Investments |
6.
Investments
Alset
International Limited, related party
The
Company owns 127,179,311 shares or approximately 4% of the outstanding shares of Alset International Limited (“Alset Intl”),
a company incorporated in Singapore and publicly listed on the Singapore Exchange Limited. This investment is classified as a marketable
security and is classified as long-term assets on the consolidated balance sheets as the Company has the intent and ability to hold the
investments for a period of at least one year. The Chairman of the Company, Mr. Heng Fai Ambrose Chan, is the Executive Director and
Chief Executive Officer of Alset Intl. Mr. Chan is also the majority shareholder of Alset Intl as well as the largest shareholder of
the Company. The fair value of the marketable security as of September 30, 2022, and December 31, 2021, was approximately $3,370,000
and $4,909,000 respectively. During the nine months ended September 30, 2022 and September 30, 2021, the Company recorded unrealized
loss on this investment of approximately $1,539,000 and $967,000, respectively.
West
Park Capital, Inc.
On
October 10, 2019, the Company entered into a convertible promissory note (“TBD Note”) with Century TBD Holdings, LLC (“TBD”),
a Florida limited liability company. The Company loaned the principal sum of $500,000, of which up to $500,000 and all accrued interest
can be paid by an “Optional Conversion” of such amount up to 19.8% (non-dilutable) of all outstanding membership interest
in TBD. This TBD Note accrues interest at 6% and matures on October 9, 2021. As of December 31, 2021, this TBD Note had outstanding principal
and interest of approximately $537,000 and was classified as Current portion of notes receivable on the consolidated balance sheet. On
December 30, 2020, the Company signed a binding letter of intent with West Park Capital, Inc (“West Park”) and TBD where
the parties agreed to prepare a note and stock exchange agreement whereby DSS will assign the TBD Note to West Park and West Park shall
issue to DSS a stock certificate reflecting 7.5% of the issued and outstanding shares of West Park. This note and stock exchange agreement
was finalized during the first quarter 2022 and valued at approximately $500,000 and is included in Investments on the consolidated balance
sheet on September 30, 2022. The remaining $37,000 is included in gain (loss) on investments on the consolidated statement of operations
at September 30, 2022.
BMI
Capital International LLC
On
September 10, 2020, the Company’s wholly owned subsidiary DSS Securities, Inc. entered into membership interest purchase agreement
with BMI Financial Group, Inc. a Delaware corporation (“BMIF”) and BMI Capital International LLC, a Texas limited liability
company (“BMIC”) whereas DSS Securities, Inc. purchased 14.9% membership interests in BMIC for $100,000. DSS Securities also
had the option to purchase an additional 10% of the outstanding membership interest which it exercised for $100,000 in January of 2021
and increased its ownership to 24.9%. Upon achieving greater than 20% ownership in BMIC during the quarter ended September 30, 2021,
the Company is currently accounting for this investment under the equity method of accounting per ASC 323. The Company’s portion
of net loss in BMIC during the nine months ended September 30, 2022, approximated $10,000.
BMIC
is a broker-dealer registered with the Securities and Exchange Commission, is a member of the Financial Industry Regulatory Authority,
Inc. (“FINRA”), and is a member of the Securities Investor Protection Corporation (“SIPC”). The Company’s
chairman of the board and another independent board member of the Company also have ownership interest in BMIC.
BioMed
Technologies Asia Pacific Holdings Limited
On
December 19, 2020, Impact BioMedical, a wholly owned subsidiary of the Company, entered into a subscription agreement (the “Subscription
Agreement”) with BioMed Technologies Asia Pacific Holdings Limited (“BioMed”), a limited liability company incorporated
in the British Virgin Islands, pursuant to which the Company agreed to purchase 525 ordinary shares or 4.99% of BioMed at a purchase
price of approximately $632,000. The Subscription Agreement provides, among other things, the Company has the right to appoint a new
director to the board of BioMed. With respect to an issuance of shares to a third party by BioMed, the Company will have the right of
first refusal to purchase such shares, as well as customary tag-along rights. In connection with the Subscription Agreement, Impact Biomedical
entered into an exclusive distribution agreement (the “Distribution Agreement”) with BioMed, to directly market, advertise,
promote, distribute, and sell certain BioMed products, which focus on manufacturing natural probiotics, to resellers. This investment
is valued at cost as it does not have a readily determined fair value.
BioMed
focuses on manufacturing natural probiotics, pursuant to which the Company will directly market, advertise, promote, distribute and sell
certain BioMed products to resellers. The products to be distributed by the Company include BioMed’s PGut Premium Probiotics®,
PGut Allergy Probiotics®, PGut SupremeSlim Probiotics®, PGut Kids Probiotics®, and PGut
Baby Probiotics®.
Under
the terms of the Distribution Agreement, the Company will have exclusive rights to distribute the products within the United States,
Canada, Singapore, Malaysia, and South Korea and non-exclusive distribution rights in all other countries. In exchange, the Company agreed
to certain obligations, including mutual marketing obligations to promote sales of the products. This agreement is for ten years with
a one year auto-renewal feature.
Vivacitas
Oncology, Inc.
