8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

Amendment No.1

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 27, 2020

DOCUMENT SECURITY SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

New York	001-32146	16-1229730
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

200 Canal View Boulevard Suite 300 Rochester, NY	14623
(Address of principal executive offices)	(Zip Code)

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

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[  ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company [  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Item 1.01 Entry into a Material Definitive Agreement.

As previously reported on a Current Report on Form 8-K filed on May 1, 2020 by Document Security Systems, Inc. (“DSS” or the “Company”), on April 27, 2020, the Board of Directors of the Company approved and the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with DSS BioHealth Security, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“DBHS”), Singapore eDevelopment Limited, a Singapore corporation (“SeD”) that is listed on the Singapore Exchange, and Global BioMedical Pte Ltd, a Singapore corporation and wholly owned subsidiary of SeD (“GBM”), pursuant to which, among other things and subject to the terms and conditions contained therein, including both the Company and SeD having obtained approvals from their respective shareholders, DBHS will acquire all of the outstanding capital stock (the “Impact Shares”) of Impact BioMedical Inc., a Nevada corporation and wholly owned subsidiary of GBM (“Impact BioMedical”) through a share exchange, with Impact BioMedical becoming a direct wholly owned subsidiary of the DBHS.

The Company is filing this amendment to the above-referenced Form 8-K to provide the: (i) audited consolidated financial statements of Impact BioMedical, which include the consolidated balance sheets as of December 31, 2019 and December 31, 2018, the consolidated statement of operations for the years ended December 31, 2019 and December 31, 2018, the consolidated statements of stockholders’ equity for the years ended December 31, 2019 and December 31, 2018, the consolidated statements of cash flows for the years ended December 31, 2019 and December 31, 2018 and the notes related thereto (collectively, the “Audited Consolidated Financial Statements”); and (ii) unaudited condensed interim consolidated financial statements of Impact BioMedical, which include the consolidated balance sheets as of March 31, 2020 and December 31, 2019, the consolidated statement of operations for the three months ended March 31, 2020 and December 31, 2019, the consolidated statements of stockholders’ equity for the period ended March 31, 2020 and March 31, 2019, the consolidated statements of cash flows for the three months ended March 31, 2020 and March 31 ,2019, and the notes related thereto (collectively, the “Interim Unaudited Consolidated Financial Statements”), and (iii) DSS and Impact BioMedical’s unaudited pro forma condensed combined financial statements, which include the unaudited pro forma condensed combined balance sheet as of March 31, 2020 and December 31, 2019, the unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2020 and for the year ended December 31, 2019, and the notes related thereto (collectively, the “Unaudited Pro Forma Condensed Combined Financial Statements”).

2

Item 9.01 Financial Statements and Exhibits

(a) Financial statements of businesses to be acquired.

The Audited Consolidated Financial Statements, and the Interim Unaudited Consolidated Financial Statements are included as Exhibits 99.1 and 99.2, respectively, to this Amended Form 8-K and incorporated herein by reference.

(b) Pro forma financial information.

The Unaudited Pro Forma Condensed Combined Financial Statements of DSS and Impact BioMedical are filed herewith as Exhibit 99.3 to this Amended Form 8-K and incorporated herein by reference.

(d) Exhibits.

Exhibit
Number	Exhibit
99.1	Impact BioMedical’s Audited Consolidated Financial Statements and the notes related thereto.
99.2	Impact BioMedical’s Interim Unaudited Consolidated Financial Statement and the notes related thereto.
99.3	Unaudited Pro Forma Condensed Combined Financial Statements of DSS and Impact BioMedical and the notes related thereto

3

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.

	DOCUMENT SECURITY SYSTEMS, INC.
Dated: June 8, 2020	By:	/s/ Frank D. Heuszel
	Name:	Frank D. Heuszel
	Title:	Chief Executive Officer and Interim Chief Financial Officer

4

EX-99.1

Exhibit 99.1

REPORT OF INDEPENDENT AUDITORS

AND FINANCIAL STATEMENTS

Impact BioMedical Inc and Subsidiaries

December 31, 2019 and 2018

Table of Contents

	PAGE
Report of Independent Registered Public Accounting Firm	2
Financial Statements
Consolidated Balance Sheets	3
Consolidated Statements of Operations	4
Consolidated Statements of Stockholders’ Equity	5
Consolidated Statements of Cash Flows	6
Notes to Consolidated Financial Statements	7

1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Director and Stockholders of Impact BioMedical Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Impact BioMedical Inc. and its subsidiaries (the “Company”) as of December 31, 2019 and 2018 and the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2019 and 2018, and the results of its consolidated operations and its consolidated cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ Turner, Stone & Company, L.L.P.

Dallas, Texas

May 4, 2020

We have served as the Company’s auditor since 2020.

