Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

Certain statements contained herein this report constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "1995 Reform Act"). Except for the historical information contained herein, this report contains forward-looking statements (identified by words such as "estimate", "project", "anticipate", "plan", "expect", "intend", "believe", "hope", "strategy" and similar expressions), which are based on our current expectations and speak only as of the date made. These forward-looking statements are subject to various risks, uncertainties and factors that could cause actual results to differ materially from the results anticipated in the forward-looking statements.

Overview

The Company, incorporated in the state of New York in May 1984 has conducted business in the name of DSS, 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 August 2020), for the sole purpose of effecting a name change from Document Security Systems, Inc. to DSS, Inc. This change became effective on September 30, 2021. DSS, Inc. maintained the same trading symbol "DSS".

DSS, Inc. (together with its consolidated subsidiaries, referred to herein as "DSS," "we," "us," "our" or the "Company") currently operates nine (9) distinct business lines with operations and locations around the globe. These business lines are: (1) Product Packaging, (2) Biotechnology, (3) Commercial Lending, (4) Securities and Investment Management, (5) Direct Marketing.

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

The five reporting segments are as follows:

Premier Packaging: ("Premier") Premier Packaging Corporation provides custom packaging services and serves clients in the pharmaceutical, nutraceutical, consumer goods, beverage, specialty foods, confections, photo packaging and direct marketing industries, among others. The group also provides active and intelligent packaging and document security printing services for end-user customers. In addition, the division produces a wide array of printed materials, such as folding cartons and paperboard packaging, security paper, vital records, prescription paper, birth certificates, receipts, identification materials, entertainment tickets, secure coupons and parts tracking forms. The division also provides resources and production equipment for our ongoing research and development of security printing, brand protection, consumer engagement and related technologies.

Commercial Lending: ("Commercial Lending") through its operating company, American Pacific Financial, Inc. ("APF") represents our banking and financing business line. is organized for the purposes of being a financial network holding company, focused providing commercial loans and on acquiring equity positions in (i) undervalued commercial bank(s), bank holding companies and nonbanking licensed financial companies operating in the United States, South East Asia, Taiwan, Japan and South Korea, and (ii) companies engaged in-nonbanking activities closely related to banking, including loan syndication services, mortgage banking, trust and escrow services, banking technology, loan servicing, equipment leasing, problem asset management, SPAC (special purpose acquisition company) consulting, and advisory capital raising services. From this financial platform, the Company shall provide an integrated suite of financial services for businesses that shall include commercial business lines of credit, land development financing, inventory financing, third party loan servicing, and services that address the financial needs of the world Gig Economy.

Biotechnology: ("Biotech") targets unmet, urgent medical needs and expands the borders of medical and pharmaceutical science. Biotech drives mission-oriented research, development, and commercialization of solutions for medical advances in human wellness and healthcare. By leveraging technology and new science with strategic partnerships, Biotech provides advances in drug discovery for the prevention, inhibition, and treatment of neurological, oncology and immuno-related diseases. Other exciting technologies include a breakthrough alternative sugar aimed to combat diabetes and functional fragrance formulations aimed at the industrial and medical industry.

