Core Insights - The merger between Dr Ashleys Limited and Impact BioMedical Inc. aims to enhance market reach for innovative pharmaceutical patents, creating a new entity to be traded on the NYSE American under the name "Dr Ashleys Limited" [1][4] - This strategic move highlights the increasing significance of innovation and collaboration within the biomedical industry, leveraging Dr Ashleys' global presence and financial resources to expedite the commercialization of Impact BioMedical's patents [1][2] Company Overview - Dr Ashleys Limited is a global pharmaceutical company focused on developing and manufacturing specialized active pharmaceutical ingredients (APIs) and orphan drugs for rare diseases, addressing critical health issues such as malaria, cancer, and COVID-19 [7][8] - Impact BioMedical Inc. specializes in innovative health solutions, holding a portfolio of over 90 patents aimed at tackling significant health challenges, including infectious diseases [9] Transaction Details - The merger will involve a subsidiary of Dr Ashleys merging with Impact BioMedical, with the latter being the surviving entity, and both companies will become wholly-owned subsidiaries of the newly formed PubCo [3][4] - The management team of Dr Ashleys will operate the new entity, with a new Board of Directors to be established [3] Leadership Statements - Dr. Kanans Visvanats, Director of Dr Ashleys, emphasized that the merger is a milestone in delivering innovative treatments globally, integrating Impact BioMedical's intellectual property into their R&D efforts [2] - Frank D. Heuszel, CEO of Impact BioMedical, expressed enthusiasm about the merger, highlighting the resources and infrastructure that Dr Ashleys can provide to bring their innovations to market [2]

[PART I - FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1 - Condensed Consolidated Financial Statements](index=2&type=section&id=Item%201%20Condensed%20Consolidated%20Financial%20Statements) This section presents Impact BioMedical, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, changes in stockholders' equity, and cash flows, with explanatory notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets and stockholders' equity decreased, primarily due to reduced cash and increased related party note payable | Metric | March 31, 2025 (Unaudited) | December 31, 2024 | | :-------------------------------- | :------------------------- | :------------------ | | Cash and cash equivalents | $1,318,000 | $1,999,000 | | Total current assets | $2,183,000 | $2,448,000 | | Total assets | $20,051,000 | $20,290,000 | | Total current liabilities | $9,973,000 | $9,785,000 | | Total liabilities | $13,241,000 | $13,053,000 | | Total stockholders' equity | $6,810,000 | $7,237,000 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported an increased net loss for the three months ended March 31, 2025, driven by higher operating expenses | Expense Category | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Sales, general and administrative compensation | $248,000 | $148,000 | | Sales and marketing | $19,000 | $8,000 | | Professional Fees | $223,000 | $145,000 | | Research and development | $103,000 | $183,000 | | Total costs and expenses | $1,010,000 | $771,000 | | Operating loss | $(1,010,000) | $(771,000) | | Net loss | $(1,278,000) | $(998,000) | | Basic Loss per common share | $(0.11) | $(0.10) | [Condensed Consolidated Statement of Changes in Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity decreased due to a net loss, partially offset by asset acquisition via stock issuance and stock-based compensation | Item | March 31, 2025 | December 31, 2024 | | :----------------------------------- | :------------- | :---------------- | | Common Stock Shares Outstanding | 12,085,412 | 11,503,955 | | Common Stock Amount | $12,000 | $11,000 | | Additional Paid-in Capital | $42,707,000 | $41,857,000 | | Accumulated Deficit | $(38,936,000) | $(37,669,000) | | Total Stockholders' Equity | $6,810,000 | $7,237,000 | - The company issued **545,024 shares** of common stock for the acquisition of DSS PureAir, Inc. assets, valued at **$820,000**, and **36,433 shares** for professional services, valued at **$29,000**, during the three months ended March 31, 2025[10](index=10&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash decreased by **$681,000** for the three months ended March 31, 2025, primarily due to cash used in operating activities | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used by operating activities | $(682,000) | $(482,000) | | Net cash provided by investing activities | $1,000 | $0 | | Net cash provided by financing activities | $0 | $483,000 | | Net increase (decrease) in cash | $(681,000) | $1,000 | | Cash and cash equivalents at end of period | $1,318,000 | $2,000 | [Notes to Interim Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20Interim%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the company's business, significant accounting policies, and specific financial statement line items, covering operations, assets, liabilities, equity, and transactions [Note 1. Nature of Operations and Basis of Presentation](index=7&type=section&id=Note%201.%20Nature%20of%20Operations%20and%20Basis%20of%20Presentation) Impact BioMedical, Inc. (IBO) discovers and patents healthcare and wellness technologies, commercializing them via licensing, co-development, and direct sales, with a portfolio including Linebacker, Laetose, 3F, and Equivir - Impact BioMedical, Inc. (IBO) focuses on discovering, confirming, and patenting unique science and technologies for human healthcare and wellness, leveraging strategic partnerships for commercialization through licensing, co-development, joint ventures, and potential direct sales[14](index=14&type=chunk)[15](index=15&type=chunk) - The company's portfolio includes: - **Linebacker™:** Platform of small molecule electrophilically enhanced polyphenol compounds with potential applications in oncology (solid tumors), inflammatory disorders, and neurology. Licensed to ProPhase Laboratories for worldwide development and commercialization - **Laetose™:** Technology with potential to reduce caloric intake and glycemic index in foods, and inhibit TNF-α, a cytokine associated with inflammatory chronic diseases. Patented formulation with potential applications in therapeutic administration for metabolic diseases like diabetes - **Functional Fragrance Formulation ("3F"):** Suite of "functional fragrances" with specialized botanical ingredients (e.g., terpenes) for antimicrobial applications or as additives in insect repellents, detergents, lotions, shampoo, and fabrics. Global BioLife is seeking to commercialize this product in partnership with Chemia - **Equivir™/Equivir G:** Novel blend of FDA GRAS-eligible polyphenols (e.g., Myricetin, Hesperetin, Piperine) demonstrating antiviral effects, with potential as health supplements or medication. Licensed to ProPhase Laboratories for worldwide development and commercialization, initially for upper respiratory wellness[16](index=16&type=chunk)[17](index=17&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) - The company continually evaluates additional emerging technologies in various phases of development, including biopharmaceuticals, indoor air quality products, bioplastics, personalized medicine, nanotechnology, and cannabis products[23](index=23&type=chunk) [Note 2. Summary of Significant Accounting and Reporting Policies](index=8&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20and%20Reporting%20Policies) This note outlines the company's significant accounting policies, including basis of presentation, consolidation, estimates, loss per share, fair value, and recent accounting standards, also addressing going concern status - The company's consolidated financial statements are prepared in accordance with U.S. GAAP, consolidating entities where it owns over **50%** of voting common stock and controls operations. Non-controlling interest is separately disclosed[25](index=25&type=chunk)[26](index=26&type=chunk) - The company has incurred operating losses and negative cash flows, raising substantial doubt about its ability to continue as a going concern within one year. Management plans to monetize intellectual properties and tightly control operating costs to address this[45](index=45&type=chunk)[46](index=46&type=chunk) - The company adopted ASU 2023-07 (Segment Reporting) for the year ended December 31, 2024, and ASU 2023-09 (Improvements to Income Tax Disclosures) as of December 31, 2024. ASU 2024-03 (Disaggregation of Income Statement Expenses) is expected to be adopted for fiscal years beginning after December 15, 2026, with no material effect on consolidated financial statements[48](index=48&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) [Note 3. Inventory](index=15&type=section&id=Note%203.%20Inventory) As of March 31, 2025, the company reported **$489,000** in finished goods inventory, with no allowance for obsolescence deemed necessary | Inventory Category | March 31, 2025 | December 31, 2024 | | :----------------- | :------------- | :---------------- | | Finished Goods | $489,000 | $0 | | Total Inventory | $489,000 | $0 | [Note 4. Notes Receivable](index=15&type=section&id=Note%204.%20Notes%20Receivable) The company holds a promissory note with an individual, with an outstanding balance of approximately **$200,000** as of March 31, 2025 | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Outstanding Principal and Interest | $200,000 | $201,000 | | Current portion of notes receivable | $200,000 | $184,000 | | Notes receivable (long-term) | $0 | $17,000 | [Note 5. Property, Plant and Equipment, Net](index=15&type=section&id=Note%205%20Property,%20Plant%20and%20Equipment,%20Net) Net property, plant and equipment decreased slightly to **$16,000** as of March 31, 2025, with **$1,000** in depreciation expense | Asset Category | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Machinery and equipment | $30,000 | $30,000 | | Less accumulated depreciation | $14,000 | $13,000 | | Property, plant and equipment, net | $16,000 | $17,000 | - Depreciation expense for the three months ended March 31, 2025, was approximately **$1,000**, a decrease from **$2,000** in the prior year period[55](index=55&type=chunk) [Note 6. Goodwill](index=15&type=section&id=Note%206.%20Goodwill) The company fully impaired its goodwill balance of **$25,093,000** as of December 31, 2024, following an annual impairment test | Goodwill Balance | Amount | | :----------------------- | :------- | | Balance at December 31, 2023 | $25,093,000 | | Goodwill adjustment | $(25,093,000) | | Balance at December 31, 2024 | $0 | - Management performed annual goodwill impairment testing as of December 31, 2024, utilizing Market and Income Approaches, which resulted in a full impairment of goodwill[56](index=56&type=chunk) [Note 7. Intangible Assets](index=15&type=section&id=Note%207.%20Intangible%20Assets) Net definite-lived intangible assets increased to **$17,852,000** as of March 31, 2025, including a **$655,000** acquisition from DSS Pure Air, Inc., with **$282,000** in amortization expense | Intangible Asset Category | March 31, 2025 (Net Carrying Amount) | December 31, 2024 (Net Carrying Amount) | | :------------------------ | :----------------------------------- | :------------------------------------ | | Developed technology assets | $17,530,000 | $17,808,000 | | Acquired assets | $652,000 | $0 | | Total Intangible Assets | $17,852,000 | $17,808,000 | - On February 25, 2025, the company acquired intellectual property of the Celios air purification system, valued at approximately **$655,000**, from DSS Pure Air, Inc. for **$1,150,000** paid in common stock[59](index=59&type=chunk)[74](index=74&type=chunk) - Amortization expense for the three months ended March 31, 2025, was approximately **$282,000**, consistent with **$278,000** for the same period in 2024[60](index=60&type=chunk) [Note 8. Note payable, related party](index=17&type=section&id=Note%208.