vertical industries; and (ii) utilities token exchanges, focusing on “blue-chip” utility tokens from solid businesses.

	4.	DSS BioHealth Security, Inc., will seek to invest in or to acquire companies related to the biohealth and biomedical field, including businesses focused on the research to advance drug discovery and development for the prevention, inhibition, and treatment of neurological, oncological and immuno-related diseases. This new division will place special focus on open-air defense initiatives, which curb transmission of air-borne infectious diseases such as tuberculosis and influenza, among others.

	5.	DSS Secure Living, Inc., intends to develop top of the line advanced technology for energy efficiency, high quality of life living environments and home security for everyone, for new construction and renovations of residential single and multifamily living facilities.

	Aside from Decentralized Sharing Systems, Inc. the activities in these newly created subsidiaries have been minimal or in various start-up or organizational phases.

	●	The issuance of our Common Stock in the Share Exchange will reduce the ownership interests and voting power of our current common stockholders. The current owners of Impact BioMedical will acquire, in the aggregate, approximately 19.9% of our Common Stock which will be outstanding upon completion of the Share Exchange. Upon completion of the Share Exchange, our Chairman of the Board Chan Heng Fai Ambrose will have beneficial ownership of shares of our Common Stock which will represent approximately 15.3% of our Common Stock to be outstanding.

	●	Failure to complete the Share Exchange could negatively impact our stock price.

	●	investors react negatively to the prospects of the combined company’s business and prospects after the Share Exchange;

	●	the effect of the Share Exchange on the combined company’s business and prospects is not consistent with the expectations of investors; or

	●	the combined company does not achieve the perceived benefits of the Share Exchange as rapidly or to the extent anticipated by investors.

	●	we will not realize the benefits expected from the Share Exchange;

	●	the price of our Common Stock may decline to the extent that the current market price of our Common Stock reflects a market assumption that the Share Exchange will be completed;

	●	if the non-completion of the Share Exchange were due to a breach by DSS of the Share Exchange Agreement we could be responsible for reimbursing the expenses incurred by the Impact BioMedical owners which would further deplete our working capital.

	Year Ended
	March 31, 2020			March 31, 2019

Revenue	$	-		$	-
General and Administrative Expenses	$	125,470		$	112,743
Other Expenses	$	107		$	3,282
Net Loss	$	(125,577	)	$	(116,024	)

	Year Ended
	March 31, 2020		December 31, 2019

Current Assets	$	153.434	$	139,431
Current Liabilities	$	26,601	$	7,021
Working Capital	$	126,833	$	132,410

	Year Ended
	December 31, 2019			December 31, 2018

Revenue	$	-		$	-
General and Administrative Expenses	$	523,161		$	1,054,587
Other Expenses	$	130,859		$	50,371
Net Loss	$	(654,020	)	$	(1,104,958	)

	Three months Ended March 31,
	2020			2019

Net Cash Used in Operating Activities	$	(98,616	)	$	(163,145	)
Net Cash Provided by Financing Activities	$	120,000		$	200,000
Net Increase in Cash	$	21,384		$	36,855
Cash at beginning of the year	$	108,731		$	35,375
Cash at end of the year	$	130,115		$	72,230

	Years Ended December 31,
	2019			2018

Net Cash Used in Operating Activities	$	(612,802	)	$	(1,098,849	)
Net Cash Used in Investing Activities	$	(113,842	)	$	(55,000	)
Net Cash Provided by Financing Activities	$	800,000		$	986,064
Net Increase (Decrease) in Cash	$	73,356		$	(167,785	)
Cash at beginning of the year	$	35,375		$	178,160
Cash at end of the year	$	108,731		$	10,375
Non-Cash investments	$	-		$	25,000

	●	The Share Exchange Agreement and the transactions contemplated thereby shall have been approved by the requisite vote of (i) the Board of Directors of each of DSS and DBHS, and (ii) the stockholders of DSS at the Special Meeting;