On
March 15, 2021, the Company, through one of its subsidiaries, entered into a Stock Purchase Agreement (the “Vivacitas Agreement
#1”) with Vivacitas Oncology Inc. (“Vivacitas”), to purchase 500,000 shares of its common stock at the per share price
of $1.00, with an option to purchase 1,500,000 additional shares at the per share price of $1.00. This option will terminate upon one
of the following events: (i) Vivacitas’ board of directors cancels this option because it is no longer in the best interest of
the Company; (ii) December 31, 2021; or (iii) the date on which Vivacitas receives more than $1.00 per share of the Company’s common
stock in a private placement with gross proceeds of $500,000. Under the terms of the Vivacitas Agreement #1, the Company will be allocated
two seats on the board of Vivacitas. On March 18, 2021, the Company entered into an agreement with Alset EHome International, Inc. (“Seller”),
a related party, to purchase from the Seller’s its wholly owned subsidiary Impact Oncology PTE Ltd. (“IOPL”) for a
purchase price $2,480,000. The acquisition of IOPL has been treated as an asset acquisition as IOPL does not meet the definition of a
business as defined in Topic 805. IOPL owns 2,480,000 shares of common stock of Vivacitas along with the option to purchase an additional
250,000 shares of common stock. The Sellers largest shareholder is Mr. Heng Fai Ambrose Chan, the Chairman of the Company’s board
of directors and its largest shareholder.
On
April 1, 2021, the Company entered into an additional stock purchase agreement with Vivacitas (“Vivacitas Agreement #2”),
whereas Vivacities wished to employ the service of the Chief Business Officer of Impact Biomedical, and in return for the services of
this individual, Vivacitas shall issue to the Company, the aggregate purchase price for the Class A Common Shares of Vivacitas at the
value of $1.00 per share shall be $120,000 to be paid in twelve (12) equal monthly installments for the period between April 1, 2021
and March 31, 2022.
On
July 22, 2021, the Company exercised 1,000,000 of the available options under the Vivacitas Agreement #1 for $1,000,000. This, along
with the shares received as part Vivacitas Agreement #2 increased the Company’s equity position in Vivacitas to approximately 120,000
shares or 16% as of September 30, 2022. As of September 30, 2022, and December 31, 2021, the fair value of the Company’s investment
in Vivacitas is not readily available, and therefore is recorded at cost in the amount of $4,100,000 and $4,035,000, respectively.
Sentinel
Brokers Company, Inc.
On
May 13, 2021, a Sentinel Brokers, LLC., subsidiary of the Company entered into a stock purchase agreement (“Sentinel Agreement”)
to acquire a 24.9% equity position of Sentinel Brokers Company, Inc. (“Sentinel”), a company registered in the state of New
York, for the purchase price of $300,000. During the nine months ended September 30, 2021, the Company contributed and additional $750,000
capital into Sentinel, increasing its total capital investment to $1,050,000 as of September 30, 2021. Under the terms of this agreement,
the Company as the option to purchase an additional 50.1% of the outstanding Class A Common Shares. Upon the exercising of this option,
but no earlier than one year following the effective date the Sentinel Agreement, Sentinel has the option to sell the remaining 25% to
the Company. In consideration of purchase price investment in Sentinel, the Company is entitled to an additional 50.1% of the net profits
of Sentinel. The Company currently accounts for its investment in Sentinel using the equity method in accordance with ASC Topic 323,
Investments—Equity Method and Joint Ventures recognizing our share of Sentinel’s earnings and losses within our consolidated
statement of operations., as it currently owns 24.9% of Sentinel. The Company’s portion of net gain in Sentinel for the nine months
ended September 30, 2022 approximated $143,000
Sentinel
is a broker-dealer operating primarily as a fiduciary intermediary, facilitating intuitional trading of municipal and corporate bonds
as well as preferred stock, and is registered with the Securities and Exchange Commission, is a member of the Financial Industry Regulatory
Authority, Inc. (“FINRA”), and is a member of the Securities Investor Protection Corporation (“SIPC”).
Stemtech
Corporation
In September 2021, the Company, Stemtech Corporation
(“Stemtech”) and Globe Net Wireless Corp. (“GNTW”) entered into a Securities Purchase Agreement (the “SPA”)
pursuant to which the Company invested $1.4 million in Stemtech in exchange for: (a) a Convertible Promissory Note in the amount of $1.4
million in favor of the Company (the “Convertible Note”) and (b) a detachable Warrant to purchase shares GNTW common stock
(the “GNTW Warrant”). Stemtech is a subsidiary of GNTW. As an inducement to enter into the SPA, GNTW agreed to pay to the
Company an origination fee of $500,000, payable in shares of GNTW’s common stock. The Convertible Note matures on September 9,
2024, bears interest at the annual rate of 10%, and is convertible, at the option of the holder, into shares of GNTW’s common stock
at a conversion rate calculated based on the closing price per share of GNTW’s common stock during the 30-day period ended September
19, 2021. The GNTW Warrant expires on September 13, 2024 and conveys the right to purchase up to 1.4 million shares of GNTW’s common
stock at a purchase price calculated based on the closing price per share of GTNW’s common stock during the 10-day period ended
September 13, 2021. In September 2021, GNTW issued to the Company 154,173 shares of its common stock, or less than 1% of the shares of
GNTW then issued and outstanding, in payment of the origination fee. In November 2021, Globe Net Wireless Corp. changed its corporate
name to Stemtech Corporation. In connection therewith, the investee’s common stock is now traded under the symbol “STEK”.
The Company
carries its investment in the Convertible Note, the GNTW Warrant and the shares of GNTW common stock at fair value in accordance with
GAAP. During the three and six months ended September 30, 2022, the Company recognized losses, before income tax, of $ million and
$ million in connection with its investment in the Convertible Note, the GNTW Warrant and the shares of GNTW common stock.
MojiLife,
LLC
In September 2021, the Company entered into a Membership Unit Purchase
Agreement pursuant to which the Company acquired a 30.75% equity interest in MojiLife, LLC, a limited liability company organized in the
State of Utah, in exchange for $1,537,000. MojiLife is an emerging growth distributor of technology-based consumer products for the home
and car. MojiLife’s products include esthetically attractive, cordless scent diffusers for the home or for the car, as well as proprietary
home cleaning products and accessories.
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