Impact BioMedical Inc and Subsidiaries

Consolidated Balance Sheets

Impact Biomedical Inc. and Subsidiaries

Consolidated Balance Sheet

	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

2

Impact BioMedical Inc and Subsidiaries

Consolidated Statement of Operations

Impact Biomedical Inc. and Subsidiaries

Consolidated Statements of Operations

For the Year Ended December 31, 2019 and 2018

	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	)
Net Loss Attributable to Non-Controlling Interests		(199,584	)		(401,803	)
Net Loss Attributable to Common Stockholders	$	(454,437	)	$	(703,155	)
Net Loss Per Share - Basic and Diluted	$	(454.44	)	$	(703.15	)
Weighted Average Common Shares Outstanding - Basic and Diluted		1,000			1,000

3

Impact BioMedical Inc and Subsidiaries

Consolidated Statements of Stockholders’ Equity (Deficit)

Impact Biomedical Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity (Deficit)

For the Years Ended on December 31, 2019 and 2018

	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

4

Impact BioMedical Inc and Subsidiaries

Consolidated Statements of Cash Flows

Impact Biomedical Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2019 and 2018

	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 Acquistion		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 Investmnet in Joint Venture	$	-		$	25,000

5

IMPACT BioMedical Inc and Subsidiaries

Notes to Consolidated Financial Statements

Note 1 – Nature of Operations and Basis of Presentation

Nature of Operations

Impact BioMedical Inc (the “Company”) was incorporated in the State of Nevada as a for-profit company on October 16, 2018 and established a fiscal year end of December 31st. The Company issued 1,000 shares to Global BioMedical Pte. Ltd., which is wholly–owned by Singapore eDevelopment Limited (“SeD Ltd”), a multinational public company, listed on the Singapore Exchange Securities Trading Limited (“SGXST”).

The Company is committed to both funding research and developing intellectual property portfolio. Global BioLife, Inc. (“Global BioLife”), one of the Company’s subsidiaries and the main operating company of the group, focuses on research in three main areas: (i) development of a universal therapeutic drug platform; (ii) a new sugar substitute; and (iii) a multi-use fragrance. Global BioLife established a joint venture, Sweet Sense, Inc. (“Sweet Sense”), with Quality Ingredients, LLC for the development, manufacture, and global distribution of the new sugar substitute and owns 50% of Sweet Sense. On November 8, 2019, the Company purchased 50% of Sweet Sense, Inc. from Quality Ingredients, LLC for $91,000. Sweet Sense is now an 81.8% owned subsidiary of the Company.

Basis of Presentation and Principles of Consolidation

The Common Control Transactions resulted in the basis of accounting for the financial reporting period in 2018. The consolidated financial statements were retrospectively adjusted for the operating results of Global Biolife as of January 1, 2018 for comparative purposes as the entities were under common control. ASC 805-50-45 defines the transfer of a business among entities under common control at carrying amount with retrospective adjustment of prior period financial statements when reporting entity is changed. ASC 250 defines a change in the reporting entity as a change that results in financial statements that, in effect, are those of a different reporting entity. The Management believed that the acquisitions of Global BioMedical, Inc. and Global Biolife led to change in the reporting entity.

The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include all accounts of the Company and its majority owned and controlled subsidiaries. The Company consolidates entities in which it owns more than 50% of the voting common stock and controls operations. All intercompany transactions and balances among consolidated subsidiaries have been eliminated.

The consolidated financial statements include all accounts of the entities as of the reporting period ending dates and for the reporting periods as follows:

	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

6

IMPACT BioMedical Inc and Subsidiaries

Notes to Consolidated Financial Statements

All intercompany balances and transactions have been eliminated. Non–controlling interest represents the minority equity investment in the Company’s subsidiaries, plus the minority investors’ share of the net operating results and other components of equity relating to the non–controlling interest.

As of December 31, 2019 and 2018, the aggregate noncontrolling interest was $46,027 and a deficit of $4,934, respectively, which are separately disclosed on the Consolidated Balance Sheet.

On the date of incorporation, Global BioLife issued 800 shares to Global BioMedical. Inc., 100 shares to GRDG Sciences, LLC (“GRDG”) and 100 to Holista Colltech Limited. Based on the Global BioLife’s Stockholders Agreement signed on April 26, 2017, Global BioMedical Inc agreed to transfer 10% of it’s ownership in Global BioLife to GRDG Sciences, LLC upon successful completion of certain goals. GRDG Sciences, LLC fulfilled required goals and 100 shares was transferred on September 12, 2017.

On November 7, 2018, the Company entered into two Capital Contribution Agreements. First Capital Contribution Agreement (“GBMI Agreement”), was entered between the Company, Global BioMedical Pte. Ltd. (“Global BioMedical”), a Singapore limited company, and Global BioMedical. Inc. (“GBMI”), a Nevada corporation. Prior to this agreement Global BioMedical owned 90.91% of the issued and outstanding capital equity in GBMI and 100% of issued and outstanding shares of the Company. Based on GBMI Agreement, Global BioMedical contributed all of its ownership in GBMI to the Company. Another Capital Contribution Agreement (“SeD BioLife Agreement”) was entered between the Company, Global BioMedical and SeD BioLife International, Inc. (“SeD BioLife”), a Nevada Corporation. Prior to this agreement Global BioMedical owned 100% of the issued and outstanding capital equity in SeD BioLife. Based on the SeD BioLife Agreement, Global BioMedical contributed all its ownership in SeD BioLife to the Company.