	●	The Share Exchange Agreement and the transactions contemplated thereby shall have been approved by the requisite vote of (i) the Board of Directors of each of Singapore eDevelopment and Global BioMedical, (ii) the stockholder of the Global BioMedical, and (iii) the stockholders of Singapore eDevelopment at the Singapore eDevelopment Stockholders’ Meeting;

	●	No governmental authority shall have enacted, issued, promulgated, enforced or entered any Order which is in effect and has the effect of making the transactions contemplated by the Share Exchange Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated thereunder to be rescinded following completion thereof;

	●	Global BioMedical and Singapore eDevelopment shall have received all consents authorizations, orders and approvals from certain governmental authorities as set forth in the Share Exchange Agreement, and DBHS and DSS shall have received all consents, authorizations, orders and approvals from the governmental authorities as set forth in the Share Exchange Agreement, in each case, in form and substance reasonably satisfactory to DBHS and Global BioMedical, and no such consent, authorization, order and approval shall have been revoked.

	●	The Certificate of Designations shall have been filed with the Secretary of State of the State of New York.

	●	by mutual written consent of DBHS and Global BioMedical;

	●	by either DBHS or Global Medical in the event that such party is not then in material breach of any provision of the Share Exchange Agreement and there has been a breach , inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by the counterparties that would give rise to the failure of the conditions precedent to closing that has not been cured after 10 days written notice to the counterparties;

	●	if certain other conditions as set forth in the Share Exchange Agreement shall not have been, or it becomes apparent that any of such conditions will not be, fulfilled by the date that is 180 days after the date of the Share Exchange Agreement;

	●	in the event that (i) any law makes consummation of the transactions contemplated by Share Exchange Agreement illegal or otherwise prohibited or (ii) a government authority issues an order restraining or enjoining the transactions contemplated by the Share Exchange Agreement, and such order becomes final and non-appealable;

	●	by either DBHS or Global Medical if the stockholders of DSS or Singapore eDevelopment vote on, but fail to approve, the Share Exchange Agreement at each’s respective stockholders’ meeting

	December 31, 2019			December 31, 2018
Asset
Cash	$	108,731		$	35,375
Prepaid Expense		30,700			22,761
Investment in Security by Equity Method					5,312
Total Asset	$	139,431		$	63,448

Liabilities
Accounts Payable	$	7,021		$	77,018
Total Liabilities	$	7,021		$	77,018

Stockholders’ Equity
Common Stock, $0.001 Par Value, 100,000,000 shares authorized, 1,000 Issued and Outstanding	$	1		$	1
Additional Paid In Capital		1,732,590			1,183,135
Accumulated Deficit		(1,646,208	)		(1,191,772	)
Total Stockholders’ Equity (Deficit)		86,383			(8,636	)
Non-Controlling Interests		46,027			(4,934	)
Total Stockholders’ Equity (Deficit)	$	132,410		$	(13,570	)

Total Liabilities & Stockholders’ Equity	$	139,431		$	63,448

	2019			2018
Operating Expense
Research & Development	$	340,628		$	634,312
Professional Services		143,933			373,394
Marketing		5,000			25,950
Other General Expense		33,600			20,931
Total Operating Expense		523,161			1,054,587

Other Expense
Financial Services		544			683
Loss from Security Investment by Equity Method		40,314			49,688
Loss from Acquisition		90,001			-
Total Other Expense		130,859			50,371

Net Loss	$	(654,020	)	$	(1,104,958	)

	PAGE

Financial Statements
Consolidated Balance Sheets	2
Consolidated Statements of Operations	3
Consolidated Statements of Stockholders’ Equity	4
Consolidated Statements of Cash Flows	5
Notes to Consolidated Financial Statements	6

	December 31,			December 31,
	2019			2018
Asset
Cash	$	108,731		$	35,375
Prepaid Expense		30,700			22,761
Investment in Security by Equity Method					5,312
Total Asset	$	139,431		$	63,448

Liabilities
Accounts Payable	$	7,021		$	77,018
Total Liabilities	$	7,021		$	77,018