%20Note%20payable,%20related%20party) The revolving promissory note with DSS, a related party, increased to **$9,141,000** as of March 31, 2025, accruing interest at WSJ Prime Rate plus **0.50%** and accounted for at fair value | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Outstanding balance (inclusive of interest, net of change in fair value) | $9,141,000 | $8,878,000 | - The Revolving Promissory Note with DSS was amended on July 24, 2024, to allow for equity payments, adjust interest due dates, modify the 'On Demand' feature, and set a fixed monthly repayment of **$126,381** starting from the 37th month[62](index=62&type=chunk) - The note is accounted for as a liability under ASC 480 and remeasured at fair value each reporting period, with changes recognized in earnings, using a discounted cash flow method (Monte Carlo simulation)[63](index=63&type=chunk)[64](index=64&type=chunk) [Note 9. Financial Instruments](index=18&type=section&id=Note%209.%20Financial%20Instruments) The company's financial instruments, including cash (Level 1) and the related party note payable (Level 2), are valued using a three-tier fair value hierarchy with observable inputs | Financial Instrument | Fair Value (March 31, 2025) | Fair Value (December 31, 2024) | | :-------------------------- | :-------------------------- | :----------------------------- | | Cash (Level 1) | $1,318,000 | $1,999,000 | | Note payable, related party (Level 2) | $9,141,000 | $8,878,000 | | Total | $10,459,000 | $10,877,000 | [Note 10. Stockholders' Equity](index=18&type=section&id=Note%2010.%20Stockholders'%20Equity) The company completed an IPO on September 16, 2024, raising **$3,726,000** net, and issued common stock for asset acquisition and services, recognizing **$2,000** in stock-based compensation - On September 16, 2024, Impact BioMedical Inc. completed an initial public offering, selling **1,500,000 shares** of common stock at **$3.00 per share**, generating net proceeds of approximately **$3,726,000**[66](index=66&type=chunk) - The company issued **545,024 shares** of common stock for the acquisition of DSS Pure Air, Inc. assets on February 25, 2025, and **36,433 shares** for legal fees on February 26, 2025[68](index=68&type=chunk)[69](index=69&type=chunk) - Stock-based compensation expense for the three months ended March 31, 2025, was approximately **$2,000**, related to **880,000 option grants** awarded on October 1, 2024[67](index=67&type=chunk) [Note 11. Related Party Transactions](index=19&type=section&id=Note%2011.%20Related%20Party%20Transactions) The company incurred **$78,000** in general and administrative costs from DSS, a related party, with an outstanding promissory note balance of **$9,141,000** as of March 31, 2025 | Related Party Transaction | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | General and Administrative Costs | $78,000 | $93,000 | | Note payable, related party (outstanding balance) | $9,141,000 | $8,878,000 (as of Dec 31, 2024) | [Note 12. Commitments and Contingencies](index=19&type=section&id=Note%2012.%20Commitments%20and%20Contingencies) The company has a 20-year royalty agreement with Chemia Corporation for 3F technology (50/50 profit split, 5% royalty) and a license agreement for Equivir technology (5.5% royalty, 50% development cost reimbursement up to **$1,250,000**) - The Royalty Agreement with Chemia Corporation for 3F technology has a **20-year term**, with **50%** profit split after expense reimbursement and a **5%** royalty on Chemia's net sales. No reimbursements or royalties were paid for the three months ended March 31, 2025 and 2024[72](index=72&type=chunk) - The Equivir License Agreement grants a third-party rights to develop, commercialize, and sell Equivir technology, with the company receiving a **5.5%** royalty on net sales and reimbursing **50%** of development costs up to **$1,250,000**. No liability was recorded as of March 31, 2025, or December 31, 2024[73](index=73&type=chunk) [Note 13. Acquisition](index=19&type=section&id=Note%2013.%20Acquisition) On February 25, 2025, the company acquired assets from DSS Pure Air, Inc. for **$1,150,000** in common stock, including **$325,000** in intellectual property and a **$330,000** premium recorded to equity - The company acquired assets from DSS Pure Air, Inc. for **$1,150,000**, paid in **545,024 shares** of common stock on February 25, 2025[74](index=74&type=chunk) | Acquired Asset | Value | | :-------------------------------- | :-------- | | Accounts receivable | $4,000 | | Prepaid assets | $2,000 | | Inventory | $489,000 | | Intellectual property (Celios air purification system) | $325,000 | | Premium paid for assets acquired | $330,000 | | Total consideration | $1,150,000 | - A **$330,000** premium paid for the assets acquired from a common control entity was recorded directly to equity, in accordance with ASC 805-50[74](index=74&type=chunk)[75](index=75&type=chunk) [Note 14. Supplemental Cash Flow Information](index=20&type=section&id=Note%2014.%20Supplemental%20Cash%20Flow%20Information) This note details noncash investing and financing activities, including share issuance for legal services and DSS PureAir asset acquisition | Noncash Activity | 2025 | 2024 | | :--------------------------------------- | :--------- | :--- | | Shares issued in lieu of cash for legal services | $29,000 | $0 | | Shares issued for acquisition of DSS PureAir assets | $1,150,000 | $0 | [Note 15. Subsequent Events](index=20&type=section&id=Note%2015.%20Subsequent%20Events) No subsequent events requiring financial statement recognition or disclosure were identified through May 14, 2025 - No subsequent events requiring financial statement recognition or disclosure were identified through May 14, 2025[77](index=77&type=chunk) [Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial condition and results of operations for the three months ended March 31, 2025, covering business overview, expenses, income, net loss, liquidity, and cash flows [Overview](index=21&type=section&id=Overview) Impact BioMedical Inc. (IBO) is a biotechnology company focused on discovering and patenting healthcare and wellness technologies, commercializing them through licensing and partnerships, with a diverse technology portfolio - Impact BioMedical Inc. (IBO) discovers, confirms, and patents unique science and technologies for human healthcare and wellness, aiming to develop new offerings through licensing, co-development, joint ventures, and direct sales[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk) - The company's structure and key technologies include: - **Principal Subsidiaries:** Impact BioLife Science, Inc., Global Biomedical, Inc., Global BioLife, Inc., and Sweet Sense, Inc. - **Key Technologies:** Linebacker (oncology, inflammatory, neurology), Laetose (caloric/glycemic reduction, anti-inflammatory), Functional Fragrance Formulation (3F) (antimicrobial, insect repellents), Equivir (antiviral effects, health supplements)[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) - The company continually evaluates additional proprietary technologies in various development phases, including biopharmaceuticals, indoor air quality products, bioplastics, personalized medicine, nanotechnology, and cannabis products[99](index=99&type=chunk)[100](index=100&type=chunk) [Costs and expenses](index=23&type=section&id=Costs%20and%20expenses) Total costs and expenses increased by **31%** to **$1,010,000** for the three months ended March 31, 2025, driven by higher compensation, marketing, professional fees, and other operating expenses, partially offset by reduced R&D | Expense Category | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | % Change | | :------------------------------------------------- | :-------------------------------- | :-------------------------------- | :------- | | Sales, general and administrative compensation | $246,000 | $148,000 | 66% | | Stock-based compensation | $2,000 | $0 | N/A | | Sales and marketing | $19,000 | $8,000 | 138% | | Professional Fees | $223,000 | $145,000 | 54% | | Research and development | $103,000 | $183,000 | -44% | | Depreciation and Amortization | $283,000 | $280,000 | 1% | | Rent and utilities | $19,000 | $4,000 | 375% | | Other operating expenses | $115,000 | $3,000 | 3,733% | | Total costs and expenses | $1,010,000 | $771,000 | 31% | - Sales, general and administrative compensation increased **66%** due to additional headcount[101](index=101&type=chunk) - Sales and marketing costs increased **138%** due to trade show attendance and post-IPO marketing efforts[104](index=104&type=chunk) - Professional fees increased **54%** as the company began enacting its business plan post-IPO[105](index=105&type=chunk) - Research and development costs decreased **44%** due to reduced efforts on certain patents in 2025 compared to 2024[106](index=106&type=chunk) - Other operating expenses increased **3,733%** primarily due to increases in directors and officers insurance post-IPO[109](index=109&type=chunk) [Other Income (Expense)](index=24&type=section&id=Other%20Income%20(Expense)) Total other expense increased by **18%** to **$(268,000)** for the three months ended March 31, 2025, primarily due to an **18%** increase in interest expense on debt to DSS | Category | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | % Change | | :--------------- | :-------------------------------- | :-------------------------------- | :------- | | Interest income | $3,000 | $3,000 | 0% | | Interest expense | $(271,000) | $(230,000) | 18% | | Total other expense | $(268,000) | $(227,000) | -18% | - Interest expense increased **18%** due to the increased outstanding balance of debt owed to DSS[111](index=111&type=chunk) [Net loss](index=25&type=section&id=Net%20loss) The net loss for the three months ended March 31, 2025, increased by **28%** to **$(1,278,000)**, primarily due to higher costs from additional headcount, D&O insurance post-IPO, and increased professional fees | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | % Change | | :------- | :-------------------------------- | :-------------------------------- | :------- | | Net loss | $(1,278,000) | $(998,000) | -28% | - The increase in net loss is attributed to higher costs from additional headcount, the purchase of directors' and officers' insurance post-IPO, and increased professional fees related to the execution of the company's business plan[112](index=112&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=25&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company completed an IPO on September 16, 2024, raising **$3,726,000**, but operating losses and negative cash flows raise going concern doubts, prompting plans to monetize IP and control costs - The company completed an initial public offering on September 16, 2024, raising **$3,726,000** net of issuance costs, and is listed on the NYSE American under the ticker symbol IBO[113](index=113&type=chunk) - Operating losses and negative cash flows raise substantial doubt about the company's ability to continue as a going concern. Management plans to monetize intellectual properties and tightly control operating costs[113](index=113&type=chunk) [Cash Flow from Continuing Operating Activities](index=25&type=section&id=Cash%20Flow%20from%20Continuing%20Operating%20Activities) Net cash used by operating activities increased to **$682,000** for the three months ended March 31, 2025, primarily due to increased accounts payable payments and a higher net loss | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used by operating activities | $(682,000) | $(482,000) | - The increase in cash used by operating activities was driven by approximately **$289,000** more in accounts payable payments and a **$213,000** increase in net loss after reconciling items[114](index=114&type=chunk) [Cash Flow from Investing Activities](index=25&type=section&id=Cash%20Flow%20from%20Investing%20Activities) Net cash provided by investing activities was **$1,000** for the three months ended March 31, 2025, due to payments received on notes receivable | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by investing activities | $1,000 | $0 | [Cash Flow from Financing Activities](index=25&type=section&id=Cash%20Flow%20from%20Financing%20Activities) Net cash provided by financing activities was **$0** for the three months ended March 31, 2025, a decrease from **$483,000** in the prior year due to borrowings from DSS | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by financing activities | $0 | $483,000 | [Off-Balance Sheet Arrangements](index=25&type=section&id=Off-Balance%20Sheet%20Arrangements) The company has no material off-balance sheet arrangements that would significantly affect its financial condition, statements, revenues, or expenses - The company has no material off-balance sheet arrangements[116](index=116&type=chunk) [Critical Accounting Policies and Estimates](index=25&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) No additional material changes to the company's critical accounting policies were reported as of March 31, 2025, compared to December 31, 2024 - No additional material changes to critical accounting policies as of March 31, 2025[117](index=117&type=chunk) [Item 4 - Controls and Procedures](index=25&type=section&id=Item%204%20Controls%20and%20Procedures) This section addresses the effectiveness of disclosure controls and procedures, concluding they were not effective as of March 31, 2025, due to material weaknesses, but no material changes to internal control over financial reporting occurred [Disclosure Controls and Procedures](index=25&type=section&id=Disclosure%20Controls%20and%20Procedures) As of March 31, 2025, the company's disclosure controls and procedures were deemed not effective due to material weaknesses identified in the Annual Report on Form 10-K for the year ended December 31, 2023 - As of March 31, 2025, the company's disclosure controls and procedures were not effective due to material weaknesses disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023[118](index=118&type=chunk) - Internal control over financial reporting has inherent limitations and may not prevent or detect misstatements, and projections of effectiveness are subject to risks of controls becoming inadequate or compliance deteriorating[119](index=119&type=chunk)[120](index=120&type=chunk) [Changes in Internal Control over Financial Reporting](index=26&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) Despite remediation steps, no material changes to internal control over financial reporting occurred during the quarter ended March 31, 2025 - No material changes in the company's internal control over financial reporting occurred during the quarter ended March 31, 2025, despite ongoing implementation of remediation steps[121](index=121&type=chunk) [PART II - OTHER INFORMATION](index=27&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1 - Legal Proceedings](index=27&type=section&id=Item%201%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings, though ordinary course litigation could have an adverse impact - The company is not currently a party to any material legal proceedings[123](index=123&type=chunk) [Item 1A - Risk Factors](index=27&type=section&id=Item%201A%20Risk%20Factors) As a smaller reporting company, Impact BioMedical, Inc. is not required to provide the information typically required by this item - Smaller reporting companies are not required to provide risk factor information[124](index=124&type=chunk) [Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported for the period - No unregistered sales of equity securities and use of proceeds to report[125](index=125&type=chunk) [Item 3 - Defaults upon Senior Securities](index=27&type=section&id=Item%203%20Defaults%20upon%20Senior%20Securities) No defaults upon senior securities were reported for the period - No defaults upon senior securities to report[126](index=126&type=chunk) [Item 4 - Mine Safety Disclosures](index=27&type=section&id=Item%204%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Mine Safety Disclosures are not applicable to the company[127](index=127&type=chunk) [Item 5 - Other Information](index=27&type=section&id=Item%205%20Other%20Information) No other information is disclosed under this item - No other information to disclose[128](index=128&type=chunk) [Item 6 - Exhibits](index=28&type=section&id=Item%206%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including underwriting agreements, corporate documents, warrants, various agreements, and certifications - The report includes a comprehensive list of exhibits, such as the Underwriting Agreement, Amended and Restated Articles of Incorporation, Bylaws, Certificate of Designation of Series A Convertible Preferred Stock, Form of Underwriter Warrant, and various Share Exchange, Subscription, Promissory Note, Royalty, Distribution, and License Agreements[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk)

PART I [ITEM 1 - BUSINESS](index=4&type=section&id=ITEM%201%20-%20BUSINESS) IBO discovers and patents unique science for human healthcare, advancing biopharmaceuticals and drug discovery; IPO in 2024 [Overview](index=4&type=section&id=Overview) Impact Biomedical Inc. (IBO) focuses on discovering, confirming, and patenting unique science and technologies for human healthcare and wellness - Impact Biomedical Inc. (IBO) focuses on discovering, confirming, and patenting unique science and technologies for human healthcare and wellness, trading on the NYSE American under ticker symbol IBO[14](index=14&type=chunk) - The company aims to advance biopharmaceuticals, over-the-counter wellness offerings, and drug discovery for neurological, oncologic, and inflammatory diseases through technology and strategic partnerships[15](index=15&type=chunk)[17](index=17&type=chunk) [Principal Subsidiaries](index=4&type=section&id=Principal%20Subsidiaries) Impact Biomedical Inc. conducts operations and owns assets through its principal subsidiaries - Impact Biomedical Inc. conducts operations and owns assets through its principal subsidiaries: Global BioLife, Inc., Impact BioLife Science, Inc., Global BioMedical, Inc., and Sweet Sense, Inc[16](index=16&type=chunk)[19](index=19&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk) [Proprietary Technologies](index=5&type=section&id=Proprietary%20Technologies) Impact BioMedical possesses several unique and proprietary technologies in various stages of development - Impact BioMedical possesses several unique and proprietary technologies in various stages of development, including Linebacker, Laetose, Functional Fragrance Formulation (3F), Equivir, and other emerging technologies[22](index=22&type=chunk)[36](index=36&type=chunk) [Linebacker](index=5&type=section&id=Linebacker) Linebacker is a platform of small molecule electrophilically enhanced polyphenol compounds with potential applications in oncology - Linebacker is a platform of small molecule electrophilically enhanced polyphenol compounds with potential applications in oncology (solid tumors), inflammatory disorders, and neurology, licensed to ProPhase Laboratories for development and commercialization[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) [Laetose](index=5&type=section&id=Laetose) Laetose™ technology shows potential in reducing caloric intake and glycemic index in foods - Laetose™ technology shows potential in reducing caloric intake and glycemic index in foods, inhibiting TNF-α, and could lead to **30% lower sugar consumption** and lower glycemic index/load compared to sugar[27](index=27&type=chunk)[28](index=28&type=chunk) - IBO is actively seeking partners for further development and commercialization of Laetose as a consumer-packaged or biopharmaceutical offering worldwide[29](index=29&type=chunk) [Functional Fragrance Formulation ("3F")](index=5&type=section&id=Functional%20Fragrance%20Formulation%20(%223F%22)) 3F is a suite of 'functional fragrances' with specialized botanical ingredients that have potential applications as antimicrobials - 3F is a suite of 'functional fragrances' with specialized botanical ingredients (e.g., terpenes) that have potential applications as antimicrobials or additives in insect repellents, detergents, lotions, and shampoos[30](index=30&type=chunk) - IBO has partnered with Chemia Corporation for 3F technology development and is seeking additional partners for worldwide commercialization[30](index=30&type=chunk)[31](index=31&type=chunk) [Equivir](index=5&type=section&id=Equivir) Equivir/Equivir G technology is a novel blend of FDA GRAS-eligible polyphenols demonstrating antiviral effects - Equivir/Equivir G technology is a novel blend of FDA GRAS-eligible polyphenols (Myricetin, Hesperetin, Piperine) demonstrating antiviral effects, licensed to ProPhase Laboratories for development and commercialization, initially focusing on upper respiratory wellness[33](index=33&type=chunk)[34](index=34&type=chunk) [Emerging Technology](index=5&type=section&id=Emerging%20Technology) Impact BioMedical continuously evaluates additional proprietary technologies in various development phases - Impact BioMedical continuously evaluates additional proprietary technologies in various development phases, including biopharmaceuticals, indoor air quality products, preservatives, bioplastics, personalized medicine, nanotechnology, and cannabis products[36](index=36&type=chunk) [2024 RECAP](index=7&type=section&id=2024%20RECAP) In 2024, Impact BioMedical demonstrated its ability to establish an experienced leadership team and attract investor confidence - In 2024, Impact BioMedical demonstrated its ability to establish an experienced leadership team, attract investor confidence, build a robust intellectual property portfolio, and create partnerships for development and commercialization[38](index=38&type=chunk) - Key achievements in 2024 include establishing three new patent platforms, completing the first human study for the Equivir platform (licensed to ProPhase Labs) with anticipated launch in 2025-2026, and completing an IPO in September 2024[39](index=39&type=chunk)[40](index=40&type=chunk) - The company successfully restructured its long-term debt in Q3 2024, allowing debt repayment with company equity for 24 months to preserve cash[40](index=40&type=chunk) [Reporting Operating Segments](index=7&type=section&id=Reporting%20Operating%20Segments) Impact BioMedical currently operates as one business segment: Biotechnology, focusing on unmet medical needs - Impact BioMedical currently operates as one business segment: Biotechnology, focusing on unmet medical needs and advancing drug discovery for neurological, oncology, and immuno-related diseases[44](index=44&type=chunk)[46](index=46&type=chunk) - The Chief Executive Officer and Chief Operating Officer jointly serve as the Chief Operating Decision Maker (CODM), evaluating performance and allocating resources based on net income (loss) and operating income (loss)[42](index=42&type=chunk)[43](index=43&type=chunk) [Business Model](index=9&type=section&id=Business%20Model) Impact BioMedical's business model centers on licensing patented technologies and direct sales distribution - Impact BioMedical's business model centers on two methodologies: licensing patented technologies to pharmaceutical and consumer packaged goods companies for royalties, and direct sales distribution through the DSS ecosystem for nutraceutical and health-related products[48](index=48&type=chunk)[49](index=49&type=chunk) [Intellectual