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

	●	LineBacker: Multi-faceted therapeutic platform for metabolic, neurologic, cancer, and infectious diseases.
	●	Equivir: A polyphenol compound that is believed to be successful in antiviral infection treatments. Equivir/Nemovir technology is a novel blend of FDA Generally Recognized as Safe ("GRAS") eligible polyphenols (e.g., Myricetin, Hesperetin, Piperine) which have demonstrated antiviral effects with additional potential application as health supplements or medication. Polyphenols are sourced from fruits, vegetables, and other natural substances. Myricetin is a member of the flavonoid class of polyphenolic compounds with antioxidant properties. Hesperitin is a flavanone and Piperine is an alkaloid, commonly found in black pepper.
	●	Procombin: Applications as food additive, and natural preservative for beauty and person care products as well as natural food preservative.
	●	VanXin: Food preservative booster made up of polyphenols that extend the shelf life.
	●	Bioplastics: Advanced bio-compatible plastics that mitigate accumulation of plastics in oceans and landfills and provide UVA and UVB protection for many types of material for including containers, hard surfaces, and fibers for clothing. The technology is presently in development and testing antimicrobial plastics for consumer products that control the spread of active pathogens such as SARS-CoV-2, Influenza, E. coli, Staph, and Rhinovirus, by exploiting key strategies found in the biological realm. These new plastics are specifically focused on solutions for common products such as cups, plates, utensils, plastic bags, and countertops. The first prototypes are currently undergoing antimicrobial resistance testing.
	●	Laetose: Laetose technology is derived from a unique combination of sugar and inositol, which demonstrates the ability to inhibit the inflammatory and metabolic response of sugar alone. A sugar alternative which is believed to lower human glycemic indexes and is believed to be a breakthrough alternative sugar aimed to combat diabetes. The use of Laetose in a daily diet, compared to sugar, could result in 30% lower sugar consumption and lower glycemic index/load.
	●	3F: A botanical compound believed to serve as an insect repellent and anti-microbial agent. 3F is a unique formulation of specialized ingredients (e.g. terpenes) from botanical sources with demonstrated effect as an insect repellent and an antimicrobial.
	●	3F Mosquito Repellent: 3F repellent contains botanical ingredients that mosquitos avoid. These ingredients are scientifically proven1 to affect the mosquito's receptors, essentially making the insect blind to a human's presence. This can be utilized as a stand-alone repellent or as an additive in detergents, lotions, shampoo, and other substances to provide mosquito protection.
	●	3F Antimicrobial: 3F antimicrobial contains botanical ingredients known to kill viruses. These ingredients are scientifically proven to inhibit viral replication. This can be utilized as a stand-alone antimicrobial or as an additive in detergents, lotions, shampoo, fabrics, and other substances.
	●	Quantum: The solution to the Patent Cliff accomplished by creating a new class of medicinal chemistry that uses advanced methods to increase effectiveness and persistence of natural compounds and existing drugs. The safety attributes of the original molecules are maintained. Typically, drug discovery processes modify functional groups. Quantum's new techniques alter behavior of molecules at the sub-molecular level. It is estimated that 65% of the World Health Organization Essential Medicines List can be improved and re-patented using Quantum and these methods can be used to enhance and patent natural compounds including many substances used in traditional medicines around the world.
	●	Bio Med (license): A probiotic gut health product that helps to regulate many physiological functions, ranging from energy regulation and cognitive processes to toxin neutralization and immunity against pathogens.

Securities and Investment Management: ("Securities") Securities was established to develop and/or acquire assets in the securities trading or management arena, and to pursue, among other product and service lines, real estate investment funds, broker dealers, and mutual funds management. This business sector has already established the following business lines/investments and associated products and services:

	●	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.
	●	Sentinel: Sentinel Brokers Company, Inc. ("Sentinel") began business on January 1, 1996. It's primarily engaged in acting as an intermediary facilitating the trading of Municipal Bonds and Preferred Stocks between institutions. Sentinel has no retail customer base. Sentinel is a broker-dealer registered with the Financial Industry Regulatory Authority (FINRA) and the Securities Exchange Commission. Sentinel, as a non-clearing broker, does not handle customers' funds or securities. In April of 2025, Sentinel received approval from FINRA to perform underwriting licenses.
	●	BMIC: BMIC 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, BMIC services companies in the US, Hong Kong, Singapore, Taiwan, Japan, Canada, and Australia.
	●	DSS Wealth Management: AmericaFirst is a suite of mutual funds managed by DSS Wealth Management. AmericaFirst expects to expand into numerous investment platforms including additional mutual funds and exchange-traded funds. AmericaFirst currently consists of four mutual funds that seek to outperform their respective benchmark indices by applying top-down, fundamental research, quantitative and technical analysis to stock selection and portfolio management.