Stockholders’ Equity
Common Stock, $0.001 Par Value, 100,000,000 shares authorized, 1,000 Issued and Outstanding	$	1		$	1
Additional Paid In Capital		1,732,590			1,183,135
Accumulated Deficit		(1,646,208	)		(1,191,772	)
Total Stockholders’ Equity (Deficit)		86,383			(8,636	)
Non-Controlling Interests		46,027			(4,934	)
Total Stockholders’ Equity (Deficit)	$	132,410		$	(13,570	)

Total Liabilities & Stockholders’ Equity	$	139,431		$	63,448

	Common Stock				Additional					Non-			Total
	Shares		Par Value $0.001		Paid in Capital		Accumulated Deficit			controlling Interests			Stockholders’ Equity
Balance at January 1, 2018		1,000	$	1	$	539,731	$	(488,616	)	$	29,209		$	80,324

Proceeds from Shareholders						643,404					367,660			1,011,064

Net loss								(703,155	)		(401,803	)		(1,104,958	)

Balance at December 31, 2018		1,000	$	1	$	1,183,135	$	(1,191,772	)	$	(4,934	)	$	(13,570	)

Proceeds from Shareholders						549,455					250,545			800,000

Net Loss								(454,436	)		(199,584	)		(654,020	)

Balance at December 31, 2019		1,000	$	1	$	1,732,590	$	(1,646,208	)	$	46,027		$	132,410

	2019			2018
Cash Flows From Operating Activities
Net Loss from Operations	$	(654,020	)	$	(1,104,958	)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Loss from Acquisition		90,001			-
Loss from Investment in Security by Equity Method		40,314			49,688
Changes in Operating Assets and Liabilities
Prepaid Expense		(7,940	)		1,566
Accounts Payable		(81,157	)		(45,145	)
Net Cash Used in Operating Activities		(612,802	)		(1,098,849	)

Cash Flows From Investing Activities
Acquisition of Securities		(91,000	)		-
Cash from Acquisition		13,158			-
Investment in Joint Venture		(36,000	)		(55,000	)
Net Cash Used in Investing Activities		(113,842	)		(55,000	)

Cash Flows From Financing Activities
Proceeds from Shareholders		800,000			986,064
Net Cash Provided by Financing Activities		800,000			986,064

Net Increase (Decrease) in Cash		73,356			(167,785	)

Cash - Beginning of Year		35,375			178,160
Cash - End of Year	$	108,731		$	10,375

Non Cash Investment in Joint Venture	$	-		$	25,000

	State or other		Attributable			Attributable
Name of consolidated	jurisdiction of incorporation or	Date of incorporation	interest as of December 31,			interest as of December 31,
subsidiary	organization	or formation	2019			2018
Global BioMedical, Inc.	Nevada	April, 18, 2017		90.9	%		90.9	%
Global BioLife, Inc.	Nevada	April 14, 2017		63.6	%		63.6	%
Biolife Sugar, Inc.	Nevada	April 23, 2018		63.6	%		63.6	%
Happy Sugar Inc.	Nevada	August 17, 2018		63.6	%		63.6	%
Sweet Sense Inc.	Nevada	April 30, 2018		81.8	%		31.8	%
SeD BioLife International, Inc.	Nevada	March 29, 2017		100	%		100	%
SeD BioMedical International Inc.	Nevada	March 13, 2017		100	%		100	%
Global Sugar Solutions Inc.	Nevada	November 7, 2019		80	%		n/a

	Year Ended December 31,
	2019			2018
Current:
Federal	$	-		$	-
State		-			-
Total Current		-			-
Deferred:
Federal		(530,629	)		(393,285	)
State		(151,034	)		(122,106	)
Total Deferred		(681,663	)		(515,390	)
Valuation Allowance		681,663			515,390
Total Income Tax Expense	$	-		$	-

Pre-tax Loss	$	(645,020	)	$	(1,104,958	)

