10-K: DSS, Inc. Reports 2024 Annual Results: Revenue Declines Amid Strategic Shift

DSS, Inc.'s 2024 annual report reveals a 26% decrease in revenue, driven by changes in business strategy and market conditions, alongside a strategic focus on operational efficiencies and long-term growth.

Summary

• DSS, Inc. reported a 26% decrease in revenue for the year ended December 31, 2024, totaling $19.1 million compared to $25.9 million in 2023.
• The decline in printed products sales was 13%, attributed to order timing and reduced demand from key customers.
• Rental income decreased by 51% due to a tenant's inability to make rent payments at AMRE LifeCare.
• Net investment income fell by 41% to $226,000 due to uncollectible notes receivable.
• Direct marketing revenue decreased by 100% due to a shift in business plan towards licensing.
• Commission revenue decreased 41% due to a change in clearing houses.
• The company experienced a net loss of $53.7 million, compared to a net loss of $77.5 million in the previous year.
• The company impaired Impact BioMedical goodwill in the amount of $25,093,000.
• The company has taken steps to materially reduce the expenses and cash burn at all corporate and business line levels.
• The company has concluded that substantial doubt of its ability to continue as a going concern has been alleviated.

Sentiment

Score: 4

Explanation: The document presents a mixed sentiment. While there are positive aspects such as cost reduction efforts and the alleviation of going concern doubts, the overall tone is weighed down by significant revenue decline, net losses, and goodwill impairment. The strategic shift and future outlook provide some optimism, but the current financial performance is concerning.

Positives

• The company has taken steps to materially reduce the expenses and cash burn at all corporate and business line levels.
• The company has concluded that substantial doubt of its ability to continue as a going concern has been alleviated.
• The company sold shares of Impact BioMedical for approximately $1,969,000 between March 24, 2025 and March 27, 2025.
• The company sold its retail space in Lindon, Utah for the sales price, net of expenses, of approximately $ 5,758,000.

Negatives

• DSS, Inc.'s revenue decreased by 26% to $19.1 million in 2024.
• Printed products sales decreased by 13% due to order timing and reduced demand.
• Rental income decreased by 51% due to a tenant's inability to make rent payments.
• Net investment income decreased by 41% to $226,000 due to uncollectible notes receivable.
• Direct marketing revenue decreased by 100% due to a shift in business plan towards licensing.
• Commission revenue decreased 41% due to a change in clearing houses.
• The company experienced a net loss of $53.7 million.
• The company impaired Impact BioMedical goodwill in the amount of $25,093,000.

Risks

• The value of intangible assets and investments may not be equal to their carrying values.
• The company has secured indebtedness, and a potential risk exists that the company may be unable to satisfy its obligations to pay interest and principal thereon when due or negotiate acceptable extensions or settlements.
• A significant amount of the company's revenue is derived by two customers.
• The company may face intellectual property infringement or other claims against the company, its customers or its intellectual property that could be costly to defend and result in the company's loss of significant rights.
• Certain of the company's recently developed products are not yet commercially accepted and there can be no assurance that those products will be accepted, which would adversely affect the company's financial results.
• The results of the company's research and development efforts are uncertain and there can be no assurance of the commercial success of the company's products.
• The markets in which the company operates are highly competitive, and the company may not be able to compete effectively, especially against established industry competitors with greater market presence and financial resources.
• If the company is unable to respond to regulatory or industry standards effectively, the company's growth and development could be delayed or limited.
• Breaches in security, whether cyber or physical, and other disruptions and/or the company's inability to prevent or respond to such breaches, could diminish the company's ability to generate revenues or contain costs, compromise the company's assets, and negatively impact the company's business in other ways.
• The company's investments in Asia are subject to unique risks and uncertainties, including tariffs and trade restrictions.
• Future growth in the company's business could make it difficult to manage the company's resources.
• If the company fails to retain certain of its key personnel and attract and retain additional qualified personnel, the company might not be able to remain competitive, continue to expand the company's technology or pursue growth.
• The company has identified weaknesses in its internal control over financial reporting structure; any material weaknesses may cause errors in the company's financial statements that could require restatements of the company's financial statements and investors may lose confidence in the company's reported financial information, which could lead to a decline in the company's stock price.
• The company does not intend to pay cash dividends.
• The company may seek to 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 the company's investments in such activities.
• Changes in the laws and regulations to which the company is subject may increase the company's costs.
• Declines in general economic conditions or acts of war and terrorism may adversely impact the company's business.
• If the company fails to comply with the continued listing standards of the NYSE American LLC Exchange, it may result in a delisting of the company's common stock from the exchange.
• If securities or industry analysts do not publish research or reports about the company's business, or if they change their recommendations regarding the company's stock adversely, the company's stock price and trading volume could decline.
• Because certain of the company's stockholders control a significant number of shares of the company's common stock, they may have effective control over actions requiring stockholder approval.
• Additional financing or future equity issuances may result in future dilution to the company's shareholders.

