DSS, Inc. (“DSS” or the “Company”) (NYSE American: DSS), a
multinational company operating nine business divisions through
strategic acquisitions and development to enrich shareholder value,
today announced a letter to shareholders.
Dear Shareholders:
I want to begin by thanking you, our
shareholders, for your continued support as we execute our vision
of a decentralized sharing business model to build shareholder
value and drive exponential growth.
In my last letter to shareholders, I said 2022
was forecasted to be a breakout year for DSS. I am pleased to
report that our team delivered on this objective as we excelled
under the first year of the rebranded DSS, Inc., driving strong
top-line growth across our diverse business lines and fortifying
our foundation for accelerated growth and value creation moving
forward. I remain proud of what our company and team of employees
around the world have achieved, collectively and individually. This
progress is a function of continual investments in our people,
systems, and companies, in good and bad times, to build our
capabilities and brand.
Our trailing 12-month revenues, as of the third
quarter of 2022, have more than doubled from where we were at the
end of 2021, and our total assets, now at nearly $265 million, have
grown more than 1,000%, up from under $20 million, since we first
embarked on transforming DSS just over three years ago in late
2019.
Importantly, the acquisition of new assets,
whether entire businesses, new technologies, or other innovations,
is an integral part of the unique development process we employ to
create value and drive long-term growth.
Three-Stage Development for Exponential
Growth
I would like to note some principles and
strategies that we use to build this company, which have been
described to you, but that are worth repeating. For each
acquisition we complete, we apply a three-stage development process
to maximize value creation and provide the engine for growth
through increased bandwidth, horsepower, and scale. The first stage
of this process begins with the asset acquisition itself, where we
identify and acquire the right vehicles and asset structures, as
well as the organizations and people capable of building revenue
and scaling operations.
The second stage of our development process
focuses on revenue generation, creating revenue streams, license
streams, and other recurring, scalable revenue. We seek to build
highly functional businesses during this stage of development,
businesses that we transform into well-oiled machines built for
efficiency and operational excellence. As evidenced by the revenue
growth mentioned earlier, we have delivered well on this stage in
2022. And as we continue to grow revenue, we enter the final stage
of development where the focus turns toward positive EBITDA and
profitability driven by scale and efficiencies.
While each of our business lines are in various
stages of this development process, ultimately as we reach our
internal goals and expectations and these businesses reach an
optimal point for the most effective leverage, we intend to pursue
IPOs that enable us to share our success with our shareholders.
Giving back to our shareholders in this way has been part of our
vision since the beginning days of our transformation, and we could
potentially see two or even three such IPOs over the next 12
months.
We believe our decentralized sharing model, the
culmination of our three-stage development process, is unique and
will drive shareholder value as we distribute dividends from these
potential IPOs of our wholly owned subsidiaries, directly
benefiting each of our shareholders.
Greater Capacity Added
to Consumer Packaging Business
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 19% year-over-year revenue growth for this
segment in the most recently reported quarter.
For over 25 years, Premier has been a market leader in providing
solutions for paperboard packaging from consumer retail packaging
and heavy mailing envelopes, to sophisticated custom and
sustainable folding cartons and complex three-dimensional direct to
consumer packaging solutions. Premier’s innovative products and
design team delivers packaging that provides functionality,
marketability, and sustainability, with its fiber-based packaging
solutions, providing an alternative to traditional plastic
packaging.
Since 2019, we have accelerated the
transformation of Premier’s operations, investing in
state-of-the-art manufacturing equipment, people, and processes 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.
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.
Licensing Agreements Add Value to Impact BioMedical
Ahead of Planned IPO
Impact BioMedical, the cornerstone of our
BioHealth group, continued to progress on multiple fronts in 2022,
including promising early testing results on new bioplastics,
strengthened intellectual property protections, and licensing
agreements with ProPhase Biopharma, a wholly owned subsidiary of
ProPhase Labs, Inc., for its proprietary Linebacker and Equivir
compounds. ProPhase Labs, a diversified diagnostic company with
over three decades of enhancing wellness and improving health with
OTC and prescription products, believes Impact BioMedical’s
Linebacker compounds have multi-billion-dollar potential as cancer
co-therapies and expects to commercialize Equivir as an OTC
supplement in late 2023. Additionally, ProPhase BioPharma expects
to file an IND with the US FDA for Equivir G as a prescription
antiviral.