Effective Income Tax Rate		0	%		0	%

	PAGE

Consolidated Financial Statements
Consolidated Balance Sheets (unaudited)	2
Consolidated Statements of Operations (unaudited)	3
Consolidated Statements of Stockholders’ Equity (unaudited)	4
Consolidated Statements of Cash Flows (unaudited)	5
Notes to Consolidated Financial Statements (unaudited)	6

Name of consolidated subsidiary	State or other jurisdiction of incorporation or organization	Date of incorporation or formation	Attributable interest as of March 31, 2020			Attributable interest as of December 31, 2019
Global BioMedical, Inc.	Nevada	April, 18, 2017		90.9	%		90.9	%
Global BioLife, Inc.	Nevada	April 14, 2017		63.6	%		63.6	%
Biolife Sugar, Inc.	Nevada	April 23, 2018		63.6	%		63.6	%
Happy Sugar Inc.	Nevada	August 17, 2018		63.6	%		63.6	%
Sweet Sense Inc.	Nevada	April 30, 2018		81.8	%		81.8	%
SeD BioLife International, Inc.	Nevada	March 29, 2017		100	%		100	%
SeD BioMedical International Inc.	Nevada	March 13, 2017		100	%		100	%
Global Sugar Solutions Inc.	Nevada	November 7, 2019		80	%		80	%

	Pre-Acquisition DSS (Purchaser)			Record Purchase		Post-acquisition DSS (Purchaser)			ImpactBio (Target)			Proforma Adjustment (Note 1)			Proforma Adjustment (Note 2)			Consolidated Financials
ASSETS
Current Assets:
Cash	$	3,802,000				$	3,802,000		$	130,000								$	3,932,000
Accounts Receivable		3,582,000					3,582,000			-									3,582,000
Inventory		1,743,000					1,743,000			-									1,743,000
Prepaid Expense and other current assets		514,000					514,000			23,000									537,000
Total Current Assets		9,641,000			-		9,641,000			153,000			-			-			9,794,000
Property plant and equipment, net		4,925,000					4,925,000			-									4,925,000
Investment		2,154,000					2,154,000			-									2,154,000
Marketable Securities		570,000					570,000			-									570,000
Investment in Target		-			50,000,000		50,000,000			-			(127,000	)		(49,873,000	)		-
Notes Receivable		1,255,000					1,255,000			-									1,255,000
Other assets		54,000					54,000			-									54,000
Right-of -use assets		1,119,000					1,119,000			-									1,119,000
Goodwill		1,769,000					1,769,000			-						78,440,000			80,209,000
Other intangible assets, net		816,000					816,000			-									816,000
Total Assets	$	22,303,000		$	50,000,000	$	72,303,000		$	153,000		$	(127,000	)	$	28,567,000		$	100,896,000

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts Payable	$	1,489,000				$	1,489,000		$	27,000								$	1,516,000
Accrued expenses and deferred revenue		706,000					706,000												706,000
Other current liabilities		390,000					390,000												390,000
Revolving line of credit		800,000					800,000												800,000
Current portion of lease liabilities		369,000					369,000												369,000
Current portion of long-term debt, net		403,000					403,000												403,000
Total Current Liabilities	$	4,157,000		$	-	$	4,157,000		$	26,000		$	-		$	-		$	4,183,000
Long-term debt, net		2,427,000					2,427,000												2,427,000
Long term lease liability		750,000					750,000												750,000
Other long-term liabilities		507,000					507,000												507,000
Deferred tax liability, net		44,000					44,000												44,000
Total Liabilities	$	7,885,000		$	-	$	7,885,000		$	26,000		$	-		$	-		$	7,911,000
																			-
Stockholders’ Equity																			-
Common Stock	$	42,000		$	10,000	$	52,000		$	14,000		$	(14,000	)				$	52,000
Convertible Preferred Stock		-			46,868,000		46,868,000			-									46,868,000
Additional Paid in Capital		119,624,000			3,122,000		122,746,000			1,802,000			(1,802,000	)					122,746,000
Accumulated Deficit		(105,181,000	)				(105,181,000	)		(1,730,000	)		1,730,000						(105,181,000	)
Total Stockholders’ Equity (Deficit)		14,485,000			50,000,000		64,485,000			86,000			(86,000	)		-			64,485,000
Non-Controlling Interests		(67,000	)				(67,000	)		41,000			(41,000	)		28,567,000			28,500,000
Total Stockholders’ Equity (Deficit)	$	14,418,000		$	50,000,000	$	64,418,000		$	127,000		$	(127,000	)	$	28,567,000		$	92,985,000
																			-
Total Liabilities & Stockholders’ Equity	$	22,303,000		$	50,000,000	$	72,303,000		$	153,000		$	(127,000	)	$	28,567,000		$	100,896,000

