Impact Biomedical Inc(IBO) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements, management's discussion and analysis, and an assessment of internal controls and procedures Item 1 - Condensed Consolidated Financial Statements This section presents Impact BioMedical's unaudited condensed consolidated financial statements and notes, reflecting increased net loss and worsened equity due to a related party note fair value adjustment Condensed Consolidated Balance Sheets This statement provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific reporting dates | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | Change | | :-------------------------------- | :------------------------ | :------------------ | :------- | | Cash and cash equivalents ($,000) | $624 | $1,999 | -$1,375 | | Total current assets ($,000) | $1,481 | $2,448 | -$967 | | Total assets ($,000) | $19,060 | $20,290 | -$1,230 | | Note payable, related party ($,000) | $22,352 | $8,878 | +$13,474 | | Total liabilities ($,000) | $26,440 | $13,053 | +$13,387 | | Total stockholders' (deficit) equity ($,000) | $(7,380) | $7,237 | -$14,617 | Condensed Consolidated Statements of Operations This statement reports the company's revenues, expenses, and net loss over specific periods, highlighting the impact of fair value adjustments | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Total revenue ($,000) | $7 | $- | $7 | $- | | Total costs and expenses ($,000) | $1,160 | $626 | $2,172 | $1,396 | | Operating loss ($,000) | $(1,153) | $(626) | $(2,165) | $(1,396) | | Change in fair value of note payable, related party ($,000) | $(12,942) | $- | $(12,942) | $- | | Net loss ($,000) | $(14,352) | $(884) | $(15,631) | $(1,880) | | Basic Loss per common share ($) | $(1.18) | $(0.09) | $(1.29) | $(0.18) | Condensed Consolidated Statement of Changes in Stockholders' (Deficit) Equity This statement details changes in the company's equity components, including common stock, additional paid-in capital, and accumulated deficit | Metric | December 31, 2024 | June 30, 2025 | Change | | :----------------------------------- | :------------------ | :------------------ | :------- | | Common Stock Shares (shares) | 11,503,955 | 12,185,412 | +681,457 | | Common Stock Amount ($,000) | $11 | $12 | +$1 | | Additional Paid-in Capital ($,000) | $41,857 | $42,870 | +$1,013 | | Accumulated Deficit ($,000) | $(37,669) | $(53,283) | -$15,614 | | Total stockholders' (deficit) equity ($,000) | $7,237 | $(7,380) | -$14,617 | - Acquisition of DSS PureAir, Inc. assets contributed $820,000 to equity, and stock-based payments for professional services added $190,000[12] Condensed Consolidated Statements of Cash Flows This statement summarizes the cash inflows and outflows from operating, investing, and financing activities over specific periods | Cash Flow Activity (Six Months Ended June 30) | 2025 | 2024 | Change | | :-------------------------------------------- | :----------- | :----------- | :------- | | Net cash used by operating activities ($,000) | $(1,376) | $(867) | -$509 | | Net cash provided by investing activities ($,000) | $1 | $1 | $0 | | Net cash provided by financing activities ($,000) | $- | $867 | -$867 | | Net increase (decrease) in cash ($,000) | $(1,375) | $1 | -$1,376 | | Cash and cash equivalents at end of period ($,000) | $624 | $2 | +$622 | - Non-cash activities included $190,000 in shares issued for legal services and $820,000 in shares issued for the acquisition of DSS PureAir assets in 2025[78] Notes to Interim Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the interim condensed consolidated financial statements Note 1. Nature of Operations and Basis of Presentation This note describes the company's business activities, operational model, and the foundational principles used in preparing the financial statements Nature of Operations Impact BioMedical, Inc. (IBO) discovers, confirms, and patents unique science and technologies for human healthcare and wellness, focusing on biopharmaceuticals, over-the-counter wellness, and drug discovery for neurological, oncologic, and inflammatory diseases. The business model involves partnering, licensing, co-development, and direct sales - IBO's business model includes partnering and potentially direct sales for commercialization, with potential licensors and development partners including pharmaceutical and consumer packaged goods companies[17] - The company has not generated significant revenues from operations as of the report date and is subject to risks inherent in new business enterprises[26] Principal Subsidiaries IBO conducts operations through its principal subsidiaries: Global BioLife, Inc., Impact BioLife Science, Inc., Global BioMedical, Inc., and Sweet Sense, Inc - Principal subsidiaries include Global BioLife, Inc., Impact BioLife Science, Inc., Global BioMedical, Inc., and Sweet Sense, Inc[17] Proprietary Technologies Impact BioMedical has several proprietary technologies in development, including Linebacker™ for oncology and inflammatory disorders (licensed to ProPhase Laboratories), Laetose™ for reducing caloric intake and inflammation, Functional Fragrance Formulation ("3F") for antimicrobial and repellent applications, and Equivir™/Equivir G for antiviral effects (also licensed to ProPhase Laboratories). The company also continually evaluates emerging technologies - Linebacker™ is a platform of small molecule polyphenol compounds with potential applications in oncology, inflammatory disorders, and neurology, licensed to ProPhase Laboratories[18][19][20] - Laetose™ technology aims to reduce caloric intake and glycemic index in foods while inhibiting TNF-α, with potential applications in inflammatory and metabolic diseases[21][22] - Functional Fragrance Formulation ("3F") uses botanical ingredients for antimicrobial and additive applications in various products, with Global BioLife seeking commercialization[23] - Equivir™/Equivir G is a blend of FDA GRAS-eligible polyphenols with demonstrated antiviral effects, licensed to ProPhase Laboratories for development and commercialization[24] - IBO continually evaluates emerging technologies in biopharmaceuticals, indoor air quality, personalized medicine, and other areas for potential expansion[25] Note 2. Summary of Significant Accounting and Reporting Policies This note outlines the key accounting principles and methods applied in the preparation of the company's consolidated financial statements Basis of Presentation and Principles of Consolidation The consolidated financial statements are prepared in accordance with U.S. GAAP, consolidating all majority-owned and controlled subsidiaries, with intercompany transactions eliminated. Non-controlling interests are separately disclosed - The Company consolidates entities where it owns over 50% of voting common stock and controls operations[27] | Subsidiary Name | Attributable Interest as of June 30, 2025 (%) | Attributable Interest as of December 31, 2024 (%) | | :------------------------ | :---------------------------------------- | :------------------------------------------ | | Global BioMedical, Inc. | 90.9 | 90.9 | | Global BioLife, Inc. | 81.8 | 81.8 | | BioLife Sugar, Inc | 90.9 | 90.9 | | Happy Sugar Inc | 81.8 | 81.8 | | Sweet Sense Inc. | 95.5 | 95.5 | | Global Sugar Solutions Inc. | 100 | 100 | Use of estimates Financial statement preparation requires management to make estimates and assumptions affecting reported amounts, and actual results may differ - The preparation of consolidated financial statements requires management to make estimates and assumptions that affect reported amounts, and actual results could differ from these estimates[30] Reclassifications Certain costs were reclassified for the three and six months ended June 30, 2024, to conform with current period presentation, including research and development expenses and accrued interest on notes receivable - Costs associated with research and development were reclassed from Professional fees to Research and development expenses for the three and six months ended June 30, 2024, to conform with current period presentation[31] Loss per Share Basic and diluted loss per share are calculated based on net loss attributable to common stockholders and weighted average common shares outstanding. Dilutive instruments, such as Series A Convertible Preferred Shares and options, are considered if dilutive - Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding[32] - Diluted loss per share includes potential common shares from instruments like Series A Convertible Preferred Shares and options, if dilutive[32] Fair Value of Financial Instruments Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction, categorized into a three-tier hierarchy (Level 1, 2, 3) based on input observability - Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, categorized into Level 1 (observable inputs), Level 2 (indirectly observable inputs), and Level 3 (unobservable inputs)[33] - The carrying amounts of cash, other receivables, accounts payable, and accrued expenses approximate fair value due to their immediate or short-term maturity. Notes payable, related party, are recorded at fair value based on several factors[34] Cash and cash equivalents Highly liquid investments with maturities of three months or less are considered cash equivalents; there were none as of June 30, 2025, and December 31, 2024 - The Company considers all highly liquid investments with a maturity of three months or less