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. Although the uniqueness of our
planned dividend strategy has required overcoming numerous
regulatory challenges that have delayed the planned spinoff of
Impact BioMedical, we anticipate we could receive the long-awaited
approval to move forward with the first tranche of the dividend in
early 2023.
Importantly, Impact BioMedical is just one of
multiple assets we believe can have liquidity events in 2023 as we
continue to diligently move our growing portfolio of businesses
through our unique and strategic value creation process.
Double-Digit Portfolio Growth for American Medical
REIT’s High-Quality Healthcare Assets
We continued to expand our medical real estate
operations in 2022 and now own more than 380,000 sq. ft. of
high-quality healthcare assets across the US, providing a
formidable foundation for our operations as we seek to further
accelerate growth and build long-term value for our
shareholders.
This attractive business line operates as
American Medical REIT (AMRE), a subsidiary of our DSS Securities
subsidiary, and acquired its first properties in 2021. It’s now
generating average yields of approximately six percent (6%), and we
have a significant pipeline of opportunities to further grow AMRE
in the quarters ahead once we believe the economic opportunities
have improved.
While other areas within commercial real estate
have been impacted by the ongoing effects from the pandemic and
changing interest rate environments, medical real estate has
demonstrated considerable resiliency and demand. We are in a great
position to further pursue opportunities to expand AMRE as we
continue to execute our strategic growth plans. Ultimately, this is
a business we intend to spinoff in an IPO at an optimal time,
enabling us to further share our success with our shareholders.
High-Quality Loan Portfolio Generating 10.6% Average
Return
The expansion of our medical real estate
holdings is in part supported by our banking and financing business
line, primarily through our majority-owned American Pacific
Bancorp, Inc. (APB) subsidiary. APB issued more than $40 million in
new loans since our third quarter 2021 acquisition, assembling a
diversified portfolio of strong credit quality that is generating
an average 10.6% return. Looking ahead, as we prepare to file an
S-1 for APB’s IPO in late 2023 or early 2024, we expect to expand
our managed loan portfolio, which earns 1.5% annually in service
charges, to more than $39 million. Importantly, our equity
portfolio as a bank holding company is anticipated to remain
relatively stable, regardless of stock market fluctuations.
USX Holdings to Launch Innovative
Marketplace for Trading Digital Assets
In the near-term, we anticipate new developments
from our 70% ownership of USX Holdings Company Inc. (USX Holdings),
a joint venture collaboration with GSX Group Limited, a global
digital exchange ecosystem for the issuance, trading, and
settlement of tokenized securities, and Coinstreet Partners, a
global decentralized digital investment banking group and digital
asset financial service firm.
We are taking the necessary steps to prepare USX
Holdings to launch an innovative marketplace for trading digital
ADRs based on US equity securities. The transformative potential of
digital securities is extremely exciting, and we believe USX
Holdings can be a major player in the space as it pursues the
massive opportunity in the US for a secondary market in securities
tokens.
USX Holdings is part of our larger securities
business line. In addition to the investment we made in USX
Holdings in 2021, we also completed strategic investments in broker
dealers WestPark Capital and Sentinel Brokers and formed Liquid
Value Asset Management Limited, a proprietary algorithmic trading
firm majority owned by our wholly owned subsidiary, DSS Financial
Management, Inc. As we move into 2023, we plan to add market making
to our securities business line and to pursue additional
initiatives to drive further strong revenue growth.
DSS PureAir Positioned for Global
Rollout
We also expect the foundation laid for our DSS
PureAir subsidiary, first launched in mid-2021, to gain significant
new traction across the Asia Pacific region in the quarters ahead.
The primary assets of DSS PureAir include our investment in the
Celios air purification system, Puradigm air purification product
distribution license, and an array of other healthcare-related
product licenses. With a growing portfolio of solutions, we have
launched a direct-to-consumer online distribution channel at
https://dsspureair.com/ and continue to generate sales for our
innovative proactive air and surface purifications solutions
through our expanding direct selling business.