Property](index=9&type=section&id=Intellectual%20Property) The company protects its intellectual property through patents, trademarks, and trade secrets - The company protects its intellectual property through patents, trademarks, and trade secrets, with current rights or ownership to **8 issued patents** and over **40 pending patents** worldwide, covering compositions and methods[50](index=50&type=chunk)[54](index=54&type=chunk) - Issued patents cover oncology, neurology, inflammatory disease, infectious disease, antivirals, and insect repellents, while pending patents include food preservatives, bio-plastics, biopharmaceuticals, and sugar/diet substitutes[55](index=55&type=chunk) [Markets and Competition](index=10&type=section&id=Markets%20and%20Competition) Impact Biomedical operates in the human healthcare and wellness market, focusing on specialty biopharmaceuticals - Impact Biomedical operates in the human healthcare and wellness market, focusing on specialty biopharmaceuticals, antivirals, antimicrobials, and consumer healthcare products, competing with major pharmaceutical, biotechnology companies, and research institutions[60](index=60&type=chunk) [Customers](index=10&type=section&id=Customers) Potential customers include pharmaceutical, food, and consumer packaged goods companies who would license IBO technologies - Potential customers include pharmaceutical, food, and consumer packaged goods companies who would license IBO technologies in exchange for milestone and royalty payments[61](index=61&type=chunk) [Environmental Compliance](index=12&type=section&id=Environmental%20Compliance) The company's policy is to operate in accordance with all applicable environmental laws and regulations - The company's policy is to operate in accordance with all applicable environmental laws and regulations, and management believes compliance will not have a material adverse effect on its financial results[63](index=63&type=chunk) [Government Regulation](index=12&type=section&id=Government%20Regulation) The company faces potential government regulations, and changes in patent laws could negatively affect its patent monetization efforts - The company faces potential government regulations, and changes in patent laws or enforcement standards could negatively affect its patent monetization efforts and increase costs[64](index=64&type=chunk)[65](index=65&type=chunk) [Corporate History](index=12&type=section&id=Corporate%20History) Impact BioMedical, Inc. was incorporated in Nevada on October 16, 2018 - Impact BioMedical, Inc. was incorporated in Nevada on October 16, 2018, focusing on drug discovery and prevention/treatment of neurological, oncological, and immune-related diseases, and developing open-air defense initiatives[66](index=66&type=chunk) [Employees](index=12&type=section&id=Employees) As of December 31, 2024, the Company has two full-time employees and six shared employees with DSS - As of December 31, 2024, the Company has two full-time employees and six shared employees with DSS[67](index=67&type=chunk) [Available Information](index=12&type=section&id=Available%20Information) The company's primary corporate website is www.impactbiomedinc.com, where press releases and SEC reports are made available - The company's primary corporate website is www.impactbiomedinc.com, where press releases and SEC reports (10-K, 10-Q, 8-K) are made available free of charge[68](index=68&type=chunk) [ITEM 1A – RISK FACTORS](index=12&type=section&id=ITEM%201A%20%E2%80%93%20RISK%20FACTORS) Investment in IBO securities is highly speculative due to IP, regulatory, development, and liquidity risks; company faces losses [Risks Related to Liquidity, the Company's Business and Industry](index=13&type=section&id=Risks%20Related%20to%20Liquidity,%20the%20Company's%20Business%20and%20Industry) Failure to adequately protect intellectual property rights, new legislation, and product safety concerns can materially harm operations - Failure to adequately protect intellectual property rights, new legislation impacting patent processes, and product safety concerns can materially harm operations and financial condition[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) - Significant challenges or delays in innovation and development of new products, technologies, and indications could adversely impact long-term success, as only a few biopharmaceutical R&D programs result in commercially viable products[73](index=73&type=chunk) - The company may not have adequate funds to implement its business plan, requiring additional financing beyond its IPO, and faces significant competition from other biopharmaceutical and consumer product companies with greater resources[75](index=75&type=chunk)[77](index=77&type=chunk) - Successful clinical trials are crucial for reselling and/or licensing products, but the process is complex, time-consuming, and expensive, with no guarantee of regulatory approval or commercial success[76](index=76&type=chunk)[86](index=86&type=chunk) - Reliance on third parties for manufacturing clinical drug supplies exposes the company to risks of delays, quality issues, and increased costs[88](index=88&type=chunk)[89](index=89&type=chunk) [Risks Related to Intellectual Property Rights](index=17&type=section&id=Risks%20Related%20to%20Intellectual%20Property%20Rights) The company relies on various intellectual property rights, but these may not provide sufficient competitive advantage - The company relies on various intellectual property rights, including patents and licenses, but these may not provide sufficient competitive advantage or be adequately protected against challenges, invalidation, or circumvention[92](index=92&type=chunk) - Enforcing patent rights or defending against infringement lawsuits can be expensive, time-consuming, and divert management's attention, with uncertain outcomes[93](index=93&type=chunk)[94](index=94&type=chunk) - Dependence on third-party intellectual property and licensing agreements means the company's success is tied to licensors' ability to maintain and enforce patents, and breaches could harm business prospects[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) - Confidentiality agreements may not adequately prevent disclosure of trade secrets, and independent discovery by others could weaken the company's competitive position[101](index=101&type=chunk) [Risks Related to Ownership of Our Securities](index=19&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Securities) The market price of the company's common stock is likely to be highly volatile - The market price of the company's common stock is likely to be highly volatile due to a small public float, concentrated ownership, and various other factors including financing ability, R&D status, and market conditions[102](index=102&type=chunk)[103](index=103&type=chunk) - The company does not anticipate paying any dividends in the foreseeable future, meaning any gains from investment will depend solely on stock price appreciation[104](index=104&type=chunk) - As an 'emerging growth company,' the company benefits from reduced disclosure requirements, which may make its common stock less attractive to some investors and potentially increase stock price volatility[107](index=107&type=chunk) [ITEM 1B – UNRESOLVED STAFF COMMENTS](index=21&type=section&id=ITEM%201B%20%E2%80%93%20UNRESOLVED%20STAFF%20COMMENTS) There are no unresolved staff comments to report - The company has no unresolved staff comments[112](index=112&type=chunk) [ITEM 1C - CYBERSECURITY](index=21&type=section&id=ITEM%201C%20-%20CYBERSECURITY) IBO employs a proactive cybersecurity strategy integrating Microsoft cloud ecosystem with third-party services, overseen by VPE&T [Governance](index=21&type=section&id=Governance) The VP, Engineering & Technology (VPE&T) is responsible for overseeing the company's cybersecurity risk management strategy - The VP, Engineering & Technology (VPE&T) is responsible for overseeing the company's cybersecurity risk management strategy, including prevention, detection, mitigation, and remediation of cybersecurity incidents[117](index=117&type=chunk)[118](index=118&type=chunk) [ITEM 2 - PROPERTIES](index=21&type=section&id=ITEM%202%20-%20PROPERTIES) Impact Biomedical Inc. subleases 1,997 square feet of office space from DSS - Impact Biomedical Inc. subleases **1,997 square feet** of office space from DSS[119](index=119&type=chunk) - The lease term is from October 1, 2022, to September 30, 2026[119](index=119&type=chunk) - Monthly rent increased from approximately **$5,500** through September 2024 to approximately **$7,200** in October 2024[119](index=119&type=chunk)[120](index=120&type=chunk) [ITEM 3 - LEGAL PROCEEDINGS](index=22&type=section&id=ITEM%203%20-%20LEGAL%20PROCEEDINGS) There are no material legal proceedings involving the company's directors or officers that are adverse to the company - There are no material legal proceedings to which any director or officer, or any associate, is a party adverse to the company or its subsidiaries[121](index=121&type=chunk) - The company may become involved in various lawsuits and legal proceedings in the ordinary course of business, which are subject to inherent uncertainties[122](index=122&type=chunk) [ITEM 4 - MINE SAFETY DISCLOSURES](index=22&type=section&id=ITEM%204%20-%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - Mine Safety Disclosures are not applicable to Impact Biomedical Inc[123](index=123&type=chunk) PART II [ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=23&type=section&id=ITEM%205%20-%20MARKET%20FOR%20THE%20REGISTRANT'S%20COMMON%20EQUITY,%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) IBO common stock not listed, intends NYSE American; 608 holders; no dividends paid [Market Information](index=23&type=section&id=Market%20Information) The company's common stock is not currently listed on any exchange, but it intends to apply to the NYSE American LLC for listing - The company's common stock is not currently listed on any exchange, but it intends to apply to the NYSE American LLC for listing[125](index=125&type=chunk) [Holders of Record](index=23&type=section&id=Holders%20of%20Record) As of January 25, 2025, there were 608 record holders of the company's common stock - As of January 25, 2025, there were **608 record holders** of the company's common stock[126](index=126&type=chunk) [Dividends](index=23&type=section&id=Dividends) The company did not pay dividends during 2024 or 2023 and anticipates retaining any future earnings for business investment - The company did not pay dividends during 2024 or 2023 and anticipates retaining any future earnings for investment in its business[127](index=127&type=chunk) [Securities Authorized for Issuance Under Equity Compensation Plans](index=23&type=section&id=Securities%20Authorized%20for%20Issuance%20Under%20Equity%20Compensation%20Plans) Securities Authorized for Issuance Under Equity Compensation Plans (as of December 31, 2024) | Plan Category | Restricted stock to be issued upon vesting (a) | Number of securities to be issued upon exercise of outstanding options, warrants and rights (b) | Weighted average exercise price of outstanding options, warrants and rights (c) | Number of securities remaining available for future issuance (d) | | :--- | :--- | :--- | :--- | :--- | | 2023 Employee, Director and Consultant Equity Incentive Plan - options | - | 880,000 | $3.00 | - | | 2023 Employee, Director and Consultant Equity Incentive Plan - warrants | - | 75,000 | $3.75 | - | | 2023 Employee, Director and Consultant Equity Incentive Plan | - | - | $ - | 18,037,079 | | **Total** | **-** | **955,000** | **$3.06** | **18,037,079** | [Recent Issuances of Unregistered Securities](index=24&type=section&id=Recent%20Issuances%20of%20Unregistered%20Securities) There were no recent issuances of unregistered securities - There were no recent issuances of