Note 2 – Summary of Significant Accounting and Reporting Policy

Use of estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates of the balance sheets and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates.

Earnings (Loss) per Share

Basic earnings (loss) per share is computed by dividing the net income (loss) attributable to the common stockholders by weighted average number of shares of common stock outstanding during the period. Fully diluted earnings (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no dilutive financial instruments issued or outstanding for the periods ended December 31, 2019 or 2018.

Fair Value of Financial Instruments

For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation.

Cash and cash equivalents

The Company considers all highly liquid investments with a maturity of three months or less at the date of acquisition to be cash equivalents. There were no cash equivalents as of December 31, 2019 and December 31, 2018.

7

IMPACT BioMedical Inc and Subsidiaries

Notes to Consolidated Financial Statements

Investment in Securities Under Equity Method Accounting

BioLife Sugar, Inc. (“BioLife”), a subsidiary consolidated under the Company, entered into a joint venture agreement on April 25, 2018 with Quality Ingredients, LLC (“QI”). The agreement created Sweet Sense which is 50% owned by BioLife and 50% owned by QI. Management believes its 50% investment represents significant influence over Sweet Sense and accounts for the investment under the equity method of accounting. As of December 31, 2018, BioLife contributed $55,000 to the joint venture and recorded its proportionate share losses totaling $49,687 recorded as loss on investment in security by equity method in the Consolidated Statements of Operations. As of November 08, 2019, the total investment in joint venture was equal to $91,000 and the proportionate losses totaled $90,001.

On November 8, 2019, Impact BioMedical Inc., a subsidiary of the Company, purchased 50% of Sweet Sense from QI for $91,000. Consequently, Sweet Sense is now an 81.8% owned subsidiary of the Company, and therefore, is now consolidated into the consolidated financial statements.

Research and Development

Research and development costs are expensed as incurred. Total research and development costs were $340,628 and $634,312 for the years ended December 31, 2019 and 2018, respectively.

Income taxes

Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carry-forwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company records an estimated valuation allowance on its deferred income tax assets if it is more likely than not that these deferred income tax assets will not be realized.

The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company has not recorded any unrecognized tax benefits. The Company’s policy is to recognize interest and penalties related to income taxes in income tax expense.

Subsequent Events

Subsequent events are events or transactions that occur after the balance sheet date but before the financial statements are available to be issued.

The Company’s financial statements do not recognize subsequent events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after the balance sheet date and before financial statements are available to be issued.

Recent Accounting Standards

Financial Instruments

The Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) FASB ASU 2016-01 – Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities – The changes to the current U.S. GAAP model primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments.

8

IMPACT BioMedical Inc and Subsidiaries

Notes to Consolidated Financial Statements

Non-Controlling Interests

In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception (“ASU 2017-11”). ASU 2017-11 is intended to simplify the accounting for financial instruments with characteristics of liabilities and equity. Among the issues addressed are: (i) determining whether an instrument (or embedded feature) is indexed to an entity’s own stock; (ii) distinguishing liabilities from equity for mandatorily redeemable financial instruments of certain nonpublic entities; and (iii) identifying mandatorily redeemable noncontrolling interests. The Company adopted ASU 2017-11 on January 1, 2019 and determined that this ASU did not have a material impact on the consolidated financial statements.

Note 2. Prepaid Expenses

Prepaid expenses for the years ended December 31, 2019 and 2018 include mostly research and development fees paid to GRDG in the amounts of $30,700 and $22,761, respectively.

Note 3. Shareholders’ Equity

On October 16, 2018, 1,000 shares of common stock were issued to Global BioMedical Pte. Ltd.

On November 21, 2018 the Company increased its authorized shares from 10,000 to 100,000,000 common shares with a par value of $0.001 per share. No preferred shares have been authorized or issued.

Note 5. Related Party Transactions

Research and Development Activities

Based on Shareholders Agreement entered into on April 26, 2017, the Company should fund the scientific operations of GRDG, a company involved in research and development of biomedical products and owned by Daryl Thompson, a director of many subsidiaries of the Company, to do the development and research works on the biomedical products for the Company. Initial monthly payments were agreed to be $20,994 plus any additional amounts that would be necessary and agreed by the Board of Directors. The monthly payments were adjusted for the increase in rent of GRDG office and general inflation. Current monthly payments equal to $23,319. The Company incurred expenses of $303,071 and $ 285,573 for the years ended December 31, 2019 and 2018, respectively. On December 31, 2019 and December 31, 2018, the Company owed this related party $0 and had prepaid monthly fees of $30,700 and $22,761, respectively.