Direct Marketing Segment: provides services to assist companies in the emerging growth gig business model of peer-to-peer decentralized sharing marketplaces. It specializes in marketing and distributing its products and services through its subsidiary and partner network, using the popular gig economic marketing strategy as a form of direct marketing. Direct marketing products include, among other things, nutritional and personal care products sold throughout North America, Asia Pacific and Eastern Europe.

Results of operations for the three and nine months ended September 30, 2025, as compared to the three and nine months ended September 30, 2024.

This discussion should be read in conjunction with the financial statements and footnotes contained in this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2024.

Revenue

		Three months ended September 30, 2025				Three months ended September 30, 2024				% Change				Nine months ended September 30, 2025				Nine months ended September 30, 2024				% Change
Printed products		$	4,994,000			$	4,828,000				3	%		$	13,249,000			$	11,429,000				16	%
Rental income			718,000				496,000				45	%			2,147,000				1,334,000				61	%
Net investment income			7,000				45,000				-84	%			36,000				181,000				-80	%
Commission revenue			662,000				230,000				188	%			1,166,000				737,000				58	%
Biotechnology retail sales			11,000				-				N/A				32,000				-				N/A
Total Revenue		$	6,392,000			$	5,599,000				14	%		$	16,630,000			$	13,681,000				22	%

For the nine months ended September 30 2025, total revenue increased 22% as compared to the nine months ended September 30, 2024. The increase in Printed Product revenue of approximately 16% is driven by new customer orders as well as existing customer orders exceeding their forecasts. The increases in Securities revenue of approximately 61% is driven by an increase in rental income by new tenants at AMRE LifeCare Pittsburgh facility beginning to making rental payments in the second half of 2024. The decreases in Net investment income approximating 80% is due to a number of loans made going on non-accrual as borrowers have struggled to make expect payments. Biotechnology revenue is driven by sales of the Company's air purification Celios brand.

Costs and Expenses

		Three months ended September 30, 2025				Three months ended September 30, 2024				% Change				Nine months ended September 30, 2025				Nine months ended September 30,2024				% Change
Cost of revenue
Printed products		$	4,380,000			$	4,350,000				1	%		$	12,274,000			$	10,715,000				15	%
Securities			1,868,000				1,993,000				-6	%			4,430,000				5,804,000				-24	%
Biotechnology			12,000				10,000				20	%			36,000				30,000				20	%
Commercial lending			(192,000	)			252,000				-176	%			20,000				719,000				-97	%
Direct marketing			-				(2,000	)			-100	%			(7,000	)			(2,000	)			250	%
Sales, general and administrative compensation			1,219,000				1,197,000				2	%			4,386,000				3,639,000				21	%
Professional fees			750,000				565,000				33	%			1,881,000				1,870,000				1	%
Stock based compensation			2,000				-				N/A				5,000				-				N/A
Sales and marketing			631,000				907,000				-30	%			1,455,000				1,849,000				-21	%
Rent and utilities			136,000				133,000				2	%			395,000				560,000				-29	%
Research and development			52,000				82,000				-37	%			230,000				386,000				-40	%
Other operating expenses			768,000				783,000				-2	%			1,909,000				2,398,000				-20	%
Total costs and expenses		$	9,626,000			$	10,270,000				-6	%		$	27,014,000			$	27,968,000				-3	%

Costs of revenueincludes all direct costs of the Company's printed products, including its packaging and printing sales and its direct marketing sales, materials, direct labor, transportation, and manufacturing facility costs. In addition, this category includes all direct costs associated with the Company's technology sales, services and licensing including hardware and software that are resold, third-party fees, and fees paid to inventors or others because of technology licenses or settlements, if any. Cost of revenue for our 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 for the nine months ended September 30, 2025 as compared to September 30, 2024 by approximately 3%. Cost of revenue increased at our Printed products business line driven by an increase in revenue which was offset by decrease in cost of revenue within our REIT business driven by the sale of the Plano, Tx facility as well as new tenants at our Pittsburgh, PA facility paying related cost previously paid for by the Company as well as decreases in our Commercial lending business unit driven by decreases on loans reserved for year over year.