unregistered securities[129](index=129&type=chunk) [Shares Repurchased by the Registrant](index=24&type=section&id=Shares%20Repurchased%20by%20the%20Registrant) The company did not purchase or repurchase any of its securities in the fiscal year ended December 31, 2024 - The company did not purchase or repurchase any of its securities in the fiscal year ended December 31, 2024[130](index=130&type=chunk) [ITEM 6 - SELECTED FINANCIAL DATA](index=24&type=section&id=ITEM%206%20-%20SELECTED%20FINANCIAL%20DATA) This item is not applicable to the company - Selected Financial Data is not applicable[131](index=131&type=chunk) [ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=24&type=section&id=ITEM%207%20-%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) IBO incurred a **$24.77 million net loss** in 2024, driven by goodwill impairment; no revenue; IPO raised **$3.73 million** [Overview](index=24&type=section&id=Overview) Impact Biomedical Inc. discovers, confirms, and patents unique science and technologies for human healthcare and wellness - Impact Biomedical Inc. discovers, confirms, and patents unique science and technologies for human healthcare and wellness, leveraging strategic partnerships for development and commercialization[133](index=133&type=chunk)[134](index=134&type=chunk) - The business model involves licensing and potential direct sales, with operations conducted through principal subsidiaries including Global BioLife, Impact BioLife Science, Global BioMedical, and Sweet Sense[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk) [Revenue](index=27&type=section&id=Revenue) The company has not generated any revenue for the years ended December 31, 2024, or 2023 - The company has not generated any revenue for the years ended December 31, 2024, or 2023[156](index=156&type=chunk) [Costs and expenses](index=27&type=section&id=Costs%20and%20expenses) Costs and Expenses (Years Ended December 31) | Expense Category | 2024 ($) | 2023 ($) | % Change | | :--- | :--- | :--- | :--- | | Sales, general and administrative compensation | 699,000 | 315,000 | 122% | | Stock based compensation | 19,000 | - | N/A | | Sales and marketing | 633,000 | 65,000 | 874% | | Professional Fees | 446,000 | 724,000 | -38% | | Research and development | 278,000 | 1,685,000 | -84% | | Depreciation and Amortization | 1,119,000 | 1,120,000 | 0% | | Rent and utilities | 32,000 | - | N/A | | Impairment of fixed assets | 263,000 | - | N/A | | Impairment of goodwill | 25,093,000 | - | N/A | | Other operating expenses | 171,000 | 119,000 | 44% | - Sales, general and administrative compensation increased by **122%** in 2024 due to increased headcount and costs associated with SEC registration and IPO efforts[158](index=158&type=chunk) - Sales and marketing costs surged by **874%** in 2024, primarily due to increased expenses for trade shows and marketing efforts pre and post-IPO[160](index=160&type=chunk) - Research and development costs decreased by **84%** in 2024 due to cost-cutting activities, including the cessation of a contract with GRDG at the end of 2023[161](index=161&type=chunk) - A goodwill impairment of **$25,093,000** was recognized in Q4 2024 following qualitative and quantitative assessments[164](index=164&type=chunk) [Other Income (Expense)](index=29&type=section&id=Other%20Income%20(Expense)) Other Income (Expense) (Years Ended December 31) | Category | 2024 ($) | 2023 ($) | % Change | | :--- | :--- | :--- | :--- | | Interest income | 13,000 | 13,000 | 0% | | Other income (expense) | - | 52,000 | -100% | | Change in fair value of note payable, related party | 5,068,000 | - | N/A | | Interest expense | (1,065,000) | (444,000) | 140% | | **Total other income (expense)** | **4,016,000** | **(379,000)** | **1160%** | - A significant change in fair value of note payable, related party, of **$5,068,000** was recognized in 2024 due to an amendment allowing equity settlement of the DSS Note[168](index=168&type=chunk) - Interest expense increased by **140%** in 2024 due to an increase in the debt balance year over year[169](index=169&type=chunk) [Net Loss](index=30&type=section&id=Net%20Loss) Net Loss (Years Ended December 31) | Metric | 2024 ($) | 2023 ($) | % Change | | :--- | :--- | :--- | :--- | | Net loss | (24,770,000) | (4,407,000) | -462% | - The increase in net loss is primarily attributable to the impairment of goodwill as of December 31, 2024, partially offset by cost-cutting measures and the change in fair value of the amended note payable[170](index=170&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) The company historically met liquidity needs through debt financing but completed an IPO on September 16, 2024 - The company historically met liquidity needs through debt financing but completed an IPO on September 16, 2024, raising **$3,726,000** net of issuance costs[171](index=171&type=chunk) - Management plans to continue as a going concern by monetizing intellectual properties and tightly controlling operating costs[171](index=171&type=chunk) [Cash Flow from Operating Activities](index=31&type=section&id=Cash%20Flow%20from%20Operating%20Activities) Net cash used by operating activities increased to **$3,919,000** in 2024 from **$2,851,000** in 2023 - Net cash used by operating activities increased to **$3,919,000** in 2024 from **$2,851,000** in 2023, driven by increased operating loss adjusted for reconciling items, decreased accounts payable, and increased prepaid expenses[172](index=172&type=chunk) [Cash Flow from Investing Activities](index=31&type=section&id=Cash%20Flow%20from%20Investing%20Activities) Net cash provided by investing activities was **$2,000** in 2024, a change from **$15,000** used in 2023 - Net cash provided by investing activities was **$2,000** in 2024, a change from **$15,000** used in 2023, primarily due to the absence of property, plant, and equipment purchases in 2024[173](index=173&type=chunk) [Cash Flow from Financing Activities](index=31&type=section&id=Cash%20Flow%20from%20Financing%20Activities) Net cash provided by financing activities was **$5,915,000** in 2024, including **$2,189,000** in DSS borrowings and **$3,726,000** from the IPO - Net cash provided by financing activities was **$5,915,000** in 2024, including **$2,189,000** in DSS borrowings and **$3,726,000** from the IPO, compared to **$2,865,000** from DSS borrowings in 2023[174](index=174&type=chunk) [Continuing Operations and Going Concern](index=31&type=section&id=Continuing%20Operations%20and%20Going%20Concern) Operating losses and negative cash flows from operating activities raise substantial doubt about the company's ability to continue as a going concern - Operating losses and negative cash flows from operating activities raise substantial doubt about the company's ability to continue as a going concern within one year[175](index=175&type=chunk) - Management plans to address this by monetizing intellectual properties and tightly controlling operating costs, following the September 2024 IPO[176](index=176&type=chunk) [Off-Balance Sheet Arrangements](index=31&type=section&id=Off-Balance%20Sheet%20Arrangements) The company does not have any off-balance sheet arrangements that are reasonably likely to have a material effect on its financial condition - The company does not have any off-balance sheet arrangements that are reasonably likely to have a material effect on its financial condition, statements, revenues, or expenses[177](index=177&type=chunk) [Inflation](index=31&type=section&id=Inflation) Management believes inflation did not have a material effect on the company's results of operations during 2024 or 2023 - Management believes inflation did not have a material effect on the company's results of operations during 2024 or 2023[178](index=178&type=chunk) [Critical Accounting Policies](index=31&type=section&id=Critical%20Accounting%20Policies) The preparation of financial statements requires management to make judgments, assumptions, and estimates in conformity with U.S. GAAP - The preparation of financial statements requires management to make judgments, assumptions, and estimates in conformity with U.S. GAAP, with no material changes to critical accounting policies as of December 31, 2024[179](index=179&type=chunk) [ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=33&type=section&id=ITEM%207A%20-%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This item is not applicable to the company - Quantitative and Qualitative Disclosures About Market Risk are not applicable[191](index=191&type=chunk) [ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=34&type=section&id=ITEM%208%20-%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) Audited financial statements for 2024 and 2023 are presented; auditors noted substantial doubt about going concern [Report of Independent Registered Public Accounting Firm](index=35&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Grassi & Co., CPAs, P.C. issued an unqualified opinion on the consolidated financial statements for 2024 and 2023 - Grassi & Co., CPAs, P.C. issued an unqualified opinion on the consolidated financial statements for 2024 and 2023, stating they present fairly the financial position and results of operations in conformity with U.S. GAAP[196](index=196&type=chunk) - The audit report includes an emphasis-of-matter paragraph highlighting substantial doubt about the company's ability to continue as a going concern due to operating losses and negative cash flows[197](index=197&type=chunk) [Consolidated Balance Sheets](index=36&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheets (as of December 31) | ASSETS | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | **Current assets:** | | | | Cash and cash equivalents | 1,999,000 | 1,000 | | Other receivables | - | 128,000 | | Current portion of notes receivable | 184,000 | 203,000 | | Prepaid expenses and other current assets | 265,000 | - | | **Total current assets** | **2,448,000** | **332,000** | | Property, plant and equipment, net | 17,000 | 287,000 | | Notes receivable | 17,000 | - | | Goodwill | - | 25,093,000 | | Other intangible assets, net | 17,808,000 | 18,921,000 | | **Total assets** | **20,290,000** | **44,633,000** | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | **Current liabilities:** | | | | Accounts payable | 713,000 | 832,000 | | Accrued expenses | 194,000 | 230,000 | | Note payable, related party | 8,878,000 | 12,074,000 | | **Total current liabilities** | **9,785,000** | **13,136,000** | | Deferred tax liability, net | 3,268,000 | 3,235,000 | | **Total liabilities** | **13,053,000** | **16,371,000** | | **Stockholders' equity** | | | | Preferred stock, $.001 par value | 60,000 | 60,000 | | Common stock, $.001 par value | 11,000 | 10,000 | | Additional paid-in capital | 41,857,000 | 38,113,000 | | Accumulated deficit | (37,669,000) | (12,961,000) | | Total stockholders' equity of the Company | 4,259,000 | 25,222,000 | | Non-controlling interest in subsidiaries | 2,978,000 | 3,040,000 | | **Total stockholders' equity** | **7,237,000** | **28,262,000** | | **Total liabilities and stockholders' equity** | **20,290,000** | **44,633,000** | [Consolidated Statements of Operations](index=37&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations (For the Years Ended December 31) | Category | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | **Costs and expenses:** | | | | Sales, general and administrative compensation (inclusive of stock based compensation) | 718,000 | 315,000 | | Sales and marketing | 633,000 | 65,000 | | Professional Fees | 446,000 | 724,000 | | Research and development | 278,000 | 1,685,000 | | Depreciation and Amortization | 1,119,000 | 1,120,000 | | Rent and utilities | 32,000 | - | | Impairment of fixed assets | 263,000 | - | | Impairment of goodwill | 25,093,000 | - | | Other operating expenses | 171,000 | 119,000 | | **Total