Administrative and Accounting Services

SeD Development Management, LLC, an indirect subsidiary of SeD Ltd, provides administrative and accounting services to the Company and its subsidiaries. The Company incurred expenses of $6,000 and $4,000 for the years ended December 31, 2019 and 2018, respectively. On December 31, 2019 and December 31, 2018, the Company owed this related party $0.

9

IMPACT BioMedical Inc and Subsidiaries

Notes to Consolidated Financial Statements

Note 6 - Commitments and Contingencies

Leases

At December 31, 2019, Impact BioMedical, Inc. had not entered into any leases, as the Company had no employees.

Royalty Agreement

On August 15, 2018, the Company entered into Royalty Agreement with Chemia Corporation (“Chemia”) pursuant to which Chemia transferred to the Company all of its right to 3F (Functional Fragrance Formulation). 3F consists of 3F Mosquito Repellant and 3F Anti-Viral formulations. Based on the Royalty Agreement, the Company should cover all the costs to prepare and finalize necessary patent application and other intellectual property related to 3F. Chemia agreed to support the Company in efforts leading to development of 3F intellectual property and it’s licensing. Based on Royalty Agreement any payments received from development, sales, licensing or transfer of 3F technology will be paid 50% to the Company and 50% to Chemia. On November 27, 2018, Company and Chemia signed an Addendum to Royalty Agreement (“Addendum”), according to which the Company granted Chemia a royalty-based limited license for purposes of making and selling fragrances embodying the 3F technology. Based on the Addendum, Chemia should pay the Company 5% of net sales in royalty. On November 8, 2019, both companies entered into Amendment no.1 to Royalty Agreement, based on which certain expenses bore by the Company towards patent application and licensing should be reimbursed to the Company before any royalty payments are made. As on December 31 2019 and 2018 there were no reimbursements or royalties paid to the Company and the Company cannot be assured that Chemia’s efforts will end up in any future sales of the technology.

Note 7 – Income Taxes

On December 22, 2017, the “Tax Cuts and Jobs Act” (TCJA) was signed into law that significantly reformed the Internal Revenue Code of 1986, as amended. The TCJA reduces the corporate tax rate to 21 percent beginning with years starting January 1, 2018. The deferred tax assets and liabilities have been adjusted to the newly enacted U.S. corporate rate and the related impact to the tax expense has been recognized in the current year.

The components of income tax expense and the effective tax rates for the years ended December 31, 2019 and 2018 are as follows:

	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 Incom Tax Expense	$	-		$	-
Pre-tax Loss	$	(645,020	)	$	(1,104,958	)
Effective Income Tax Rate		0	%		0	%

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IMPACT BioMedical Inc and Subsidiaries

Notes to Consolidated Financial Statements

A reconciliation of our income tax expense at federal statutory income tax rate of 21% to our income tax expense at the effective tax rate is as follows:

	Year Ended December 31,
	2019			2018
Tax at the Statutory Federal Rate	$	(137,344	)	$	(232,041	)
State Income Taxes (Net of Federal Benefit)		(28,929	)		(72,043	)
Changes in Valutation Allowance, Net		166,273			304,084
Total Income Tax Expense	$	-		$	-

Deferred tax assets consist of the following at December 31, 2019 and 2018:

	Year Ended December 31,
	2019			2018
Net Operating Loss		681,663			515,390
		681,663			515,390
Valuation Allowance		(681,663	)		(515,390	)
Net Deferred Tax Asset		-			-

As of December 31, 2019 and 2018, the Company has net operating loss carry-forwards of $2,526,804and $1,872,784, respectively. The Company does not have other temporary differences. As of December 31, 2019 and 2018, the total deferred tax assets carry-forward were $681,663 and $515,390, respectively. The deferred tax assets could be carried forward for 20 years. The full utilization of the deferred tax assets in the future is dependent upon the Company’s ability to generate taxable income. Considering the development stage of the Company, management believed that it was probable that the Company would not use tax assets in the near future. Accordingly, a valuation allowance of an equal amount has been established. As of the years ended December 31, 2019 and 2018, the valuation allowance were $681,663 and $515,390, respectively. During the year ended December 31, 2019, the valuation allowance increased by $166,273. No deferred tax assets were recorded on years ended December 31, 2019 and 2018.

The federal income tax returns of the Company are subject to examination by the IRS, generally for three years after they are filed. The tax returns for the years ended December 31, 2018 and 2017 are still subject to examination by the taxing authorities.

Note 8 – Subsequent Events

On March 31, 2020 the Company issued 13,896,069 shares of common stock to its sole shareholder Global BioMedical Pte. Ltd. in consideration of the $2,779,214 invested in the Company.