at the date of acquisition to be cash equivalents[35] - There were no cash equivalents as of June 30, 2025, and December 31, 2024[35] Notes receivable, unearned interest, and related recognition Notes receivable are recorded at future principal and interest payments, offset by unearned interest income, and reported as current or long-term based on maturity - The Company records all future payments of principal and interest on notes as notes receivable, offset by unearned interest income[36] - The net investment in notes receivable is reported as current or long-term based on the maturity date and includes amounts advanced, adjusted for deferred loan fees/costs, and warrant allocations[36] Inventory Inventories, consisting of filtration systems, are stated at the lower of cost or net realizable value using the FIFO method. No obsolescence allowance was deemed necessary - Inventories consist of filtration systems and are stated at the lower of cost or net realizable value using the first-in, first-out ("FIFO") method[37] - No allowance for obsolescence was deemed necessary as of June 30, 2025, and December 31, 2024[37] Goodwill Goodwill, the excess of acquisition cost over fair value of net assets, is tested for impairment annually or more frequently. As of December 31, 2024, the company fully impaired its goodwill based on quantitative analysis - Goodwill is the excess of cost of an acquired entity over the fair value of amounts assigned to assets acquired and liabilities assumed in a business combination[38] - As of December 31, 2024, the Company fully impaired its goodwill after performing annual impairment testing using quantitative analysis (Market Approach and Income Approach)[38][58] Intangible Assets Acquired identifiable intangible assets are recorded at fair value and amortized over their estimated useful lives (1 to 20 years). Indefinite-lived intangibles are reviewed for impairment annually. No impairment was recognized for the six months ended June 30, 2025, and 2024 - Acquired identifiable intangible assets are recorded at fair value and amortized over their estimated useful lives (1 to 20 years)[39] - Acquired intangible assets with an indefinite life are not amortized but are reviewed for impairment at least annually[39] - No impairment was recognized for the six months ended June 30, 2025, and 2024[39] Recoverability of Long-Lived Assets Long-lived assets are evaluated for impairment when circumstances indicate carrying value may not be recoverable, involving significant judgment in estimating future cash flows and asset fair values - Long-lived assets are evaluated for impairment when events or circumstances indicate that their carrying value may not be recoverable[40] - Assessment of recoverability involves significant judgment and estimation, including forecasted revenue, margin costs, and economic life of the asset[40][41] Revenue Recognition The company recognizes revenue from licensing and development agreements and product sales (Celios technology) following ASC Topic 606, applying a five-step model to identify performance obligations, determine transaction price, allocate it, and recognize revenue when control is transferred - The Company adopted ASC Topic 606, Revenue from Contracts with Customers, for recognizing revenue from licensing and development agreements[42] - Revenue from the sale of Celios technology is recognized when title passes to the customer or service is completed and accepted[44] - The five-step model is applied to identify performance obligations, determine transaction price, allocate it, and recognize revenue when control is transferred[42][43] Share-Based Payments Compensation cost for stock awards is measured at fair value using the Black-Scholes model and expensed over the service period. For consultants, fair value is determined at commitment or performance completion - Compensation cost for stock awards is measured at fair value using the Black-Scholes option pricing model and recognized over the service period[45] - For equity instruments issued to consultants and vendors, the fair value measurement date is the earlier of commitment for performance or completion of performance[45] - Stock based compensation expense was approximately $4,000 for the six months ended June 30, 2025[45] Research and Development Research and development costs are expensed as incurred, totaling $178,000 for the six months ended June 30, 2025, a decrease from $304,000 in 2024 - Research and development costs are expensed as incurred[46] | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | | Research and development ($,000) | $178 | $304 | Provision for Credit Losses The company adopted ASC Topic 326, requiring an allowance for credit losses based