Dss, Inc 10-Q for FY2022 Q1

Dss, Inc. (DSS)

10-Q 2022-05-16 For: 2022-03-31

Added on April 10, 2026

About this 10-Q

Dss, Inc filed this 10-Q on May 16, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $12.3M; up 175.3% from $4.47M a year earlier
Net loss: $8.05M; compared with a net loss of $3.98M a year earlier
Diluted EPS: -$0.10; compared with -$0.21 a year earlier

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Emerging growth company ☐

Title of each class		Ticker symbol(s)		Name of each exchange on which registered
Common Stock, $0.02 par value per share		DSS		The NYSE American LLC

PART I	FINANCIAL INFORMATION	3
Item 1	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021	3
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021	4
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021	5
	Condensed Consolidated Statement of Changes in Stockholders’ Equity for the three months ended March 31, 2022 and 2021	6
	Notes to Interim Condensed Consolidated Financial Statements	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 4	Controls and Procedures	35

PART II	OTHER INFORMATION	36
Item 1	Legal Proceedings	36
Item 1A	Risk Factors	36
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3	Defaults upon Senior Securities	36
Item 4	Mine Safety Disclosures	36
Item 5	Other Information	36
Item 6	Exhibits	36

	March 31, 2022			December 31, 2021

ASSETS
Current assets:
Cash and cash equivalents	$	53,811,000		$	56,595,000
Accounts receivable, net		6,103,000			5,673,000
Inventory		9,778,000			10,380,000
Current portion of notes receivable		6,739,000			6,310,000
Prepaid expenses and other current assets		1,869,000			3,466,000
Total current assets		78,300,000			82,424,000

Property, plant and equipment, net		16,247,000			17,674,000
Investment in real estate, net		56,365,000			56,374,000
Other investments		10,466,000			11,001,000
Investment, equity method		1,193,000			1,080,000
Marketable securities		18,435,000			14,172,000
Notes receivable		6,240,000			5,878,000
Other assets		557,000			489,000
Right-of-use assets		1,181,000			498,000
Goodwill		56,606,000			56,606,000
Other intangible assets, net		36,269,000			38,630,000
Total assets	$	281,859,000		$	284,826,000

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	2,452,000		$	1,920,000
Accrued expenses and deferred revenue		16,515,000			21,180,000
Other current liabilities		402,000			402,000
Current portion of lease liability		540,000			393,000
Current portion of long-term debt, net		6,835,000			3,916,000
Total current liabilities		26,744,000			27,811,000

Long-term debt, net		59,398,000			55,711,000
Long term lease liability		782,000			120,000
Other long-term liabilities		880,000			880,000

Commitments and contingencies (Note 9)		-

Stockholders’ equity
Preferred stock, $.02 par value; 47,000 shares authorized, shares issued and outstanding (47,000 on December 31, 2021); Liquidation value $1,000 per share, $46,868,000 aggregate December 31, 2021).		-			-
Common stock, $.02 par value; 200,000,000 shares authorized, 84,626,847 shares issued and outstanding (79,745,886 on December 31, 2021)		1,692,000			1,594,000
Additional paid-in capital		296,450,000			294,685,000
Non-controlling interest in subsidiaries		36,345,000			36,409,000
Accumulated deficit		(140,432,000	)		(132,384,000	)
Total stockholders’ equity		194,055,000			200,304,000

Total liabilities and stockholders’ equity	$	281,859,000		$	284,826,000

	2022			2021
	For the Three Months Ended March 31,
	2022			2021
Revenue:
Printed products	$	3,569,000		$	3,861,000
Rental income		1,663,000			-
Management fee income		11,000			-
Net investment income		129,000			-
Direct marketing		6,932,000			608,000
Total revenue		12,304,000			4,469,000

Costs and expenses:
Cost of revenue, exclusive of depreciation and amortization		5,443,000			3,287,000
Selling, general and administrative (including stock based compensation)		10,338,000			4,060,000
Depreciation and amortization		3,266,000			514,000
Total costs and expenses		19,047,000			7,861,000
Operating loss		(6,743,000	)		(3,392,000	)

Other income (expense):
Interest income		156,000			52,000
Other income		(1,703,000	)		-
Interest expense		(1,378,000	)		(20,000	)
Gain on extinguishment of debt		-			116,000
Loss on equity method investment		(112,000	)		(579,000	)
(Gain) loss on investments		424,000			(1,077,000	)
Gain on sale of asset		405,000			-
Loss from continuing operations before income taxes		(8,951,000	)		(4,900,000	)