On March 12, 2020 Singapore eDevelopment Ltd., Global BioMedical Pte Ltd., Document Security Systems, Inc (“DSS”) and DSS BioHealth Security Inc. (“DSS BioHealth”) signed Term Sheets and subsequently on April 21, 2020, these four companies entered into Share Exchange Agreement, based on which Global BioMedical Pte Ltd. agreed to sell all of the issued and outstanding shares of the Company to DSS BioHealth in exchange for the combination of common and preferred shares of DSS. The closing of this transaction is contingent upon DSS shareholders’ approval and all parties meeting the conditions of the Share Exchange Agreement. Our Company’s Chairman, who is also the largest shareholder of Singapore eDevelopment Ltd., is the beneficial owner of approximately 36.97% of the outstanding shares of DSS and is the Chairman of the Board of Directors of DSS. The Company is currently supporting Global BioMedical Pte Ltd. in meeting the closing conditions.

11

EX-99.2

Exhibit 99.2

FINANCIAL STATEMENTS

Impact BioMedical Inc and Subsidiaries

March 31, 2020 (Unaudited)

Table of Contents

	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

1

Impact BioMedical Inc and Subsidiaries

Consolidated Balance Sheets

Impact Biomedical Inc. and Subsidiaries

Consolidated Balance Sheet

(Unaudited)

	March 31, 2020			December 31, 2019
Asset
Cash	$	130,115		$	108,731
Prepaid Expense		23,319			30,700
Total Asset	$	153,434		$	139,431
Liabilities
Accounts Payable	$	26,601		$	7,021
Total Liabilities	$	26,601		$	7,021
Stockholders’ Equity
Common Stock, $0.001 Par Value, 100,000,000 shares authorized, 13,897,069 and 1,000 Issued and Outstanding as of March 31, 2020 and December 31, 2019, respectively	$	13,897		$	1
Additional Paid In Capital		1,802,330			1,732,590
Accumulated Deficit		(1,729,966	)		(1,646,208	)
Total Stockholders’ Equity		86,261			86,383
Non-Controlling Interests		40,572			46,027
Total Stockholders’ Equity	$	126,833		$	132,410
Total Liabilities & Shareholder’s Equity	$	153,434		$	139,431

2

Impact BioMedical Inc and Subsidiaries

Consolidated Statements of Operations

Impact Biomedical Inc. and Subsidiaries

Consolidated Statements of Operations

For the Three Months Ended March 31, 2020 and 2019

(Unaudited)

	2020			2019
Operating Expense
Research & Development	$	71,967		$	106,123
Professional Services		51,325			4,645
Other General Expense		2,178			1,975
Total Operating Expense		125,470			112,743
Other Expense
Financial Services		107			76
Loss from Security Investment by Equity Method		-			3,206
Total Other Expense		107			3,282
Net Loss	$	(125,577	)	$	(116,024	)
Net Loss Attributable to Non-Controlling Interests		(41,819	)		(32,484	)
Net Loss Attributable to Common Stockholders	$	(83,758	)	$	(83,540	)
Net Loss Per Share - Basic and Diluted	$	(0.19	)	$	(83.54	)
Weighted Average Common Shares Outstanding - Basic and Diluted		449,260			1,000

3

Impact BioMedical Inc and Subsidiaries

Consolidated Statements of Stockholders’ Equity (Deficit)

Impact Biomedical Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity

For the Period Ended on March 31, 2020 (Unaudited)

	Common Stock				Additional						Non-			Total
	Shares		Par Value $0.001		Paid in Capital			Accumulated Deficit			controlling Interests			Stockholders Equity
Balance at January 1, 2020		1,000	$	1	$	1,732,590		$	(1,646,208	)	$	46,027		$	132,410
Issue Shares to the Shareholder at Par Value $0.001 per share		13,896,069		13,896		(13,896	)								-
Proceeds from the Shareholder						83,636						36,364			120,000
Net loss									(83,758	)		(41,819	)		(125,577	)
Balance at March 31, 2020		13,897,069	$	13,897	$	1,802,330		$	(1,729,966	)	$	40,572		$	126,833

Impact Biomedical Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity

For the Period Ended on March 31, 2019 (Unaudited)

	Common Stock				Additional					Non-			Total
			Par Value		Paid in		Accumulated			controlling			Stockholders
	Shares		$0.001		Capital		Deficit			Interests			Equity
Balance at January 1, 2019		1,000	$	1	$	1,183,135	$	(1,191,772	)	$	(4,934	)	$	(13,570)
Proceeds from the Shareholder						127,273					72,727			200,000
Net loss								(83,539	)		(32,484	)		(116,024	)
Balance at March 31, 2019		1,000	$	1	$	1,310,408	$	(1,275,311	)	$	35,308		$	70,406

4

Impact BioMedical Inc and Subsidiaries

Consolidated Statements of Cash Flows

Impact Biomedical Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For the Three Month Ended March 31, 2020 and 2019

(Unaudited)

	2020			2019
Cash Flows From Operating Activities
Net Loss from Operations	$	(125,577	)	$	(116,024	)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Loss from Investment on Security by Equity Method Changes in Operating Assets and Liabilities		-			3,205
Prepaid Expense		7,381			-
Trade Payable		19,580			(50,326	)
Net Cash Used in Operating Activities		(98,616	)		(163,145	)
Cash Flows From Financing Activities
Proceeds from Shareholders		120,000			200,000
Net Cash Provided by Financing Activities		120,000			200,000
Net Increase in Cash		21,384			36,855
Cash - Beginning of Year		108,731			35,375
Cash - End of Period	$	130,115		$	72,230