Sales, general and administrative compensationcosts, excluding stock-based compensation, increased 21% for nine months ended September 30, 2025 as compared to 2024 is primarily due to bonus awarded to Heng Fai Holdings Limited ("HFHL"), a Hong Kong Company, which is beneficially owned by Mr. Heng Fai Ambrose Chan, Director of DSS, Inc., for services rendered. The issuance was approved by the board of directors on January 31, 2025.

Professional feesincreased for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 due to cost incurred associated with the resignation of the Company's position as the registered investment advisor for the AmericanFirst Funds as well as recruiting costs incurred to expand the sales force at Premier Packaging. Professional fees increased for the nine months ended September 30, 2025 as compared to 2024 due primarily to efforts taken to control these costs as the Company continues to drive savings in non-essential areas.

Stock based compensationincludes expense charges for all stock-based awards to employees, directors, and consultants of Impact Bio. Such awards can include option grants, warrant grants, and restricted and unrestricted stock awards. These types of awards were not used prior to the Company's IPO in September 2024.

Sales and marketingwhich include internet and trade publication advertising, travel and entertainment costs, sales-broker commissions, and trade show participation expenses. Sales and marketing decreased 21% during the nine months ended September 30, 2025 as compared to 2024 due to decreases in marketing, and travel costs within our Printed Products division.

Rent and utilities decreased 29% during the nine months ended September 30, 2025 as compared to 2024 primarily due to end of the lease in office space in California for the Company's DSS Wealth Management subsidiary.

Research and developmentcosts represent costs consisting primarily of independent, third-party testing of the various properties of each technology the Company owns possesses as well as research on new technologies. These costs increased for the three and nine months ended September 30, 2025 as compared to September 30, 2024, due cost incurred to file, perfect or update existing and potential patents on technologies owned by Impact BioMedical.

Other operating expenses consist primarily of equipment maintenance and repairs, office supplies, IT support, and insurance costs. These costs decreased approximately 20% during the nine months ended September 30, 2025 as compared to September 30, 2024, primarily due to collections of previously written-off of accounts receivable associated with our AMRE LifeCare facilities of approximately $600,000.

Other Income (Expense)

		Three months ended September 30, 2025				Three months ended September 30, 2024				% Change				Nine months ended September 30, 2025				Nine months ended September 30, 2024				% Change
Interest Income		$	9,000			$	28,000				-68	%		$	42,000			$	331,000				-87	%
Dividend Income			4,000				-				N/A				4,000				-				N/A
Other Income (expense)			-				2,000				-100	%			10,000				39,000				-74	%
Interest Expense			(38,000	)			(53,000	)			-28	%			(194,000	)			(242,000	)			-20	%
Foreign Currency Translation Adjustment			(1,000	)			8,000				-113	%			(1,000	)			(5,000	)			-80	%
Gain/(Loss) on extinguishment of debt			595,000				-				N/A				595,000				-				N/A
(Loss)/gain on equity method investment			2,000				(4,000	)			-150	%			(4,000	)			3,000				-233	%
Gain (loss) on investments			477,000				(449,000	)			-206	%			1,105,000				(1,021,000	)			-208	%
Impairment of intangible assets			-				-				N/A				(600,000	)			-				N/A
Provision for loan losses			-				(562,000	)			-100	%			-				(908,000	)			-100	%
(Loss)/gain on sale			(43,000	)			-				N/A				(727,000	)			165,000				-541	%
Total other income		$	1,005,000			$	(1,030,000	)			198	%		$	230,000			$	(1,638,000	)			114	%

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

Other incomefor the nine months ended September 30, 2025 as compared to 2024 decreased 74% due primarily to income incurred in 2024 regarding the Company's distribution agreement with BioMed Technologies that did not reoccur in 2025.

Interest expensesdecreased 20% during the nine months ended September 30, 2025, as compared to the same period in 2024, due to decreasing debt balances driven by the sale of the Company's Plano, Texas facility.