Income tax benefit		-			838,000
Loss from continuing operations		(8,951,000	)		(4,062,000	)
Income from discontinued operations, net of tax		-			50,000
Net loss		(8,951,000	)		(4,012,000	)

(Gain) loss from continuing operations attributed to noncontrolling interest		903,000			31,000

Net loss attributable to common stockholders		(8,048,000	)		(3,981,000	)

Loss per common share:
Basic	$	(0.10	)	$	(0.21	)
Diluted	$	(0.10	)	$	(0.21	)

Earnings per common share - discontinued operations:
Basic	$	-		$	-
Diluted	$	-		$	-

Shares used in computing loss per common share:
Basic		84,626,847			19,432,831
Diluted		84,626,847			19,432,831

	(585) 325-3610
	(Registrant’s telephone number, including area code)

	2022			2021
Cash flows from operating activities:
Net loss from continuing operations	$	(8,951,000	)	$	(4,062,000	)
Adjustments to reconcile net loss from continuing operations to net cash used by operating activities:
Depreciation and amortization		3,266,000			514,000
Stock based compensation		4,000			12,000
Loss on equity method investment		(112,000	)		579,000
Loss (gain) on investments		424,000			1,076,000
Impairment of notes receivable and other investments		1,637,000			-
Gain on extinguishment of debt		-			(116,000	)
Deferred tax benefit		-			(838,000	)
Decrease (increase) in assets:
Accounts receivable		(430,000	)		82,000
Inventory		602,000			(601,000	)
Prepaid expenses and other current assets		1,597,000			(103,000	)
Other assets		(68,000	)		(382,000	)
Increase (decrease) in liabilities:
Accounts payable		532,000			107,000
Accrued expenses		(4,697,000	)		(3,521,000	)
Other liabilities		126,000			(778,000	)
Net cash used by operating activities		(6,070,000	)		(8,031,000	)

Cash flows from investing activities:
Purchase of property, plant and equipment		(942,000	)		(72,000	)
Purchase of real estate		-			(3,230,000	)
Purchase of investment		(1,085,000	)		(4,329,000	)
Purchase of marketable securities		(4,693,000	)		2,188,000
Disposal of property, plant and equipment		2,152,000
Note receivable investment		(791,000	)		(1,006,000	)
Net cash used by investing activities		(5,359,000	)		(6,449,000	)

Cash flows from financing activities:
Payments of long-term debt		(246,000	)		(89,000	)
Borrowings of long-term debt		6,193,000			110,000
Debt conversion to equity in subsidiary		840,000			-
Issuances of common stock, net of issuance costs		1,858,000			61,068,000
Net cash provided by financing activities		8,645,000			61,089,000

Cash flows from discontinued operations:
Cash (used) provide by discontinued operations		-			(12,000	)
Net cash used by discontinued operations		-			(12,000	)

Net increase (decrease) in cash		(2,784,000	)		46,597,000
Cash and cash equivalents at beginning of period		56,595,000			5,226,000
Cash and cash equivalents at end of period	$	53,811,000		$	51,823,000

	Shares		Amount		Shares		Amount		Capital		Subsidiary			Deficit			Total
	Common Stock				Preferred Stock				Additional Paid-in		Non- controlling Interest in			Accumulated
	Shares		Amount		Shares		Amount		Capital		Subsidiary			Deficit			Total

Balance, December 31, 2021		79,746,000	$	1,594,000		-	$	-	$	294,686,000	$	36,407,000		$	(132,384,000	)	$	200,304,000

Issuance of common stock, net		4,881,000		98,000		-		-		1,760,000		-			-			1,858,000
Conversion of debt to equity in subsidiary		-		-		-		-		-		840,000			-			840,000
Stock based payments, net of tax effect		-		-		-		-		4,000		-			-			4,000
Net loss		-		-		-		-		-		(903,000	)		(8,048,000	)		(8,951,000	)
Balance March 31, 2022		84,627,000	$	1,692,000		-	$	-	$	296,450,000	$	36,344,000		$	(140,432,000	)	$	194,055,000

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

Issuance of common stock, net		21,834,000		436,000		-		-		60,632,000		-			-			61,068,000
Stock based payments, net of tax effect		-		-		-		-		15,000		-			-			15,000
Net loss		-		-		-		-		-		(31,000	)		(3,981,000	)		(4,012,000	)
Balance, March 31, 2021		27,670,000	$	552,000		43,000	$	1,000	$	235,027,000	$	3,399,000		$	(105,363,000	)	$	133,616,000