on expected collectability. No reserve for credit losses was deemed necessary as of June 30, 2025, and December 31, 2024 - The Company adopted ASC Topic 326, requiring an allowance for credit losses based on expected collectability over the contractual term of the asset[47] - No reserve on credit losses was deemed necessary as of June 30, 2025, and December 31, 2024[47] Continuing Operations and Going Concern The company has incurred operating losses and negative cash flows, raising substantial doubt about its ability to continue as a going concern. Management plans to monetize intellectual properties and control operating costs, having raised $3,726,000 net from an IPO in September 2024 - The Company has incurred operating losses and negative cash flows, raising substantial doubt about its ability to continue as a going concern[48] - Management plans to monetize intellectual properties and tightly control operating costs to continue as a going concern[49] - The Company completed an initial public offering on September 16, 2024, raising $3,726,000 net of issuance costs[49] Recent Accounting Standards The company has adopted or will adopt recent FASB ASUs, including ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Tax Disclosures), and does not expect a material effect on financial statements from ASU 2024-03 (Disaggregation of Income Statement Expenses) - The Company adopted ASU 2023-07, Segment Reporting, for the year ended December 31, 2024, enhancing disclosures about significant segment expenses[51] - ASU 2023-09, Improvements to Income Tax Disclosures, was adopted as of December 31, 2024[53] - The Company does not expect the adoption of ASU 2024-03, Disaggregation of Income Statement Expenses, to have a material effect on its consolidated financial statements, except for expanding disclosures[54] Note 3. Inventory This note provides details on the composition and valuation of the company's inventory | Inventory Type | June 30, 2025 ($,000) | December 31, 2024 ($,000) | | :------------- | :------------ | :---------------- | | Finished Goods | $486 | $- | Note 4. Notes Receivable This note outlines the details of the company's notes receivable, including outstanding principal and interest - Outstanding principal and interest on a secured promissory note was approximately $200,000 as of June 30, 2025, and $201,000 as of December 31, 2024, with a maturity date of February 19, 2026[56] Note 5. Property, Plant and Equipment, Net This note presents the company's property, plant, and equipment, net of accumulated depreciation | Asset Category | June 30, 2025 ($,000) | December 31, 2024 ($,000) | | :------------- | :------------ | :---------------- | | Machinery and equipment (Gross) | $30 | $30 | | Accumulated depreciation ($,000) | $16 | $13 | | Net Property, plant and equipment ($,000) | $14 | $17 | - Depreciation expense for the six months ended June 30, 2025 and 2024 was approximately $3,000 for both periods[57] Note 6. Goodwill This note details the company's goodwill balance and any adjustments, including impairment | Goodwill Activity | Amount ($,000) | | :---------------------- | :----------- | | Balance at Dec 31, 2023 | $25,093 | | Goodwill adjustment | $(25,093) | | Balance at Dec 31, 2024 | $- | Note 7. Intangible Assets This note provides information on the company's identifiable intangible assets, their acquisition, and amortization | Intangible Asset Category | June 30, 2025 (Net Carrying Amount, $,000) | December 31, 2024 (Net Carrying Amount, $,000) | | :------------------------ | :---------------------------------- | :-------------------------------------- | | Developed technology assets | $17,168 | $17,808 | | Acquired assets | $397 | $- | | Total | $17,565 | $17,808 | - On February 25, 2025, the Company acquired intellectual property of the Celios air purification system for approximately $655,000 as part of the DSS Pure Air, Inc. acquisition[61][77] - Amortization expense for the six months ended June 30, 2025, was approximately $568,000, compared to $556,000 in 2024[62] Note 8. Note payable, related party This note details the terms, fair value adjustments, and outstanding balance of the company's note payable to a related party - The note payable to DSS, a related party, had an outstanding balance of $22,352,000 (net of $12,942,000 change in fair value) as of June 30, 2025, compared to $8,878,000 (net of $5,068,000 change in fair value) at December 31, 2024[64] - The note was amended to allow payment in cash or equity, adjust interest to WSJ Prime Rate + 0.50%, and set a fixed monthly payment schedule starting from the 37th month[64] - The note is accounted for at fair value under ASC 480 and ASC 825-10, with changes in fair value recognized in