costs and expenses** | **28,753,000** | **4,028,000** | | **Operating loss** | **(28,753,000)** | **(4,028,000)** | | **Other income (expense):** | | | | Interest income | 13,000 | 13,000 | | Other income | - | 52,000 | | Change in fair value of note payable, related party | 5,068,000 | - | | Interest expense | (1,065,000) | (444,000) | | **Loss from operations before income taxes** | **(24,737,000)** | **(4,407,000)** | | Income tax expense | (33,000) | - | | **Net loss** | **(24,770,000)** | **(4,407,000)** | | Loss from operations attributed to noncontrolling interest | 62,000 | 71,000 | | **Net income (loss) attributable to common stockholders** | **(24,708,000)** | **(4,336,000)** | | **Earnings (loss) per common share:** | | | | Basic | (2.30) | (0.07) | | Diluted | (2.30) | (0.07) | | **Shares used earnings (loss) per common share:** | | | | Basic | 10,757,147 | 60,248,078 | | Diluted | 10,757,147 | 60,248,078 | [Consolidated Statements of Cash Flows](index=38&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows (For the Years Ended December 31) | Cash Flow Category | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | **Cash flows from operating activities:** | | | | Net loss | (24,770,000) | (4,407,000) | | Adjustments to reconcile net loss to net cash used by operating activities: | | | | Depreciation and amortization | 1,119,000 | 1,120,000 | | Stock based compensation | 19,000 | - | | Change in fair value of note payable, related party | (5,068,000) | - | | Change in deferred tax liability | 33,000 | - | | Impairment of fixed assets | 263,000 | - | | Impairment of goodwill | 25,093,000 | - | | Decrease (increase) in assets: | | | | Other receivable | 128,000 | (128,000) | | Prepaid expenses and other current assets | (265,000) | 104,000 | | Increase (decrease) in liabilities: | | | | Accounts payable | (436,000) | 293,000 | | Accrued expenses | (35,000) | 167,000 | | **Net cash used by operating activities** | **(3,919,000)** | **(2,851,000)** | | **Cash flows from investing activities:** | | | | Purchase of property, plant and equipment | - | (18,000) | | Payments received on notes receivable | 2,000 | 3,000 | | **Net cash provided (used) by investing activities** | **2,000** | **(15,000)** | | **Cash flows from financing activities:** | | | | Borrowings from revolving lines of credit, net | 2,189,000 | 2,865,000 | | Issuances of common stock, net of issuance costs | 3,726,000 | - | | **Net cash provided by financing activities** | **5,915,000** | **2,865,000** | | **Net increase (decrease) in cash** | **1,998,000** | **(1,000)** | | Cash and cash equivalents at beginning of year | 1,000 | 2,000 | | **Cash and cash equivalents at end of year** | **1,999,000** | **1,000** | [Consolidated Statements of Changes in Stockholders' Equity](index=39&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Consolidated Statements of Changes in Stockholders' Equity (For the Years Ended December 31) | Category | Common Stock Shares (2024) | Common Stock Amount (2024) | Preferred Stock Shares (2024) | Preferred Stock Amount (2024) | Additional Paid-in Capital (2024) | Accumulated Deficit (2024) | Total Impact Equity (2024) | Noncontrolling Interest in Subsidiary (2024) | Total (2024) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Balance, December 31, 2023 | 10,000,000 | $10,000 | 60,496,041 | $60,000 | $38,113,000 | $(12,961,000) | $25,222,000 | $3,040,000 | $28,262,000 | | Issuance of common stock, net of expenses | 1,500,000 | $1,000 | - | - | 3,725,000 | - | 3,726,000 | - | 3,726,000 | | Fractional shares as a result of reverse stock split | 3,955 | - | - | - | - | - | - | - | - | | Stock based payments | - | - | - | - | 19,000 | - | 19,000 | - | 19,000 | | Net (loss) income | - | - | - | - | - | (24,708,000) | (24,708,000) | (62,000) | (24,770,000) | | **Balance, December 31, 2024** | **11,503,955** | **$11,000** | **60,496,041** | **$60,000** | **$41,857,000** | **$(37,669,000)** | **$4,259,000** | **$2,978,000** | **$7,237,000** | [Notes to the Consolidated Financial Statements](index=40&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) [1. DESCRIPTION OF BUSINESS](index=40&type=section&id=1.%20DESCRIPTION%20OF%20BUSINESS) Impact Biomedical Inc. leverages technology and strategic partnerships to advance biopharmaceuticals and drug discovery - Impact Biomedical Inc. leverages technology and strategic partnerships to advance biopharmaceuticals, over-the-counter wellness offerings, and drug discovery for neurological, oncologic, and inflammatory diseases[214](index=214&type=chunk) - The business model includes licensing and direct sales, with operations conducted through subsidiaries like Global BioLife, Impact BioLife Science, Global BioMedical, and Sweet Sense[215](index=215&type=chunk) - Key proprietary technologies include Linebacker (oncology, inflammatory, neurology), Laetose (caloric reduction, anti-inflammatory), Functional Fragrance Formulation (antimicrobial, insect repellent), and Equivir (antiviral effects)[216](index=216&type=chunk)[219](index=219&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk) [2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=41&type=section&id=2.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) The consolidated financial statements are prepared in accordance with U.S. GAAP, consolidating entities where the company controls operations - The consolidated financial statements are prepared in accordance with U.S. GAAP, consolidating entities where the company owns over **50%** of voting common stock and controls operations[223](index=223&type=chunk) - Management makes estimates and assumptions affecting reported amounts, and actual results may differ[225](index=225&type=chunk) - The company adopted ASU 2023-07, Segment Reporting, for the year ended December 31, 2024, and evaluates performance based on net income (loss) and operating income (loss)[234](index=234&type=chunk)[235](index=235&type=chunk) - Goodwill is subject to annual impairment testing, and as of December 31, 2024, the company fully impaired goodwill[240](index=240&type=chunk) - The company recognizes revenue from licensing and development agreements based on a five-step model, recognizing revenue when performance obligations are satisfied[243](index=243&type=chunk)[244](index=244&type=chunk)[245](index=245&type=chunk) [3. FINANCIAL INSTRUMENTS](index=46&type=section&id=3.%20FINANCIAL%20INSTRUMENTS) Cash, Cash Equivalents, and Note Payable, Related Party (as of December 31, 2024) | Category | Adjusted Cost ($) | Unrealized Gain/(Loss) ($) | Fair Value ($) | Cash and Cash Equivalents ($) | Note Payable, Related Party ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | **Level 1** | | | | | | | Cash | 1,999,000 | - | 1,999,000 | 1,999,000 | - | | **Level 2** | | | | | | | Note payable, related party | 13,946,000 | (5,068,000) | 8,878,000 | - | 8,878,000 | | **Total** | **15,945,000** | **(5,068,000)** | **10,877,000** | **1,999,000** | **8,878,000** | - The fair value of the note payable, related party, is recorded at fair value and remeasured each reporting period, with changes recognized in earnings[259](index=259&type=chunk) [4. NOTES RECEIVABLE](index=46&type=section&id=4.%20NOTES%20RECEIVABLE) As of December 31, 2024, the outstanding principal and interest on a promissory note was approximately **$201,000** - As of December 31, 2024, the outstanding principal and interest on a promissory note from February 2021 was approximately **$201,000**, with **$184,000** classified as current and **$17,000** as long-term[251](index=251&type=chunk) - The note accrues interest at **6.5%** and has a maturity date of February 19, 2026, secured by real property in Collier County, Florida[251](index=251&type=chunk) [5. PREPAID EXPENSES AND OTHER CURRENT ASSETS](index=46&type=section&id=5.%20PREPAID%20EXPENSES%20AND%20OTHER%20CURRENT%20ASSETS) Prepaid expenses at December 31, 2024, totaled **$265,000**, primarily driven by **$263,000** in prepaid insurance - Prepaid expenses at December 31, 2024, totaled **$265,000**, primarily driven by **$263,000** in prepaid insurance, with no prepaid expenses in 2023[252](index=252&type=chunk) [6. Property, Plant and Equipment, Net](index=46&type=section&id=6.%20Property,%20Plant%20and%20Equipment,%20Net) Property, Plant and Equipment, Net (as of December 31) | Category | Estimated Useful Life | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | :--- | | Machinery and equipment | 5-10 years | 30,000 | 25,000 | | Construction in progress | | - | 263,000 | | **Total Cost** | | **30,000** | **293,000** | | Less accumulated depreciation | | 13,000 | 6,000 | | **Property, plant and equipment, net** | | **17,000** | **287,000** | - Depreciation expense was approximately **$7,000** in 2024 and **$6,000** in 2023[252](index=252&type=chunk) [7. GOODWILL](index=46&type=section&id=7.%20GOODWILL) Goodwill Balances and Activity (as of December 31) | Description | Amount ($) | | :--- | :--- | | Balance at December 31, 2023 | 25,093,000 | | Goodwill adjustment | (25,093,000) | | **Balance at December 31, 2024** | **-** | - Management performed annual goodwill impairment testing as of December 31, 2024, and identified a full impairment of goodwill, resulting in a balance of **$0**[254](index=254&type=chunk) - In 2023, no impairment was deemed necessary, with an initial value of **$46.4 million** for Impact calculated using Market and Income Approaches, exceeding the carrying amount by approximately **$5.1 million**[255](index=255&type=chunk) [8. INTANGIBLE ASSETS](index=48&type=section&id=8.%20INTANGIBLE%20ASSETS) Definite-Lived Intangible Assets (Developed Technology Assets) | Year | Gross Carrying Amount ($) | Accumulated Amortization ($) | Net Carrying Amount ($) | | :--- | :--- | :--- | :--- | | 2024 | 22,260,000 | 4,452,000 | 17,808,000 | | 2023 | 22,260,000 | 3,339,000 | 18,921,000 | - Developed technology assets are amortized over an estimated useful life of **20 years**[257](index=257&type=chunk) Future Amortization of Developed Technologies | Year | Amortization ($) | | :--- | :--- | | 2025 | 1,113,000 | | 2026 | 1,113,000 | | 2027 | 1,113,000 | | 2028 | 1,113,000 | | 2029 | 1,113,000 | | Thereafter | 12,243,000 | [9. NOTE PAYABLE, RELATED PARTY](index=48&type=section&id=9.%20NOTE%20PAYABLE,%20RELATED%20PARTY) The company has a Revolving Promissory Note with DSS, a related party, accruing interest at **4.25%** - The company has a Revolving Promissory Note with DSS, a related party, accruing interest at **4.25%** and due September 30, 2030[258](index=258&type=chunk) - An amendment on July 24, 2024, allowed the company to pay principal and/or interest in equity, adjusted quarterly interest due dates, and changed the interest rate to WSJ Prime Rate plus **0.50%**[258](index=258&type=chunk) - As of December 31, 2024, the outstanding balance was **$8,878,000** (net of a **$5,068,000** fair value adjustment), compared to **$12,074,000** in 2023[258](index=258&type=chunk) - The note is accounted for as a liability at fair value under ASC 480 and ASC 825-10, remeasured each reporting period with changes recognized in earnings[259](index=259&type=chunk) [10. STOCKHOLDERS' EQUITY](index=49&type=section&id=10.%20STOCKHOLDERS'%20EQUITY) In May 2023, the Board approved an increase in authorized common stock to **4,000,000,000** shares - In May 2023, the Board approved an increase in authorized common stock to **4,000,000,000** shares and authorized **100,000,000** shares of preferred stock[261](index=261&type=chunk) - On October 31, 2023, a 1-for-55 reverse stock split was effected, and DSS BioHealth Securities, Inc. converted **60,496,041** common shares into Series A Convertible Preferred Shares, reducing its common stock ownership from **88%** to **12%**[261](index=261&type=chunk)[263](index=263&type=chunk) - On September 16, 2024, the company closed its IPO, selling **1,500,000** common shares at **$3.00** per share, generating net proceeds of approximately **$3,726,000**, and listing on the NYSE American under 'IBO'[265](index=265&type=chunk) - The 2023 Employee, Director and Consultant Equity Incentive Plan authorizes **18,762,000** shares for grants, with **18,037,079** shares available as of December 31, 2024[266](index=266&type=chunk) - Stock-based compensation expense of approximately **$19,000** was recorded in 2024 for **880,000** option grants to officers, directors, and consultants[267](index=267&type=chunk) [11. INCOME TAXES](index=50&type=section&id=11.