	2022
	Adjusted Cost		Unrealized Gain/(Loss)		Fair Value		Cash and Cash Equivalents		Marketable Securities		Investments
Cash	$	48,799,000	$	-	$	48,799,000	$	48,799,000	$	-	$	-
Level 1
Money Market Funds		5,012,000		-		5,012,000		5,012,000		-		-
Marketable Securities		15,865,000		2,570,000		18,435,000		-		18,435,000		-
Level 2
Warrants		3,318,000		-		3,318,000		-		-		3,318,000
Convertible securities		1,023,000		357,000		1,380,000		-		-		1,380,000
Total	$	74,017,000	$	2,927,000	$	76,944,000	$	53,811,000	$	18,435,000	$	4,698,000

	2021
	Adjusted Cost		Unrealized Gain/(Loss)		Fair Value		Cash and Cash Equivalents		Marketable Securities		Investments
Cash	$	50,286,000	$	-	$	50,286,000	$	50,286,000	$	-	$	-
Level 1
Money Market Funds	$	6,309,000		-		6,309,000		6,309,000		-		-
Marketable Securities	$	12,993,000		1,544,000		14,537,000		-		14,537,000		-
Level 2
Warrants	$	3,318,000		-		3,318,000		-		-		3,318,000
Convertible securities	$	1,023,000		-		1,023,000		-		-		1,023,000
Total	$	73,929,000	$	1,544,000	$	75,473,000	$	56,595,000	$	14,537,000	$	4,341,000

	Totals
2022		513,000
2023		775,000
2024		54,000
2025		4,000
2026		2,000
2027		-
After		-
Total lease payments		1,348,000
Less: Imputed Interest		(26,000	)
Present value of remaining lease payments	$	1,322,000

Current	$	540,000
Noncurrent	$	782,000

Weighted-average remaining lease term (years)		3.5

Weighted-average discount rate		4.2	%

	2022		2021

Cash paid for interest	$	1,378,000	$	20,000

Non-cash investing and financing activities:
Termination of right of use lease asset	$	-	$	(744,000	)
Termination of right of use lease liability	$	-	$	744,000
Debt conversion to equity	$	840,000	$	-
Shares issued for accrued bonus	$	340,000	$	-

Three Months Ended March 31, 2022	Product Packaging			Commercial Lending		Direct Marketing			Biotechnology			Securities			Corporate			Total
Revenue	$	3,569,000		$	129,000	$	6,932,000		$	-		$	1,674,000		$	-		$	12,304,000
Depreciation and amortization		180,000			-		49,000			278,000			2,685,000			74,000			3,266,000
Interest expense		24,000			-		687,000			-			667,000			-			1,378,000
Stock based compensation		1,000			-		-			-			-			3,000			4,000
Impairment of goodwill		-			-		-			-			-			-			-
Net income (loss) from continuing operations		(42,000	)		181,000		(4,486,000	)		(616,000	)		(2,508,000	)		(1,480,000	)		(8,951,000	)
Capital expenditures		923,000			-		2,000			-			13,000			4,000			942,000
Identifiable assets		23,371,000			57,259,000		45,788,000			56,276,000			85,178,000			13,987,000			281,859,000

Three Months Ended March 31,2021	Product Packaging		Commercial Lending		Direct Marketing			Biotechnology			Securities		Corporate			Total
Revenue	$	3,861,000	$	-	$	608,000		$	-		$	-	$	-		$	4,469,000
Depreciation and amortization		116,000		-		44,000			278,000			-		76,000			514,000
Interest expense		19,000		-		-			-			-		1,000			20,000
Stock based compensation		1,000		-		-			-			-		6,000			7,000
Impairment of goodwill		-		-		-								-			-
Net income (loss) from continuing operations		218,000		-		(1,799,000	)		(698,000	)		-		(1,783,000	)		(4,062,000	)
Capital expenditures		66,000		-		6,000			-			-		-			72,000
Identifiable assets		22,567,000		-		18,892,000			51,158,000			-		49,206,000			141,823,000

Three months ended March 31, 2022
Packaging Printing and Fabrication	$	3,516,000
Commercial and Security Printing		53,000
Total Printed Products	$	3,569,000

	001-32146
	Commission file number

Three months ended March 31, 2021
Packaging Printing and Fabrication	$	3,720,000
Commercial and Security Printing		141,000
Total Printed Products	$	3,861,000

Three months ended March 31, 2022
Direct Marketing Internet Sales	$	6,932,000
Total Direct Marketing	$	6,932,000

Three months ended March 31, 2021
Rental income	$	-
Total Rental Income	$	-

Three months ended March 31, 2022
Management fee income	$	11,000
Total Management fee income	$	11,000