	DSS (Purchaser)			Impact BioMedical (Target)			Proforma Adjustment (Note 1)		Proforma Adjustment (Note 2)		Consolidated Proforma

Revenue:
Printed products	$	3,949,000		$	-		$	-	$	-	$	3,949,000
Technology sales, services and licensing		479,000			-			-		-		479,000
Direct selling		573,000			-			-		-		573,000
Total revenue	$	5,001,000		$	-		$	-	$	-	$	5,001,000
Costs and expense
Costs of revenue, exclusive of depreciation and amortization	$	3,271,000		$	-		$	-	$	-	$	3,271,000
Selling, general and administrative (including stock based compensation)		2,641,000			125,000			-		-		2,766,000
Depreciation and amortization		360,000			-			-		-		360,000
Impairment of Goodwill		685,000			-			-		-		685,000
Total Operating Expense		6,957,000			125,000			-		-		7,082,000
Operating Loss		(1,956,000	)		(125,000	)		-		-		(2,081,000	)
Other Income (expense)
Interest Income		24,000			-			-		-		24,000
Interest Expense		(39,000	)		-			-		-		(39,000	)
Gain on Marketable Securities		4,000			-			-		-		4,000
Amortization of deferred financing costs a debt discount		-			-			-		-		-
Financial Services		-						-		-		-
Loss from Security Investment by Equity Method		-			-			-		-		-
Loss from Acquisition		-			-			-		-		-
Total Other Expense		(11,000	)		-			-		-		(11,000	)
Income (loss) before income tax		(1,967,000	)		(125,000	)		-		-		(2,092,000	)

Income tax benefit		-			-			-		-		-

Net Loss	$	(1,967,000	)	$	(125,000	)	$	-	$	-	$	(2,092,000	)

Add: loss attributed to noncontrolling interest		67,000			41,000			-		-		108,000

Net Loss Attributable to Common Stockholders	$	(1,900,000	)	$	(84,000	)	$	-	$	-	$	(1,984,000	)

Note 1:	Elimination of impactbio equity	Investment in subsidiary	126,000
		Accumulated Deficit	1,730,000
		Common Stock		14,000
		Additional Paid in Capital		1,802,000
		Non-Controlling Interests		40,000

Note 2:	Record goodwill	Goodwill	78,441,000
		Investment in subsidiary		49,874,000
		Non-Controlling Interests		28,567,000

Note 3:	Document Security Systems, Inc. has engaged an independent valuation firm to value the assets of Impact BioMedical, Inc. and its subsidiaries. For purposes of this proforma, and until the valuation is complete, the purchase price of $50 million is included in goodwill.

Note 4:	Document Security Systems, Inc. is analyzing the accounting treatment of the perpetual convertible preferred shares offered and for the purposes of this proforma has assumed that the transaction will be recorded as an equity transaction. Also, DSS is evaluating the valuation of those shares and the quoted price of the common shares and face value of the perpetual convertible preferred shares have been assumed to be $50 million.