earnings[65] Note 9. Financial Instruments This note provides fair value information for the company's financial instruments, including cash and the related party note payable | Financial Instrument | Fair Value (June 30, 2025, $,000) | Fair Value (December 31, 2024, $,000) | | :------------------- | :------------------------- | :----------------------------- | | Cash | $624 | $1,999 | | Note payable, related party | $22,352 | $8,878 | - The fair value of the related party note payable is estimated using a Monte Carlo simulation, considering stock price and VWAP, assuming settlement in shares due to a potential event of default[66][68] Note 10. Stockholders' Equity This note details changes in stockholders' equity, including IPO proceeds, stock-based compensation, and shares issued for acquisitions and services - The IPO on September 16, 2024, raised approximately $3,726,000 net of issuance costs, and the company's common stock is listed on the NYSE American under "IBO"[69] - Stock-based compensation expense was approximately $4,000 for the six months ended June 30, 2025, related to 880,000 option grants[70] - 545,024 shares of common stock were issued for the acquisition of DSS Pure Air, Inc. assets on February 25, 2025[71] - 36,433 shares were issued for legal fees related to the IPO and equity incentive plan, and 100,000 shares for legal fees related to a merger agreement with Dr. Ashleys Limited[72] Note 11. Related Party Transactions This note describes significant transactions and balances with related parties, including general and administrative costs and the revolving promissory note - General and administrative costs from DSS were approximately $77,000 for the six months ended June 30, 2025, down from $187,000 in the same period of 2024[73] - The Revolving Promissory Note with DSS, detailed in Note 8, is a key related party transaction, with an outstanding balance of $22,352,000 as of June 30, 2025[74] Note 12. Commitments and Contingencies This note outlines the company's contractual commitments and potential contingent liabilities, including royalty and license agreements - Royalty Agreement with Chemia Corporation for 3F technology involves a 50/50 profit split and a 5% royalty on net sales, with no reimbursements or royalties received for the six months ended June 30, 2025 and 2024[75] - License Agreement for Equivir technology grants a 5.5% royalty on net sales and requires the company to reimburse 50% of development costs up to $1,250,000; no liability recorded as of June 30, 2025[76] Note 13. Acquisition This note details the acquisition of DSS Pure Air, Inc. assets, including the consideration paid and the assets acquired - Acquisition of DSS Pure Air, Inc. assets on February 25, 2025, for $1,150,000 paid in 545,024 common shares[77] - Acquired assets included $4,000 in accounts receivable, $2,000 in prepaid assets, $489,000 in inventory, and $325,000 in Celios air purification system intellectual property[77] - A $330,000 premium paid for the assets was recorded directly to equity, as per ASC 805-50 for common control transactions[77] Note 14. Supplemental Cash Flow Information This note provides additional information on non-cash investing and financing activities not presented in the cash flow statement | Non-Cash Activity (Six Months Ended June 30) | 2025 ($,000) | 2024 ($,000) | | :------------------------------------------- | :----------- | :--- | | Shares issued in lieu of cash for legal services | $190 | $- | | Shares issued for acquisition of DSS PureAir assets | $820 | $- | Note 15. Subsequent Events This note discloses significant events that occurred after the balance sheet date but before the financial statements were issued - A Merger and Share Exchange Agreement was entered into with Dr Ashleys Limited, with the merger of Merger Sub into Impact and PubCo acquiring Dr Ashleys Cayman shares, anticipated to close in Q4 2025[80] Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and results, noting increased net loss from fair value adjustments and operating expenses, and addresses going concern issues Forward-Looking Statements The report contains forward-looking statements based on current expectations, subject to various risks, uncertainties, and factors that could cause actual results to differ materially - The report contains forward-looking statements based on current expectations, which are subject to various risks, uncertainties, and factors that could cause actual results to differ materially[82] Overview Impact BioMedical (IBO) is a publicly traded company (NYSE American: IBO) focused on discovering and patenting technologies for human healthcare and wellness, including biopharmaceuticals and over-the-counter offerings. Its business