5

IMPACT Biomedical, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1 – Nature of Operations and Basis of Presentation

Nature of Operations

Impact BioMedical Inc (the “Company”) was incorporated in the State of Nevada as a for-profit company on October 16, 2018 and established a fiscal year end of December 31st. The Company issued 1,000 shares to Global BioMedical Pte. Ltd., which is wholly–owned by Singapore eDevelopment Limited (“SeD Ltd”), a multinational public company, listed on the Singapore Exchange Securities Trading Limited (“SGXST”).

The Company is committed to both funding research and developing intellectual property portfolio. Global BioLife, Inc. (“Global BioLife”), one of the Company’s subsidiaries and the main operating company of the group, focuses on research in three main areas: (i) development of a universal therapeutic drug platform; (ii) a new sugar substitute; and (iii) a multi-use fragrance. Global BioLife established a joint venture, Sweet Sense, Inc. (“Sweet Sense”), with Quality Ingredients, LLC for the development, manufacture, and global distribution of the new sugar substitute and owns 50% of Sweet Sense. On November 8, 2019, the Company purchased 50% of Sweet Sense, Inc. from Quality Ingredients, LLC for $91,000. Sweet Sense is now an 81.8% owned subsidiary of the Company.

Basis of Presentation and Principles of Consolidation

The Common Control Transactions resulted in the basis of accounting for the financial reporting period in 2018. The consolidated financial statements were retrospectively adjusted for the operating results of Global Biolife as of January 1, 2018 for comparative purposes as the entities were under common control. ASC 805-50-45 defines the transfer of a business among entities under common control at carrying amount with retrospective adjustment of prior period financial statements when reporting entity is changed. ASC 250 defines a change in the reporting entity as a change that results in financial statements that, in effect, are those of a different reporting entity. The Management believed that the acquisitions of Global BioMedical, Inc. and Global Biolife led to change in the reporting entity.

The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include all accounts of the Company and its majority owned and controlled subsidiaries. The Company consolidates entities in which it owns more than 50% of the voting common stock and controls operations. All intercompany transactions and balances among consolidated subsidiaries have been eliminated.

The consolidated financial statements include all accounts of the entities as of the reporting period ending dates and for the reporting periods as follows:

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	%

6

IMPACT Biomedical, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

All intercompany balances and transactions have been eliminated. Non–controlling interest represents the minority equity investment in the Company’s subsidiaries, plus the minority investors’ share of the net operating results and other components of equity relating to the non–controlling interest.

As of March 31, 2020 and December 31, 2019, the aggregate noncontrolling interest was $40,527 and $46,027, respectively, which are separately disclosed on the Consolidated Balance Sheet.

On the date of incorporation, Global BioLife issued 800 shares to Global BioMedical. Inc., 100 shares to GRDG Sciences, LLC (“GRDG”) and 100 to Holista Colltech Limited. Based on the Global BioLife’s Stockholders Agreement signed on April 26, 2017, Global BioMedical Inc agreed to transfer 10% of its ownership in Global BioLife to GRDG Sciences, LLC upon successful completion of certain goals. GRDG Sciences, LLC fulfilled required goals and 100 shares was transferred on September 12, 2017.

On November 7, 2018, the Company entered into two Capital Contribution Agreements. First Capital Contribution Agreement (“GBMI Agreement”), was entered between the Company, Global BioMedical Pte. Ltd. (“Global BioMedical”), a Singapore limited company, and Global BioMedical. Inc. (“GBMI”), a Nevada corporation. Prior to this agreement Global BioMedical owned 90.91% of the issued and outstanding capital equity in GBMI and 100% of issued and outstanding shares of the Company. Based on GBMI Agreement, Global BioMedical contributed all of its ownership in GBMI to the Company. Another Capital Contribution Agreement (“SeD BioLife Agreement”) was entered between the Company, Global BioMedical and SeD BioLife International, Inc. (“SeD BioLife”), a Nevada Corporation. Prior to this agreement Global BioMedical owned 100% of the issued and outstanding capital equity in SeD BioLife. Based on the SeD BioLife Agreement, Global BioMedical contributed all its ownership in SeD BioLife to the Company.

Note 2 – Summary of Significant Accounting and Reporting Policy

Use of estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates of the balance sheets and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates.

Earnings (Loss) per Share

Basic earnings (loss) per share is computed by dividing the net income (loss) attributable to the common stockholders by weighted average number of shares of common stock outstanding during the period. Fully diluted earnings (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no dilutive financial instruments issued or outstanding for the periods ended March 31, 2020 or December 31, 2019.

Fair Value of Financial Instruments

For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation.