Three months ended March 31, 2021
Management fee income	$	-
Total Management fee income	$	-

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

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

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

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

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

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

	Three months ended March 31, 2022		Three months ended March 31, 2021		% Change
Revenue
Printed products	$	3,569,000	$	3,861,000		-8	%
Rental income		1,663,000		-		N/A
Management fee income		11,000		-		N/A
Net investment income		129,000		-		N/A
Direct marketing		6,932,000		608,000		1040	%

Total Revenue	$	12,304,000	$	4,469,000		175	%

	Three months ended March 31, 2022		Months ended March 31, 2021		% Change
Costs and expenses
Cost of revenue, exclusive of depreciation and amortization	$	5,443,000	$	3,287,000		66	%
Sales, general and administrative compensation		4,333,000		1,719,000		152	%
Depreciation and amortization		3,266,000		514,000		535	%
Professional fees		1,222,000		977,000		25	%
Stock based compensation		4,000		60,000		-93	%
Sales and marketing		3,861,000		630,000		513	%
Rent and utilities		149,000		57,000		161	%
Research and development		168,000		244,000		-31	%
Other operating expenses		600,000		373,000		61	%

Total costs and expenses	$	19,046,000	$	7,861,000		142	%

	Three months ended March 31, 2022			Three months ended March 31,2021			% Change
Other Income (Expense)
Interest Income	$	156,000		$	52,000			200	%
Interest Expense		(1,378,000	)		(20,000	)		6790	%
Other Expense		(1,703,000	)		-			N/A
Loss on investments		424,000			(1,077,000	)		-139	%
Loss on equity method investment		(112,000	)		(579,000	)		-81	%
Gain on extinguishment of debt		-			116,000			-100	%
Gain on sale of assets		405,000			-			N/A

Total other income	$	(2,208,000	)	$	(1,508,000	)		-46	%

Exhibit Number		Exhibit Description

10.1		Stock Purchase Agreement by and among DSS, Inc. and Alset EHome International, Inc. dated as of January 18, 2022 (incorporated by reference to Exhibit 10.1 to Form 8-K, filed with the Commission on January 19, 2022)

10.2		Stock Purchase Agreement by and among DSS, Inc. and Alset EHome International, Inc. dated as of January 18, 2022 (incorporated by reference to Exhibit 10.2 to Form 8-K, filed with the Commission on January 19, 2022)

10.3		Stock Purchase Agreement by and among DSS, Inc. and Alset EHome International, Inc. dated as of January 25, 2022 (incorporated by reference to Exhibit 10.1 to Form 8-K, filed with the Commission on January 25, 2022)

10.4		Assignment and Assumption Agreement by and between Alset International Limited and DSS, Inc. dated as of February 25, 2022 (incorporated by reference to Exhibit 10.1 to Form 8-K, filed with the Commission on February 25, 2022)

10.5		Convertible Promissory Note executed by American Medical REIT Inc. in favor of Alset International Limited in the principal amount of $8,350,000.00 dated October 29, 2021 (incorporated by reference to Exhibit 10.2 to Form 8-K, filed with the Commission on February 25, 2022)

10.6		Amendment to Stock Purchase Agreement made as of February 28, 2022 by and between DSS, Inc. and Alset EHome International, Inc. (incorporated by reference to Exhibit 10.1 to Form 8-K, filed with the Commission on March 1, 2022)

10.7		Stock Purchase Agreement by and among DSS, Inc. and Alset EHome International Inc. dated as of February 28, 2022 (incorporated by reference to Exhibit 10.2 to Form 8-K, filed with the Commission on March 1, 2022)

10.8		Agreement to Terminate Stock Purchase Agreement between DSS, Inc. and Alset EHome International Inc. (incorporated by reference to Exhibit 10.3 to Form 8-K, filed with the Commission on March 1, 2022)

10.9		Agreement to Terminate Stock Purchase Agreement between DSS, Inc. and Alset EHome International Inc. (incorporated by reference to Exhibit 10.4 to Form 8-K, filed with the Commission on March 1, 2022)

31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.*

31.2		Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer. *

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.*

32.2		Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.*

101.INS		Inline XBRL Instance Document*
101.SCH		Inline XBRL Taxonomy Extension Schema Document*
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document*
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document*
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)*

	DSS, INC.

May 16, 2022	By:	/s/ Frank D. Heuszel
		Frank D. Heuszel
		Chief Executive Officer
		(Principal Executive Officer)

May 16, 2022	By:	/s/ Todd D. Macko
		Todd D. Macko
		Chief Financial Officer

	(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.