model relies on partnerships, licensing, and direct sales, operating through several subsidiaries and developing proprietary technologies like Linebacker, Laetose, 3F, and Equivir - IBO discovers, confirms, and patents unique science and technologies for human healthcare and wellness, leveraging strategic partnerships for biopharmaceuticals, OTC wellness, and drug discovery[83][84] - The company's business model includes partnering and direct sales, with operations conducted through subsidiaries like Global BioLife, Impact BioLife Science, Global BioMedical, and Sweet Sense[85][86][87][88] - Key proprietary technologies in development include Linebacker (oncology, inflammatory), Laetose (caloric reduction, anti-inflammatory), Functional Fragrance Formulation (antimicrobial), and Equivir (antiviral), with some licensed to ProPhase Laboratories[89][90][91][92][93][94][95][96][97][98][99][100][101] - IBO continuously evaluates additional emerging technologies across various sectors like biopharmaceuticals, indoor air quality, and personalized medicine[102][103] Costs and expenses Total costs and expenses significantly increased by 85% (3M) and 56% (6M) due to higher compensation, professional fees, rent, and D&O insurance, despite a decrease in R&D costs | Expense Category | Three Months Ended June 30, 2025 ($,000) | Three Months Ended June 30, 2024 ($,000) | % Change (3M) | Six Months Ended June 30, 2025 ($,000) | Six Months Ended June 30, 2024 ($,000) | % Change (6M) | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------ | :------------------------------- | :------------------------------- | :------------ | | Cost of revenue | $11 | $- | N/A | $11 | $- | N/A | | Sales, general and administrative compensation | $244 | $145 | 68% | $491 | $292 | 68% | | Stock-based compensation | $2 | $- | N/A | $4 | $- | N/A | | Sales and marketing | $1 | $18 | -94% | $20 | $26 | -23% | | Professional Fees | $411 | $46 | 793% | $634 | $191 | 232% | | Research and development | $75 | $121 | -38% | $178 | $304 | -41% | | Depreciation and Amortization | $288 | $279 | 3% | $571 | $559 | 2% | | Rent and utilities | $18 | $5 | 260% | $37 | $9 | 311% | | Other operating expenses | $110 | $12 | 817% | $226 | $15 | 1380% | | Total costs and expenses | $1,160 | $626 | 85% | $2,172 | $1,396 | 56% | - Sales, general and administrative compensation costs increased 68% due to additional headcount and bonus accruals[105] - Professional fees increased significantly (793% for 3M, 232% for 6M) due to post-IPO business plan execution and M&A due diligence[108] - Research and development costs decreased (38% for 3M, 41% for 6M) due to reduced efforts on certain patents in 2025 compared to 2024[109] - Other operating expenses surged (817% for 3M, 1380% for 6M) primarily due to increases in directors and officers insurance obtain post IPO[112] Other Income (Expense) Total other income (expense) significantly worsened, primarily due to a $12,942,000 negative change in the fair value of the related party note payable for both the three and six months ended June 30, 2025. Interest income remained flat, while interest expense increased slightly | Other Income (Expense) Category | Three Months Ended June 30, 2025 ($,000) | Three Months Ended June 30, 2024 ($,000) | % Change (3M) | Six Months Ended June 30, 2025 ($,000) | Six Months Ended June 30, 2024 ($,000) | % Change (6M) | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------ | :------------------------------- | :------------------------------- | :------------ | | Interest income | $3 | $3 | 0% | $7 | $7 | 0% | | Change in fair value of note payable, related party | $(12,942) | $- | N/A | $(12,942) | $- | N/A | | Interest expense | $(260) | $(261) | 0% | $(531) | $(491) | 8% | | Total other income | $(13,199) | $(258) | -5016% | $(13,466) | $(484) | -2682% | - The significant negative change in fair value of the related party note payable is due to the re-measurement of the DSS Note after an amendment allowing settlement in cash or shares[114] Net loss Net loss increased by 1,524% for the three months and 731% for the six months ended June 30, 2025, compared to the prior year. This substantial increase is attributed to higher headcount costs, D&O insurance, increased professional fees, and the fair value adjustment of the DSS debt | Metric | Three Months Ended June 30, 2025 ($,000) | Three Months Ended June 30, 2024 ($,000) | % Change (3M) | Six Months Ended June 30, 2025 ($,000) | Six Months Ended June 30, 2024 ($,000) | % Change (6M) | | :------- | :------------------------------- | :------------------------------- | :------------ | :------------------------------- | :------------------------------- | :------------ | | Net loss | $(14,352) | $(884) | 