%20INCOME%20TAXES) The company recognizes deferred tax assets and liabilities for temporary differences between financial reporting and tax basis - The company recognizes deferred tax assets and liabilities for temporary differences between financial reporting and tax basis, with a valuation allowance for unrealized tax benefits[268](index=268&type=chunk) Income Tax Expense (Benefit) (Years Ended December 31) | Category | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | **Current tax payable** | | | | Federal | - | - | | State | - | - | | **Total current tax payable** | **-** | **-** | | **Deferred tax** | | | | Federal | 30,000 | (920,000) | | State | 3,000 | (94,000) | | **Total deferred tax** | **33,000** | **(1,014,000)** | | Less increase in valuation allowance | - | 1,014,000 | | **Total income tax expense** | **33,000** | **-** | Deferred Tax Assets & Liabilities (as of December 31) | Category | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | **Deferred Tax assets:** | | | | Impairment of investment | 929,000 | 929,000 | | Research & development cost | 519,000 | 538,000 | | Compensation | 18,000 | - | | Net Operating loss | 2,950,000 | 2,087,000 | | **Gross deferred tax assets** | **4,416,000** | **3,554,000** | | **Deferred tax liability:** | | | | Note payable, related party FMV adjustment | (1,148,000) | - | | Intangible assets | (3,912,000) | (4,164,000) | | **Gross deferred tax liability** | **(5,060,000)** | **(4,164,000)** | | Less valuation allowance | (2,625,000) | (2,625,000) | | **Net deferred tax liability** | **(3,269,000)** | **(3,235,000)** | - As of December 31, 2024, the company has net operating loss carryforwards of approximately **$13,020,000**, with a full valuation allowance established due to uncertainty of future taxable income[270](index=270&type=chunk) [12. COMMITMENTS AND CONTINGENCIES](index=52&type=section&id=12.%20COMMITMENTS%20AND%20CONTINGENCIES) The company has a 20-year Royalty Agreement with Chemia Corporation for 3F technology - The company has a **20-year Royalty Agreement** with Chemia Corporation for 3F technology, where profits from development, sales, licensing, or transfer are split **50/50** after the company covers patent costs[273](index=273&type=chunk) - An Equivir License Agreement with a third-party grants development and commercialization rights in exchange for a **5.5% royalty** on net sales, with the company reimbursing **50%** of development costs up to **$1,250,000**[275](index=275&type=chunk) - The CEO, Frank Heuszel, has an employment agreement with mandatory bonuses of **$150,000** for the first year, **$100,000** for the second, and **$100,000** for the third year[276](index=276&type=chunk) [13. RELATED PARTY TRANSACTIONS](index=53&type=section&id=13.%20RELATED%20PARTY%20TRANSACTIONS) The company funded scientific operations of GRDG, a minority stockholder in two subsidiaries - The company funded scientific operations of GRDG, a minority stockholder in two subsidiaries, incurring **$25,000** in expenses in 2024 (down from **$447,000** in 2023) under a Licensing Proceeds Distribution Agreement[279](index=279&type=chunk) - General and administrative costs, primarily payroll for shared DSS employees, were passed through to the company, totaling **$357,000** in 2024 (up from **$144,000** in 2023)[280](index=280&type=chunk) - The Revolving Promissory Note with DSS, a related party, had an outstanding balance of **$8,878,000** as of December 31, 2024, amended to allow equity settlement and adjust interest rates[281](index=281&type=chunk) [14. SUBSEQUENT EVENTS](index=53&type=section&id=14.%20SUBSEQUENT%20EVENTS) On February 25, 2025, the company acquired certain assets of the Celios air purification system from DSS Pure Air, Inc. - On February 25, 2025, the company acquired certain assets, including inventory and intellectual property of the Celios air purification system, from DSS Pure Air, Inc. (a related party) for **$1,150,000**, paid in **545,024 shares** of common stock[282](index=282&type=chunk) - On February 26, 2025, **36,433 shares** of common stock were issued to settle legal fees related to the IPO and equity incentive plan registration[283](index=283&type=chunk) - The company and DSS agreed to settle **$8,697,142.80** of outstanding indebtedness under the Promissory Note through the issuance of **2,415,873 shares** of common stock at **$3.60** per share on March 24, 2025[284](index=284&type=chunk) [ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](index=54&type=section&id=ITEM%209%20-%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) There have been no changes in or disagreements with accountants on accounting and financial disclosure - There are no changes in or disagreements with accountants on accounting and financial disclosure[285](index=285&type=chunk) [ITEM 9A - CONTROLS AND PROCEDURES](index=54&type=section&id=ITEM%209A%20-%20CONTROLS%20AND%20PROCEDURES) Disclosure controls and internal control over financial reporting were ineffective as of Dec 31, 2024, due to material weaknesses [Evaluation of Disclosure Controls and Procedures](index=54&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective as of December 31, 2024 - Management concluded that disclosure controls and procedures were not effective as of December 31, 2024, to ensure timely and accurate information disclosure[285](index=285&type=chunk) - Disclosure controls, even if well-conceived, provide only reasonable, not absolute, assurance and are subject to inherent limitations and resource constraints[286](index=286&type=chunk) [Management's Annual Report on Internal Control over Financial Reporting](index=54&type=section&id=Management's%20Annual%20Report%20on%20Internal%20Control%20over%20Financial%20Reporting) Management assessed the effectiveness of internal control over financial reporting as of December 31, 2024, and concluded it was not effective - Management assessed the effectiveness of internal control over financial reporting as of December 31, 2024, using the COSO framework and concluded it was not effective[287](index=287&type=chunk) - A material weakness identified was the lack of a sufficient complement of qualified accounting personnel and controls over segregation of duties for complex transactions[288](index=288&type=chunk)[293](index=293&type=chunk) [Remediation of the Material Weaknesses](index=55&type=section&id=Remediation%20of%20the%20Material%20Weaknesses) Remediation steps include hiring a Controller, Senior Accountant, and Cost Accountant, and reassigning staff responsibilities - Remediation steps include hiring a Controller, Senior Accountant, and Cost Accountant, reassigning staff responsibilities for segregation of duties, and centralizing accounting functions[294](index=294&type=chunk) - A monthly operations and financial review is performed, and routine account reconciliations for key balance sheet accounts are initiated and reviewed by an independent person[294](index=294&type=chunk) - The company plans to engage an external, independent expert to review significant and/or complex accounting transactions[294](index=294&type=chunk) [Changes in Internal Control over Financial Reporting](index=55&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) While remediation steps were implemented in 2024, the company has not yet fully documented and tested these controls - While remediation steps were implemented in 2024, the company has not yet fully documented and tested these controls to ensure their effectiveness over financial reporting[291](index=291&type=chunk) [ITEM 9B – OTHER INFORMATION](index=55&type=section&id=ITEM%209B%20%E2%80%93%20OTHER%20INFORMATION) There is no other information to report under this item - There is no other information to report[292](index=292&type=chunk) PART III [ITEM 10 - DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE](index=56&type=section&id=ITEM%2010%20-%20DIRECTORS,%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) IBO's leadership includes CEO, COO, CFO; Board has seven directors, five independent; committees oversee governance [Executive Officers and Directors](index=56&type=section&id=Executive%20Officers%20and%20Directors) Executive Officers and Directors | Name | Age | Position | | :--- | :--- | :--- | | Frank D. Heuszel | 65 | Chief Executive Officer and Director | | Mark Suseck | 62 | Chief Operating Officer | | Todd D. Macko | 52 | Chief Financial Officer | | Jason Grady | 50 | Director | | Dr. Elise Brownell | 70 | Director | | Melissa Sims | 54 | Director | | David Keene | 66 | Director | | Christian Zimmerman | 47 | Director | | Castel Hibbert | 64 | Director | - Frank D. Heuszel has served as CEO since April 2023 and Director since August 2020, bringing over **35 years** of experience in commercial banking, law, and executive management[299](index=299&type=chunk) - Jason Grady has served as Interim CEO since October 2024, previously COO since August 2019, and President of Premier Packaging Corporation since July 2018[302](index=302&type=chunk) [Committees of our Board](index=59&type=section&id=Committees%20of%20our%20Board) The Board established an Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee on September 28, 2023 - The Board established an Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee on September 28, 2023[311](index=311&type=chunk)[314](index=314&type=chunk)[315](index=315&type=chunk) - The Audit Committee oversees accounting, financial reporting, internal controls, and the independent auditor, with Christian Zimmerman serving as chair and all members meeting NYSE American independence standards[311](index=311&type=chunk)[312](index=312&type=chunk)[313](index=313&type=chunk) - The Compensation Committee reviews and recommends compensation for the Board, CEO, and other senior management, with Dr. Elise Brownell as chair[315](index=315&type=chunk)[320](index=320&type=chunk) - The Nominating and Corporate Governance Committee develops criteria for board membership, identifies qualified individuals, and reviews corporate governance guidelines, with Melissa Sims as chair[316](index=316&type=chunk)[321](index=321&type=chunk) [Term of office](index=60&type=section&id=Term%20of%20office) All directors hold office until the next annual meeting of stockholders and until their successors are duly elected and qualified - All directors hold office until the next annual meeting of stockholders and until their successors are duly elected and qualified; officers serve at the discretion of the Board[317](index=317&type=chunk) [Code of Business Conduct and Ethics](index=60&type=section&id=Code%20of%20Business%20Conduct%20and%20Ethics) The Board adopted a Business Code of Ethics on September 28, 2023, applicable to principal executive, financial, and accounting officers - The Board adopted a Business Code of Ethics on September 28, 2023, applicable to principal executive, financial, and accounting officers, and made available on the company's website[318](index=318&type=chunk) [Involvement in Certain Legal Proceedings](index=60&type=section&id=Involvement%20in%20Certain%20Legal%20Proceedings) None of the directors or executive officers have been involved in any legal proceedings in the past 10 years requiring disclosure - None of the