Future Outlook

DSS, Inc. is strategically focusing on optimizing operational efficiencies, realigning resources, and positioning the company for sustainable long-term growth, with a target to reduce costs by 15-20% in the upcoming fiscal year.

Management Comments

• As DSS, Inc. enters a new chapter, our strategic focus is to optimize operational efficiencies, realign resources, and position the company for sustainable long-term growth.
• This pivotal moment in DSS, Inc.s journey marks a clear path toward growth, innovation, and sustained value creation.
• With a focused strategy and commitment to execution, we are poised to unlock new opportunities and drive long-term shareholder returns.

Industry Context

The company operates in diverse sectors including product packaging, biotechnology, commercial lending, securities and investment management, and direct marketing, each facing unique industry-specific challenges and competition.

Comparison to Industry Standards

• Premier Packaging competes with major integrated paper companies such as WestRock Company and Graphic Packaging Holding Company.
• American Pacific Financial competes with a wide array of traditional commercial banks and investment banking firms.
• Impact Biomedical Inc. faces competition from other biotechnology firms and research institutions that are also pursuing cutting-edge advancements in healthcare, wellness, and related technologies.
• The Securities and Investment Management unit faces competition from individual money managers, established financial institutions, and organizations that engage in securities trading and management, including both traditional Registered Investment Advisors (RIAs) and Broker-Dealers.

Management Changes

Related Party Transactions

• The Chairman of the Company, Mr. Heng Fai Ambrose Chan, is the Executive Director and Chief Executive Officer of Alset Intl.
• DSS owns 24.9% of the outstanding common shares of BMIC.
• Heng Fai Ambrose Chan, the Chairman of DSS, Inc is also the on the board of directors of VEII.
• On December 10, 2024, DSS entered into a securities purchase agreement with Alset Inc., a related party, pursuant to which the Company agreed to sell and issue in a private placement an aggregate of 820,597 shares of the Company's common stock for approximately $ 803,000.
• On December 10, 2024, DSS entered into a securities purchase agreement with Heng Fai Ambrose Chan, the Chaiman of the Board of Directors and a related party, pursuant to which the Company agreed to sell and issue in a private placement an aggregate of 205,149 shares of the Company's common stock for approximately $ 197,000.
• On February 6, 2025, as a bonus for compensation 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., and pursuant to DSS, Incs. 2020 Employee, Director and Consultant Equity Incentive Plan (the Plan), HFHL was awarded 1,000,000 shares of the Company's common stock under the Plan, for services rendered.

Stakeholder Impact

• Shareholders may experience dilution from future equity issuances.
• Employees may be affected by cost reduction efforts and business unit restructuring.
• Customers may see changes in product offerings and service delivery as the company shifts its strategic focus.
• Suppliers may be impacted by the company's efforts to optimize procurement and reduce costs.
• Creditors face the risk of default if the company is unable to meet its debt obligations.

Next Steps

• Expansion of High-Impact Business Lines, such as Premier Packaging, to drive growth and contribute to long-term revenue generation.
• Exploration of Untapped Markets, with a focus on creating scalable and recurring revenue streams across multiple sectors.
• Enhancing Accountability Across Business Units, implementing metrics-driven accountability systems across all business units.
• Comprehensive Business Unit Review to identify underperforming segments.
• Process and Technology Optimization to improve productivity and reduce inefficiencies.
• Targeted Cost Reduction of 15-20% in the upcoming fiscal year.
• Advancing Research and Development (R&D) to develop cutting-edge solutions in emerging sectors.
• Cultivating Strategic Partnerships to accelerate the market introduction of innovative products and solutions.
• Pilot Program Launches in select regions or sectors to validate new initiatives.
• Exploring Shareholder Rewards to directly reward shareholders for their continued trust and support.

Key Dates

Keywords

financial results, annual report, revenue, net loss, operating segments, biotechnology, commercial lending, securities, investment management, direct marketing, product packaging, DSS Inc