IBO 10-K & 10-Q changes, risk factors and insider trading
Impact Biomedical Inc. · NYSE · Pharmaceutical Preparations · CIK 1834105 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “If we fail to comply with the continued listing standards of the NYSE American LLC Exchange, it may result in a delisting of our common stock from the exchange.”
New heading “If we are delisted from the NYSE American, your ability to sell your shares of our common stock may be limited by the penny stock restrictions, which could further limit the marketability of your shares.”
New heading “If our common stock is not listed on a national securities exchange, compliance with applicable state securities laws may be required for certain offers, transfers and sales of the shares of our common stock.”
Largest changes
“If we are delisted from the NYSE American, your ability to sell your shares of our common stock may be limited by the penny stock restrictions, which could further limit the marketability of your shares.”see in full comparison
“If we fail to comply with the continued listing standards of the NYSE American LLC Exchange, it may result in a delisting of our common stock from the exchange.”see in full comparison
“If our common stock is delisted from the NYSE American, it could come within the definition of a “penny stock” as defined in the Exchange Act and could be covered by Rule 15g-9 of the Exchange Act. That rule imposes additional sales practice requirements on broker-dealers who sell securities to persons other than established customers and accredited investors. For transactions covered by Rule 15g-9, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser’s written agreement to the transaction prior to the sale. …”see in full comparison
“Because our common stock is listed on the NYSE American, we are not required to register or qualify in any state the offer, transfer or sale of the common stock. If our common stock is delisted from the NYSE American and is not eligible to be listed on another national securities exchange, sales of stock pursuant to the exercise of warrants and transfers of the shares of our common stock sold by us in private placements to U.S. holders may not be exempt from state securities laws. …”see in full comparison
“If our common stock is not listed on a national securities exchange, compliance with applicable state securities laws may be required for certain offers, transfers and sales of the shares of our common stock.”see in full comparison
“If our common stock were no longer listed on the NYSE American, investors might only be able to trade our shares on the OTC Bulletin Board ® or in the Pink Sheets ® (a quotation medium operated by Pink Sheets LLC). This would impair the liquidity of our common stock not only in the number of shares that could be bought and sold at a given price, which might be depressed by the relative illiquidity, but also through delays in the timing of transactions and reduction in media coverage.”see in full comparison
Full comparison: every changed paragraph (7)
If we fail to comply with the continued listing standards of the NYSE American LLC Exchange, it may result in a delisting of our common stock from the exchange.
Our common stock is currently listed for trading on the NYSE American LLC Exchange (“NYSE American”), and the continued listing of our common stock on the NYSE American is subject to our compliance with a number of listing standards.
If our common stock were no longer listed on the NYSE American, investors might only be able to trade our shares on the OTC Bulletin Board ® or in the Pink Sheets ® (a quotation medium operated by Pink Sheets LLC). This would impair the liquidity of our common stock not only in the number of shares that could be bought and sold at a given price, which might be depressed by the relative illiquidity, but also through delays in the timing of transactions and reduction in media coverage.
If we are delisted from the NYSE American, your ability to sell your shares of our common stock may be limited by the penny stock restrictions, which could further limit the marketability of your shares.
If our common stock is delisted from the NYSE American, it could come within the definition of a “penny stock” as defined in the Exchange Act and could be covered by Rule 15g-9 of the Exchange Act. That rule imposes additional sales practice requirements on broker-dealers who sell securities to persons other than established customers and accredited investors. For transactions covered by Rule 15g-9, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser’s written agreement to the transaction prior to the sale. Consequently, Rule 15g-9, if it were to become applicable, would affect the ability or willingness of broker-dealers to sell our securities, and accordingly would affect the ability of stockholders to sell their securities in the public market. These additional procedures could also limit our ability to raise additional capital in the future.
If our common stock is not listed on a national securities exchange, compliance with applicable state securities laws may be required for certain offers, transfers and sales of the shares of our common stock.
Because our common stock is listed on the NYSE American, we are not required to register or qualify in any state the offer, transfer or sale of the common stock. If our common stock is delisted from the NYSE American and is not eligible to be listed on another national securities exchange, sales of stock pursuant to the exercise of warrants and transfers of the shares of our common stock sold by us in private placements to U.S. holders may not be exempt from state securities laws. In such event, it will be the responsibility of us in the case of warrant exercises or the holder of privately placed shares to register or qualify the shares for any offer, transfer or sale in the United States or to determine that any such offer, transfer or sale is exempt under applicable state securities laws.