directors or executive officers have been involved in any legal proceedings in the past **10 years** requiring disclosure under Item 401(f) of Regulation S-K[319](index=319&type=chunk) [ITEM 11 - EXECUTIVE COMPENSATION](index=61&type=section&id=ITEM%2011%20-%20EXECUTIVE%20COMPENSATION) Executive compensation for 2024 included salaries and stock awards for CEO, COO, CFO; directors received cash and stock awards [Compensation paid to our executive officers or directors during the past two fiscal years.](index=61&type=section&id=Compensation%20paid%20to%20our%20executive%20officers%20or%20directors%20during%20the%20past%20two%20fiscal%20years.) Executive Compensation (Years 2023-2024) | Name and principal position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Frank D. Heuszel, CEO | 2023 | - | - | - | - | - | - | - | - | | | 2024 | 43,706 | - | 11,100 | - | - | - | - | 54,806 | | Mark Suseck, COO | 2023 | - | - | - | - | - | - | - | - | | | 2024 | 126,689 | - | 32,000 | - | - | - | - | 158,689 | | Todd D. Macko, CFO | 2023 | - | - | - | - | - | - | - | - | | | 2024 | - | - | 555 | - | - | - | - | 555 | [Employment Agreements](index=61&type=section&id=Employment%20Agreements) Frank D. Heuszel's Executive Employment Agreement sets an annual base salary of **$200,000** and mandatory bonuses totaling **$350,000** - Frank D. Heuszel's Executive Employment Agreement (Oct 3, 2024) sets an annual base salary of **$200,000** (year 1) and mandatory bonuses of **$150,000** (year 1), **$100,000** (year 2), and **$100,000** (year 3), plus an option for **300,000 shares**[324](index=324&type=chunk) - Mark Suseck's Employment Agreement (Nov 11, 2024) provides an annual base salary of **$250,000** (retroactive to April 1, 2024) and an option for **400,000 shares**[325](index=325&type=chunk) [Director Compensation](index=61&type=section&id=Director%20Compensation) No compensation was paid to directors in 2023 - No compensation was paid to directors in 2023[326](index=326&type=chunk) Director Compensation (2024) | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | All Other Compensation ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | | Jason Grady | - | 925 | - | 925 | | Elise Brownell | 1,250 | 925 | - | 2,175 | | Melissa Sims | 1,250 | 925 | - | 2,175 | | David Keene | 1,250 | 925 | - | 2,175 | | Christian Zimmerman | 1,250 | 925 | - | 2,175 | | Castel Hibbert | 1,250 | 925 | - | 2,175 | [Outstanding Equity Awards at Fiscal Year-End](index=62&type=section&id=Outstanding%20Equity%20Awards%20at%20Fiscal%20Year-End) There were no outstanding equity awards held by the company's named executive officers or directors as of December 31, 2023 - There were no outstanding equity awards held by the company's named executive officers or directors as of December 31, 2023[327](index=327&type=chunk) [2023 Equity Incentive Plan](index=62&type=section&id=2023%20Equity%20Incentive%20Plan) For 2024, **880,000** option grants with a purchase price of **$3.00** per share were awarded under the 2023 Equity Incentive Plan - For 2024, **880,000** option grants with a purchase price of **$3.00** per share were awarded to certain officers, directors, and consultants under the 2023 Equity Incentive Plan[328](index=328&type=chunk) - These options have various vesting periods and expire on October 31, 2031, with a fair value of approximately **$50,000**, resulting in **$19,000** in stock-based compensation expense for 2024[328](index=328&type=chunk) [ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS](index=63&type=section&id=ITEM%2012%20-%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Officers and directors beneficially own **0.8%** of common stock; major shareholders include Alset, Inc. and DSS [Beneficial Ownership of Common Stock](index=63&type=section&id=Beneficial%20Ownership%20of%20Common%20Stock) Beneficial Ownership of Common Stock (as of December 31, 2024) | Name | Number of Shares Beneficially Owned | Percentage of Outstanding Share Beneficially Owned | | :--- | :--- | :--- | | Frank D. Heuszel | 95,475 | * | | Mark Suseck | - | * | | Todd D. Macko | 122 | * | | Jason Grady | 182 | * | | Elise Brownell | - | * | | Melissa Sims | - | * | | David Keene | - | * | | Christian Zimmerman | - | * | | Castel Hibbert | - | * | | All officers and directors as a group (9 persons) | 95,779 | 0.8% | | **5% Shareholders** | | | | DSS, Inc. (1) | 1,178,882 | 10.2% | | Alset International limited | 1,553,904 | 13.5% | | Alset, Inc. | 2,560,976 | 22.3% | * Less than 1% [Beneficial Ownership of Series A Convertible Preferred Stock](index=64&type=section&id=Beneficial%20Ownership%20of%20Series%20A%20Convertible%20Preferred%20Stock) Beneficial Ownership of Series A Convertible Preferred Stock (as of February 14, 2025) | Name of Beneficial Owner | Number of Outstanding Series A Preferred Beneficially Owned | Percentage of Outstanding Series A Preferred Beneficially Owned | | :--- | :--- | :--- | | DSS, Inc. (1) | 60,496,041 | 100% | (1) DSS indirectly owns the shares through DSS BioHealth Security, Inc., its wholly-owned subsidiary. As of the date of this prospectus, the holder has not converted any of the shares of Series A Convertible Preferred Stock into shares of the Company's common stock. [Equity Compensation Plans Information](index=64&type=section&id=Equity%20Compensation%20Plans%20Information) Equity Compensation Plans Information (as of December 31, 2023) | Plan Category | Restricted stock to be issued upon vesting (a) | Number of securities to be issued upon exercise of outstanding options, warrants and rights (b) | Weighted average exercise price of outstanding options, warrants and rights (c) | Number of securities remaining available for future issuance (d) | | :--- | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | | | | | | 2023 Employee, Director and Consultant Equity Incentive Plan - options | - | 880,000 | $3.00 | - | | 2023 Employee, Director and Consultant Equity Incentive Plan - warrants | - | 75,000 | $3.75 | - | | 2023 Employee, Director and Consultant Equity Incentive Plan | - | - | - | 18,037,079 | | **Total** | **-** | **955,000** | **$3.06** | **18,037,079** | [ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE](index=64&type=section&id=ITEM%2013%20-%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS,%20AND%20DIRECTOR%20INDEPENDENCE) IBO has related party transactions with GRDG and DSS, including a revolving promissory note; five directors are independent [Related Party Transactions](index=64&type=section&id=Related%20Party%20Transactions) The company funds GRDG's scientific operations, incurring **$25,000** in expenses in 2024, under a Licensing Proceeds Distribution Agreement - The company funds GRDG's scientific operations, incurring **$25,000** in expenses in 2024, under a Licensing Proceeds Distribution Agreement[335](index=335&type=chunk) - DSS passes through general and administrative costs, primarily payroll for shared employees, to the company, totaling **$357,000** in 2024[336](index=336&type=chunk)[337](index=337&type=chunk) - The Revolving Promissory Note with DSS, a related party, was amended to allow equity payments and adjust interest rates, with an outstanding balance of **$8,878,000** as of December 31, 2024[338](index=338&type=chunk) [Director Independence](index=65&type=section&id=Director%20Independence) The company adopted NYSE American standards for determining director independence - The company adopted NYSE American standards for determining director independence[339](index=339&type=chunk) - Five directors (Castel Hibbert, Christian Zimmerman, David Keene, Dr. Elise Brownell, and Melissa Sims) were affirmatively determined to be independent under NYSE American rules[342](index=342&type=chunk) [Parent of the Company](index=66&type=section&id=Parent%20of%20the%20Company) DSS BioHealth Securities, Inc. owns approximately **86%** of the voting shares of the company - DSS BioHealth Securities, Inc., a wholly-owned subsidiary of DSS, Inc., owns approximately **86%** of the voting shares of the company, including **100%** of the Series A Convertible Preferred Stock[344](index=344&type=chunk) [ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES](index=66&type=section&id=ITEM%2014%20-%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Audit fees for 2024 were **$60,000**, down from **$210,000** in 2023; tax fees were **$2,000**; Audit Committee pre-approved services [Audit Fees](index=66&type=section&id=Audit%20Fees) Audit fees from Grassi & Co. CPAs, P.C. were approximately **$60,000** for 2024, down from **$210,000** in 2023 - Audit fees from Grassi & Co. CPAs, P.C. were approximately **$60,000** for 2024, down from **$210,000** in 2023[344](index=344&type=chunk) - Anticipated audit fees for the year ended December 31, 2025, are expected to range between **$40,000** and **$85,000**[345](index=345&type=chunk) [Tax Fees](index=67&

Core Viewpoint - Impact BioMedical Inc. has reported no material developments in its business affairs that have not been previously disclosed, addressing unusual market activity regarding its share price [1]. Company Overview - Impact BioMedical Inc. is a biotechnology company focused on discovering, developing, and patenting innovative healthcare solutions, particularly in biopharmaceuticals and consumer healthcare [2]. Market Activity - The company has acknowledged unusual market actions concerning its share price but has stated that there are no known reasons for this activity [1].

HOUSTON, Feb. 26, 2025 (GLOBE NEWSWIRE) -- Impact BioMedical Inc. (NYSE American: IBO), a pioneering biotechnology company dedicated to discovering, developing, and patenting innovative healthcare solutions, today announced the acquisition of Celios®, a pioneering air purification technology company, in a strategic, all equity transaction valued at approximately $1.15 million. This acquisition aligns with Impact Biomedical’s focused roll-up strategy, expanding its portfolio with cutting-edge solutions that ...

Core Insights - Impact BioMedical Inc. has acquired Celios®, an air purification technology company, in an all-equity transaction valued at approximately $1.15 million, aligning with its roll-up strategy to enhance its portfolio and generate immediate revenue [1][3] - Celios® offers advanced air purification capabilities with patents ensuring exclusivity through 2043, providing "virtually clean room" air quality through innovative filter technology [2][4] - The acquisition is a significant milestone for Impact BioMedical, reinforcing its commitment to health and wellness solutions while maintaining a strong cash position to support growth [3] Company Overview - Impact BioMedical Inc. focuses on discovering, developing, and patenting unique technologies in biopharmaceuticals and consumer healthcare, collaborating with external partners for research and development [5] - Celios® is dedicated to improving indoor air quality through patented filtration solutions that are efficient and portable, meeting high standards of cleanliness and safety [4]

HOUSTON, Jan. 23, 2025 (GLOBE NEWSWIRE) -- Impact BioMedical Inc. (NYSE American: IBO), a pioneering biotechnology company dedicated to discovering, developing, and patenting innovative healthcare solutions, today announced that Frank D. Heuszel, Chief Executive Officer, is pleased to announce his participation in The Microcap Conference 2025, the premier event for growth-focused companies and investors. The conference will take place January 28-30, 2025, at the Borgata Hotel Spa & Casino in Atlantic City, ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2024 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 333-275062 Commission file number IMPACT BIOMEDICAL, INC. | --- | --- | |-------------------------------------------------------------------------|-----------------------| | (Exact name of registrant ...