Cash and cash equivalents

The Company considers all highly liquid investments with a maturity of three months or less at the date of acquisition to be cash equivalents. There were no cash equivalents as of March 31, 2020 and December 31, 2019.

7

IMPACT Biomedical, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Investment in Securities Under Equity Method Accounting

BioLife Sugar, Inc. (“BioLife”), a subsidiary consolidated under the Company, entered into a joint venture agreement on April 25, 2018 with Quality Ingredients, LLC (“QI”). The agreement created Sweet Sense which is 50% owned by BioLife and 50% owned by QI. Management believes its 50% investment represents significant influence over Sweet Sense and accounts for the investment under the equity method of accounting. As of December 31, 2018, BioLife contributed $55,000 to the joint venture and recorded its proportionate share losses totaling $49,687 recorded as loss on investment in security by equity method in the Consolidated Statements of Operations. As of November 08, 2019, the total investment in joint venture was equal to $91,000 and the proportionate losses totaled $90,001.

On November 8, 2019, the Company purchased 50% of Sweet Sense from QI for $91,000. Consequently, Sweet Sense is now an 81.8% owned subsidiary of the Company, and therefore, is now consolidated into the consolidated financial statements.

Research and Development

Research and development costs are expensed as incurred. Total research and development costs were $71,967 and $106,123 for the three months ended March 31, 2020 and 2019, respectively.

Income taxes

Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carry-forwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company records an estimated valuation allowance on its deferred income tax assets if it is more likely than not that these deferred income tax assets will not be realized.

The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company has not recorded any unrecognized tax benefits. The Company’s policy is to recognize interest and penalties related to income taxes in income tax expense.

Subsequent Events

Subsequent events are events or transactions that occur after the balance sheet date but before the financial statements are available to be issued.

The Company’s financial statements do not recognize subsequent events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after the balance sheet date and before financial statements are available to be issued.

Recent Accounting Standards

Financial Instruments

The Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) FASB ASU 2016- 01 – Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities – The changes to the current U.S. GAAP model primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments.

8

IMPACT Biomedical, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Non-Controlling Interests

In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception (“ASU 2017-11”). ASU 2017-11 is intended to simplify the accounting for financial instruments with characteristics of liabilities and equity. Among the issues addressed are: (i) determining whether an instrument (or embedded feature) is indexed to an entity’s own stock; (ii) distinguishing liabilities from equity for mandatorily redeemable financial instruments of certain nonpublic entities; and (iii) identifying mandatorily redeemable noncontrolling interests. The Company adopted ASU 2017-11 on January 1, 2019 and determined that this ASU did not have a material impact on the consolidated financial statements.

Note 2. Prepaid Expenses

Prepaid expenses for the three months ended March 31, 2020 and year ended December 31, 2019 include mostly research and development fees paid to GRDG in the amounts of $23,319 and $30,700, respectively.

Note 3. Shareholders’ Equity

On October 16, 2018, 1,000 shares of common stock were issued to Global BioMedical Pte. Ltd.

On November 21, 2018 the Company increased its authorized shares from 10,000 to 100,000,000 common shares with a par value of $0.001 per share. No preferred shares have been authorized or issued.

On March 31, 2020 the Company issued 13,896,069 shares of common stock to its sole shareholder Global BioMedical Pte. Ltd.

Note 5. Related Party Transactions

Research and Development Activities

Based on Shareholders Agreement entered into on April 26, 2017, the Company should fund the scientific operations of GRDG, a company involved in research and development of biomedical products and owned by Daryl Thompson, a director of many subsidiaries of the Company, to do the development and research works on the biomedical products for the Company. Initial monthly payments were agreed to be $20,994 plus any additional amounts that would be necessary and agreed by the Board of Directors. The monthly payments were adjusted for the increase in rent of GRDG office and general inflation. Current monthly payments equal to $23,319. The Company incurred expenses of $79,516 and $ 70,258 for the three months ended March 31, 2020 and 2019, respectively. On March 31, 2020 and December 31, 2019 the Company owed this related party $0 and had prepaid monthly fees of $30,700 and $18,116, respectively.

Administrative and Accounting Services

SeD Development Management, LLC, an indirect subsidiary of SeD Ltd, provided administrative and accounting services to the Company and its subsidiaries. The Company incurred expenses of $0 and $1,500 for the three months ended March 31, 2020 and 2019, respectively. On March 31, 2020 and December 31, 2019, the Company owed this related party $0. As of January 1, 2020, both parties agreed to stop paying the service fee.

9

IMPACT Biomedical, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 6 - Commitments and Contingencies

Leases

At March 31, 2020, Impact BioMedical, Inc. had not entered into any leases, as the Company had no employees.