1524% | $(15,631) | $(1,880) | 731% | - The increase in net loss is primarily due to additional headcount, D&O insurance, professional fees for business plan execution, and the fair value adjustment of the DSS debt[116] Liquidity and Capital Resources The company historically relied on debt financing and completed an IPO in September 2024, raising $3,726,000. Despite this, operating losses and negative cash flows raise substantial doubt about its going concern ability. Management plans to monetize intellectual properties and control costs - The company raised $3,726,000 net from its IPO on September 16, 2024[117] - Net cash used in operating activities was $1,376,000 for the six months ended June 30, 2025, compared to $1,378,000 in the prior year[118] - Net cash provided by financing activities was $0 for the six months ended June 30, 2025, a decrease from $867,000 in 2024[119] - Operating losses and negative cash flows raise substantial doubt about the company's ability to continue as a going concern[48][117] Off-Balance Sheet Arrangements The company does not have any material off-balance sheet arrangements - The Company does not have any material off-balance sheet arrangements that have, or are reasonably likely to have, an effect on its financial condition, financial statements, revenues, or expenses[120] Critical Accounting Policies and Estimates There are no additional material changes to critical accounting policies as of the current quarterly report compared to the annual report - There are no additional material changes to critical accounting policies as of the Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, compared to the Annual Report on Form 10-K for the year ended December 31, 2024[121] Item 4 - Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses identified in the prior annual report. Internal control systems have inherent limitations - Management concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[122] - Internal control over financial reporting may not prevent or detect misstatements due to inherent limitations[124] Changes in Internal Control over Financial Reporting While remediation steps for internal control weaknesses began, no changes materially affected or are reasonably likely to materially affect the company's internal control over financial reporting during the quarter ended June 30, 2025 - No changes in the Company's internal control over financial reporting during the quarter ended June 30, 2025, have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting, despite ongoing remediation steps[125] PART II - OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and exhibits Item 1 - Legal Proceedings The company is not currently a party to any material legal proceedings, though it may become involved in ordinary course litigation, which could have adverse impacts - The Company is not currently a party to any material legal proceedings[128] - Litigation, regardless of outcome, can have an adverse impact due to defense and settlement costs, diversion of management resources, and reputational harm[128] Item 1A - Risk Factors As a smaller reporting company, Impact BioMedical is not required to provide specific risk factor information in this section - Smaller reporting companies are not required to provide the information required by this item[129] Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report - No unregistered sales of equity securities and use of proceeds to report[130] Item 3 - Defaults upon Senior Securities There were no defaults upon senior securities to report - No defaults upon senior securities to report[131] Item 4 - Mine Safety Disclosures This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[132] Item 5 - Other Information There is no other information to report in this section - No other information to report in this section[133] Item 6 - Exhibits This section lists all exhibits filed with the 10-Q report, including underwriting agreements, articles of incorporation, bylaws, promissory notes, royalty agreements, and other material contracts, as well as certifications - The exhibits include various agreements such as the Underwriting Agreement, Amended and Restated Articles of Incorporation, Bylaws, Promissory Notes, Royalty Agreements, and License Agreements[134][135] - Certifications from the Principal Executive Officer and Principal Financial Officer are also included as exhibits[137] SIGNATURES The report is duly signed on behalf of Impact BioMedical, Inc. by its Chief Executive Officer, Frank D. Heuszel, and Chief Financial Officer, Todd D. Macko, on August 14, 2025 - The report was signed by Frank D. Heuszel, Chief Executive Officer, and Todd D. Macko, Chief Financial Officer, on August 14, 2025[139][140]