Ended December 31, 2019
	Pre-Acquisition DSS (Purchaser)			Record Purchase		Post-acquisition DSS (Purchaser)			ImpactBio Medical, Inc. (Target)			Proforma Adjustment (Note 1)			Proforma Adjustment (Note 2)			Consolidated Financials
ASSETS
Current Assets:
Cash	$	1,096,000				$	1,096,000		$	109,000								$	1,205,000
Accounts Receivable		4,212,000					4,212,000			-									4,212,000
Inventory		1,708,000					1,708,000			-									1,708,000
Prepaid Expense and other current assets		460,000					460,000			30,000									490,000
Total Current Assets		7,476,000			-		7,476,000			139,000			-			-			7,615,000
Property plant and equipment, net		5,061,000					5,061,000			-									5,061,000
Investment		2,154,000					2,154,000			-									2,154,000
Investment in Target		-			50,000,000		50,000,000			-			(132,000	)		(49,868,000	)		-
Notes Receivable		793,000					793,000			-									793,000
Other assets		50,000					50,000			-									50,000
Right-of -use assets		1,223,000					1,223,000			-									1,223,000
Goodwill		2,454,000					2,454,000			-						78,435,000			80,889,000
Other intangible assets, net		935,000					935,000			-									935,000
Total Assets	$	20,146,000		$	50,000,000	$	70,146,000		$	139,000		$	(132,000	)	$	28,567,000		$	98,720,000

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts Payable	$	1,492,000				$	1,492,000		$	7,000								$	1,499,000
Accrued expenses and deferred revenue		936,000					936,000												936,000
Other current liabilities		390,000					390,000												390,000
Revolving line of credit		500,000					500,000												500,000
Current portion of lease liabilities		397,000					397,000												397,000
Current portion of long-term debt, net		441,000					441,000												441,000
Total Current Liabilities	$	4,156,000		$	-	$	4,156,000		$	7,000		$	-		$	-		$	4,163,000
Long-term debt, net		2,310,000					2,310,000												2,310,000
Long term lease liability		826,000					826,000												826,000
Other long-term liabilities		507,000					507,000												507,000
Deferred tax liability, net		44,000					44,000												44,000
Total Liabilities	$	7,843,000		$	-	$	7,843,000		$	7,000		$	-		$	-		$	7,850,000
																			-
Stockholders’ Equity																			-
Common Stock	$	24,000		$	10,000	$	34,000		$	-		$	-					$	34,000
Convertible Preferred Stock		-			46,868,000		46,868,000			-									46,868,000
Additional Paid in Capital		115,560,000			3,122,000		118,682,000			1,732,000			(1,732,000	)					118,682,000
Accumulated Deficit		(103,281,000	)				(103,281,000	)		(1,646,000	)		1,646,000						(103,281,000	)
Total Stockholders’ Equity (Deficit)		12,303,000			50,000,000		62,303,000			86,000			(86,000	)		-			62,303,000
Non-Controlling Interests		-								46,000			(46,000	)		28,567,000			28,567,000
Total Stockholders’ Equity (Deficit)	$	12,303,000		$	50,000,000	$	62,303,000		$	132,000		$	(132,000	)	$	28,567,000		$	90,870,000
																			-
Total Liabilities & Stockholders’ Equity	$	20,146,000		$	50,000,000	$	70,146,000		$	139,000		$	(132,000	)	$	28,567,000		$	98,720,000

Note 1:	Elimination of ImpactBio equity	Investment in subsidiary	132,000
		Accumulated Deficit	1,646,000
		Common Stock	-
		Additional Paid in Capital	1,732,000
		Non-Controlling Interests	46,000

Note 2:	Record goodwill	Goodwill	78,435,000
		Investment in subsidiary	49,868,000
		Non-Controlling Interests	28,567,000

Note 3:	Document Security Systems, Inc. has engaged an independent valuation firm to value the assets of Impact BioMedical, Inc. and its subsidiaries. For purposes of this proforma, and until the valuation is complete, the purchase price of $50 million is included in goodwill.

Note 4:	Document Security Systems, Inc. is analyzing the accounting treatment of the perpetual convertible preferred shares offered and for the purposes of this proforma has assumed that the transaction will be recorded as an equity transaction. Also, DSS is evaluating the valuation of those shares and the quoted price of the common shares and face value of the perpetual convertible preferred shares have been assumed to be $50 million.