Loss on equity method investment is the Company's prorated portion of earnings on its investments treated under the equity method of account for the nine months ended September 30, 2025 as compared to 2024.

Gain (loss)on investments consists of net realized losses on marketable securities which are recognized as the difference between the purchase price and sale price of the common stock investment, and net unrealized losses on marketable securities which are recognized on the change in fair market value on our common stock investment. The decrease in loss on investment for the nine months ended September 30, 2025 as compared to 2024 is driven by the performance of our stock portfolio.

Impairment of intangible assetsis a result of the Company resigning its position as the registered investment advisor ("RIA") of the American First Mutual Funds. The related asset was acquired at the time the Company became the RIA in September 2021.

Provision for loan lossesrepresents a reserve put against certain notes receivable deemed uncollectible. During the nine months ended September 30, 2025, the Company reviewed the entire loan portfolio and determined no additional provisions for loan losses was necessary.

Loss on sale of real estateis driven by the sale of the Company's Plano, Texas facility.

Net Loss

		Three months ended September 30, 2025				Three months ended September 30, 2024				% Change				Nine months ended September 30, 2025				Nine months ended September 30, 2024				% Change
Net loss		$	(2,229,000	)		$	(5,701,000	)			61	%		$	(10,087,000	)		$	(15,762,000	)			36	%

For the nine months ended September 30, 2025 the Company recorded net losses of $10,088,000 as compared to net losses of $15,762,000 for the same period in 2024. The decrease in net loss is driven increases in revenue at our Printed products and Securities divisions of approximately $1,820,000 and $1,242,000 respectively. The Company also saw a gain in our investments of approximately $2,126,000 during this time frame. This is offset by the bonus paid to Heng Fai Holdings Limited of approximately $871,000 during the first quarter of 2025 as well as an approximate loss of $727,000 on the sale of the Company's Plano, Tx facility.

LIQUIDITY AND CAPITAL RESOURCES

The Company has historically met its liquidity and capital requirements primarily through the sale of its equity securities and debt financing. As of September 30, 2025 the Company had cash of approximately $9.5 million. As of September 30, 2025, the Company believes that it will have access to sources of capital from the sale of its equity securities and debt financing, and thus believes that it has sufficient cash to meet its cash requirements for at least the next 12 months from the filing date of this Quarterly Report.

Cash Flow from Operating Activities

Net cash used by operating activities was $7,576,000 for the nine months ended September 30, 2025 as compared to cash used of $5,889,000 for nine months ended September 30, 2024. This fluctuation is driven by decreases in net loss, after reconciling items, approximating $2,808,000, offset by increases in accounts receivable by approximately $3,227,000

Cash Flow from Investing Activities

Net cash provided by investing activities was $12,080,000 for the nine months ended September 30, 2025 as compared to net cash provided by investing activities of $9,916,000 for the nine months ended September 30, 2024. This fluctuation is driven by the sale of real estate approximating $9,023,000, the sale of marketable securities of approximately $3,438,000, and the sale of related party investments of approximately $2,414,000, offset by the purchase of marketable securities of approximately $2,794,000 during 2025 versus a sale of marketable securities of $0 during 2024. This is offset by receipts on Notes receivable of $4,039,000 in 2024 versus $225,000 in 2025.

Cash Flow from Financing Activities

Net cash used by financing activities was $8,816,000 for the nine months ended September 30, 2025 as compared to net cash provided by financing activities of $989,000 for the nine months ended September 30, 2024. This variance is driven by payments toward long term debt of $11,492,000, payments on margin loans of $943,000 offset by borrowings of long-term debt of $3,250,00 in 2025 versus payments toward long term debt of $1,492,000 in 2024, no payments on margin loans during 2024, offset by issuance of common stock of a subsidiary of $2,227,000.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make judgments, assumptions and estimates that affect the amounts reported in our financial statements and accompanying notes. The financial statements as of December 31, 2024, describe the significant accounting policies and methods used in the preparation of the financial statements. There have been no material changes to such critical accounting policies as of the Quarterly Report on Form 10-Q for the quarter ended September 30, 2025.