DSS: DSS Grew 133% in 2022 and Continues to Pursue Spin-Offs Near Term
NYSE:DSS
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In 2022 DSS (NYSE:DSS) showed considerable revenue growth as its new ventures contributed to total sales. Most of the growth came from a full year of Sharing Services Global which added $18.7 million in revenues to the $20.3 million in revenues for all of 2021. The REIT added another $5.1 million. Since Sharing still has shown declining revenues, DSS plans to distribute its stock to shareholders in the next few weeks, growth in 2023 should have to come from the other businesses. In particular, we expected solid growth and margin improvement at Premier the company’s core printing and packaging business due to its increased capacity and elimination of paper acquisition constraints. We expect that in 2023, DSS will focus on increasing shareholder value through spin-offs and focusing on the businesses that are working while reducing exposure to those that are not.
In the next few weeks, we expect DSS should be spinning off Sharing back to its own public company traded on the OTCQB. According to its April 7th red herring, DSS currently owns 79.6% of Sharing. Following the distribution, DSS, together with its subsidiary DSSI, will have approximately 15.9% ownership. DSS will distribute 221,212,840 Sharing Services shares, which constitute approximately 63.7 % of its issued and outstanding shares of common stock to its shareholders. Once this happens, DSS will no longer be consolidating its revenues on the DSS income statement. At that point, we will take forecasted revenues for Sharing off our DSS model. There still will be a few million in revenue left in direct marketing revenues from DSS’s legacy business.
This distribution should be followed by the spin-off of Impact Biomedical in Q3. Impact Biomedical filed its latest amended S-1 on January 31st. DSS is about to file what it hopes to be the final amendment to its S-1 which will contain audited financials and a business plan. It could have a dividend record date in June or July for the first tranche of the spinoff with an IPO to follow. Impact hopes to raise $30-50 million in an IPO.
The spin-off of the REIT has been put on hold as DSS has plans to get it to a critical size before spinning it off, and lending in the REIT industry has become more difficult as interest rates rise and lenders become more cautious. As a result, the time required to achieve its size goals has been extended and we no longer think a spin-off is possible in 2023. The plan was for it to reach $200-250 million in assets before a spin-off.
American Pacific Bancorp, the bank, is the most IPO-ready of all DSS’s holdings and we still expect it to also be dividended to shareholders, possibly in 2023. This is expected to happen after Sharing and Impact. An S-1 is expected to be filed in late 2023 or early 2024. We expect it would be valued at the typical four to five times loans outstanding for commercial lenders, which currently stand at about $40 million thus valuing it at $144 million to $180 million. The most recent information is that it is earning approximately 10.6% on average on its loans.
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