Royalty Agreement

On August 15, 2018, the Company entered into Royalty Agreement with Chemia Corporation (“Chemia”) pursuant to which Chemia transferred to the Company all of its right to 3F (Functional Fragrance Formulation). 3F consists of 3F Mosquito Repellant and 3F Anti-Viral formulations. Based on the Royalty Agreement, the Company should cover all the costs to prepare and finalize necessary patent application and other intellectual property related to 3F. Chemia agreed to support the Company in efforts leading to development of 3F intellectual property and it’s licensing. Based on Royalty Agreement any payments received from development, sales, licensing or transfer of 3F technology will be paid 50% to the Company and 50% to Chemia. On November 27, 2018, Company and Chemia signed an Addendum to Royalty Agreement (“Addendum”), according to which the Company granted Chemia a royalty-based limited license for purposes of making and selling fragrances embodying the 3F technology. Based on the Addendum, Chemia should pay the Company 5% of net sales in royalty. On November 8, 2019, both companies entered into Amendment no.1 to Royalty Agreement, based on which certain expenses bore by the Company towards patent application and licensing should be reimbursed to the Company before any royalty payments are made. As on March 31, 2020 and December 31 2019 there were no reimbursements or royalties paid to the Company and the Company cannot be assured that Chemia’s efforts will end up in any future sales of the technology.

Note 7 – Subsequent Events

On March 12, 2020 Singapore eDevelopment Ltd., Global BioMedical Pte Ltd., Document Security Systems, Inc (“DSS”) and DSS BioHealth Security Inc. (“DSS BioHealth”) signed Term Sheets and subsequently on April 21, 2020, these four companies entered into Share Exchange Agreement, based on which Global BioMedical Pte Ltd. agreed to sell all of the issued and outstanding shares of the Company to DSS BioHealth in exchange for the combination of common and preferred shares of DSS. The closing of this transaction is contingent upon DSS shareholders’ approval and all parties meeting the conditions of the Share Exchange Agreement. Our Company’s Chairman, who is also the largest shareholder of Singapore eDevelopment Ltd., is the beneficial owner of approximately 36.97% of the outstanding shares of DSS and is the Chairman of the Board of Directors of DSS. The Company is currently supporting Global BioMedical Pte Ltd. in meeting the closing conditions.

10

EX-99.3

Exhibit 99.3

DOCUMENT SECURITY SYSTEMS.INC

Unaudited Pro Forma Condensed Consolidated Balance Sheet

March 31, 2020

	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

DOCUMENT SECURITY SYSTEMS.INC

Unaudited Pro Forma Condensed Consolidated Statements of Operations

Three Months Ended March 31, 2020

	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 deprecation and amortization	$	3,271,000		$	-		$	-	$	-	$	3,271,000
Selling, general and administrative (including stock based compensation)		2,641,000			125,000			-		-		2,766,000
Deprecation 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.

DOCUMENT SECURITY SYSTEMS.INC

Unaudited Pro Forma Condensed Consolidated Balance Sheet

December 31, 2019

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

DOCUMENT SECURITY SYSTEMS.INC

Unaudited Pro Forma Condensed Consolidated Statement of Operations

Year Ended December 31, 2019

	DSS  (Purchaser)			Impact BioMedical (Target)			Proforma Adjustment (Note 1)		Proforma Adjustment (Note 2)		Consolidated Proforma
Revenue:
Printed products	$	17,090,000		$	-		$	-	$	-	$	17,090,000
Technology sales, services and licensing		2,148,000			-							2,148,000
Direct selling		172,000			-							172,000
Total revenue	$	19,410,000		$	-		$	-	$	-	$	19,410,000
Costs and expense
Costs of revenue, exclusive of deprecation and amortization	$	12,602,000		$	-						$	12,602,000
Selling, general and administrative (including stock based compensation)		8,284,000			523,000							8,807,000
Deprecation and amortization		1,404,000			-							1,404,000
Total Operating Expense		22,290,000			523,000			-		-		22,813,000
Operating Loss		(2,880,000	)		(523,000	)		-		-		(3,403,000	)
Other Income (expense)
Interest Income		25,000			-							25,000
Interest Expense		(157,000	)		-							(157,000	)
Amortization of deferred financing costs a debt discount		(2,000	)		-							(2,000	)
Financial Services		-			(1,000	)						(1,000	)
Loss from Security Investment by Equity Method		-			(40,000	)						(40,000	)
Loss from Acquisition		-			(90,000	)						(90,000	)
Total Other Expense		(134,000	)		(131,000	)		-		-		(265,000	)
Income (loss) before income tax		(3,014,000	)		(654,000	)		-		-		(3,668,000	)
Income tax benefit		(125,000	)		-							(125,000	)
Net Loss	$	(2,889,000	)	$	(654,000	)	$	-	$	-	$	(3,543,000	)
Add: loss attributed to noncontrolling interest		-			200,000							200,000
Net Loss Attributable to Common Stockholders	$	(2,889,000	)	$	(454,000	)	$	-	$	-	$	(3,343,000	)
Other comprehensive income (loss)
Interest rate swap loss		(15,000	)		-							(15,000	)
Settlement of Interest rate swap		22,000			-							22,000
Comprehensive income (loss)	$	(2,882,000	)	$	(654,000	)	$	-	$	-	$	(3,536,000	)

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.