Direct Selling Subsidiary, Sharing
Services Global, to Uplist to Nasdaq Expanding Direct Selling
Business Line
Sharing Services Global (OTCQB:SHRG), our
73%-owned Direct Sales and Marketing subsidiary, is currently in
the process of being uplisted to Nasdaq which will provide us with
the capital and market exposure to advance SHRG’s expansion. An
ancillary benefit for this uplisting is strengthening DSS’s balance
sheet under the line item “Marketable Securities'.
The SHRG platform leverages the capabilities and
expertise of various companies that market and sell products direct
to the consumer and generated nearly $19 million in revenue in the
nine months ended September 30, 2022. Additionally, through its
subsidiaries, Decentralized Sharing Systems and SHRG, DSS provides
an array of products and services via various direct to consumer
models. We are continuously adding products and services to this
business to enhance its portfolio of offerings and position its
distribution team for continued growth and success.
Key Upcoming Milestone for AmericaFirst
Quantitative Funds
AmericaFirst Quantitative Funds, part of our DSS Wealth
Management subsidiary, continued to generate net asset inflows in
2022 despite the negative market environment, thanks to a
combination of peer-group outperformance and great marketing by our
team. Importantly, our AmericaFirst Income Fund is now approaching
the $25 million watermark that should greatly expand its
eligibility at additional broker/dealers, further accelerating
asset growth in this segment.
Looking Ahead
With operations around the world, we have a
unique visibility of global economic conditions, and, based on our
view of the increasing likelihood of recession, we have shifted our
near-term focus toward cost cutting initiatives and preserving cash
while maintaining our preparations for potential significant
liquidity events in 2023 that take advantage of our strong
performing assets. Alongside these efforts we will continue to
apply our three-stage value creation process across our diversified
portfolio of holdings.
Overall, I have tremendous confidence in the
future of DSS, and I believe our best days are ahead of us. We
remain steadfastly committed to new value creation and firmly
believe we have laid the necessary foundation for years of future
success.
In closing, the successes that we have
experienced over the past year and the growth opportunities
anticipated for 2023 and beyond have been made possible by the
diligent efforts of our team and the support of our shareholders.
On behalf of our entire team and Board of Directors, I want to
thank you for your continued support in the year ahead and
beyond.
Sincerely,
Frank D. HeuszelChief Executive OfficerDSS, Inc.
About DSS, Inc.
DSS is a multinational company operating
businesses within nine subsidiaries: Product Packaging,
Biotechnology, Direct Marketing, Commercial Lending, Securities and
Investment Management, Alternative Trading, Digital Transformation,
Secure Living, and Alternative Energy. DSS strategically acquires
and develops assets to enrich the value of its shareholders through
calculated IPO spinoffs and a parametric share distribution
strategy. Since 2019, under the guidance of new leadership, DSS has
built the necessary foundation for achievable growth through the
formation of a diversified portfolio of companies positioned to
drive profitability in multiple high growth sectors. These
companies offer innovative, flexible, and real-world solutions that
not only provide mutual benefits for businesses and their
customers, but also create sustainable value and opportunity for
transformation.
For more information on DSS
visit http://www.dssworld.com.
Safe Harbor Disclosure
This press release contains forward-looking
statements that are made pursuant to the safe harbor provisions
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Such forward-looking statements include, but are not
limited to, statements related to the Company's intended use of
proceeds and other statements that are not historical facts.
Forward-looking statements are based on management's current
expectations and are subject to risks and uncertainties that may
cause actual results or events to differ materially from those
projected. These risks and uncertainties, many of which are beyond
our control, include: risks relating to our growth strategy; our
ability to obtain, perform under and maintain financing and
strategic agreements and relationships; risks relating to the
results of development activities; our ability to attract,
integrate and retain key personnel; our need for substantial
additional funds; patent and intellectual property matters;
competition; as well as other risks described in our SEC filings,
including, without limitation, our reports on Forms 8-K, 10-K and
10-Q, all of which can be obtained on the SEC website at
www.sec.gov. Readers are cautioned not to place undue reliance on
the forward-looking statements, which speak only as of the date on
which they are made and reflect management's current estimates,
projections, expectations, and beliefs. We expressly disclaim any
obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements contained herein to
reflect any change in our expectations or any changes in events,
conditions, or circumstances on which any such statement is based,
except as required by law.
Contact:DSS Inc. Investor RelationsIR@
dssworld.com585-565-2422
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