Management's Discussion & Analysis (MD&A)
Largest changes
“For the year ended December 31, 2025, the Company recorded net loss of $11,870,000, as compared to a net loss of $24,770,000 for the year ended December 31, 2024. Net loss for the year ended December 31, 2025 loss is attributable to the Company’s cost associated with additional head count, the incurring 12 months of directors’ and officers’ insurance post IPO, the increase in professional fees associated with the execution of the Company’s business plan, As well as the fair value adjustment (loss) on the Note payable, related party. …”see in full comparison
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 businesssee in full comparisonbusinesscombination.Goodwill is subject to impairment testing at least annually and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired.FASB ASC Topic 350 provides an entity with the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Some of the qualitative factors considered in applying this test include consideration of macroeconomic conditions, industry and market conditions, cost factors affecting the business, and overall financial performance of the business. If, after completing the assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company will proceed to a quantitative test. If qualitative factors are not deemed sufficient to conclude that the fair value of the reporting unit more likely than not exceeds its carrying value, then a one-step approach is applied in making an evaluation. The evaluation utilizesmultiple valuation methodologies, including a market approach (market price multiples of comparable companies) andan income approach (discounted cash flow analysis). The computations require management to make significant estimates and assumptions, including, among other things, selection of comparablecomparablepublicly traded companies, the discount rate applied to future earnings reflecting a weighted average cost of capital, and earnings growth assumptions. The Company believes the estimates and assumptions used in our impairment assessments are reasonable and based on available market information, but variations in any of the assumptions could result in materially different calculations of fair value and determinations of whether or not an impairment is indicated. A discounted cash flow analysis requires management to make various assumptions about future sales, operating margins, capital expenditures, working capital, and growth rates. Cash flow projections are derived from one-year budgeted amounts plus an estimate of later period cash flows, all of which are determined by management. Subsequent period cash flows are developed for each reporting unit using growth rates that management believes are reasonably likely to occur. Impairment of goodwill is measured as the excess of the carrying amount of goodwill over the fair values of recognized and unrecognized assets and liabilities of the reporting unit.ImpairmentProjectedtestingcashwasflows,performedevaluated using a 26.3% discount rate and 3.0% terminal growth, indicated equity fair value far below the carrying amount, driven by limited historical revenues and sustained operating losses. Additional working-capital and related-party debt balance considerations further reduced equity value in the analysis. Taken together, these factors constituted triggering events and supported recording a goodwill impairment in the amount of $25,093,000 as of December 31, 2024andrepresenting theCompany deemed it appropriate to fully impairfull goodwill balance. Goodwill is $0 as of December 31,2024.2025.
“For the year ended December 31, 2024, the Company recorded net loss of $24,770,000, as compared to a net loss of $4,407,000 for the year ended December 31, 2023. The increase in net loss over year is attributable to the Company’s impairment of goodwill as of December 31, 2024 offset by cost cutting measures in taken with both its professional and research and development costs as the Company shifts efforts to taking to market its existing technologies as well as the change in fair value of with the amended Note payable, related party.”see in full comparison
“The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of our assets and the satisfaction of liabilities in the normal course of business. As reflected in the accompanying financial statements the Company has incurred operating losses as well as negative cash flows from operating activities over the past two years. …”see in full comparison
“Investments in equity securities with a readily determinable fair value, not accounted for under the equity method, are recorded at fair value with unrealized gains and losses included in earnings. For equity securities without a readily determinable fair value, the investment is recorded at cost, less any impairment, plus or minus adjustments related to observable transactions for the same or similar securities, with unrealized gains and losses included in earnings.”see in full comparison
On March 12, 2020 Alset International Limited (“Alset”), a related party, Global BioMedical Pte Ltd., a related party, DSS, Inc (“DSS”), a related party, and DSS BioHealth Security Inc. (“DSS BioHealth”), a related party, signed Term Sheets and subsequently on April 21, 2020, these four companies entered into Share Exchange Agreement (“Share Exchange”), based on which Global BioMedical Pte Ltd., agreed to sell all of the issued and outstanding shares of the Company to DSS BioHealth in exchange for the combination of common and preferred shares of DSS. Under the terms of the Share Exchange, DSS issued 483,334 shares of the DSS Common Stock nominally valued at $6.48 per share, and 46,868 newly issued shares of the DSS Series A Convertible Preferred Stock (“Series A Preferred Stock”), with a stated value of $46,868,000, or $1,000 per share, for a total consideration valued at $50 million. Due to several factors, including a discount for illiquidity, the value of the Series A Preferred Stock was discounted from $46,868,000 to $35,187,000, thus reducing the final consideration given to approximately $38,319,000. The Company’s Chairman, Heng Fai Ambrose Chan, a related party, who is also the largest shareholder of Alset, at the time of the signing of the Share Exchange Agreement was the beneficial owner of approximately 18.3% of the outstanding shares of DSS and is the Chairman of the Board of Directors of DSS. On August 21, 2020, the transaction was concluded, and the Company became a direct wholly owned subsidiary of DSS BioHealth. In connection with the acquisition, and the related accounting determination, DSS BioHealth has elected to apply push-down accounting and reflect in its financial statements of Impact BioMedical, the fair value of its assets and liabilities. Utilizing an income approach, the Company has completed its valuations of certain developed technology and pending patents assets acquired in the transaction as well the fair value of the non-controlling interests. More specifically, a Multi-Period Excess Earnings Method (“MPEEM”) estimates the value of an intangible asset by quantifying the amount of residual (or excess) estimated cash flows generated by the asset and discounting those cash flows to the present. These have been valued at approximately $22,260,000 and $3,910,000, respectively, and are included on the Consolidated Balance Sheet on December 31, 2020. Estimated useful life of these assets is twenty years, based on the remaining terms of the related patents, with annual amortization approximating $1,113,000. The Company has also completed its valuation of goodwill and deferred tax liabilities of Impact BioMedical, and has recorded goodwill of approximately $25,093,000, driven by other intangible assets that do not qualify for separate recognition, and a deferred tax liability of approximately $5,234,000.see in full comparisonTheDuringgoodwilltheisCompany’snotannualdeductible forreviewtaxofpurposesgoodwill,andithaswasbeendeemedallocatednecessary toImpactimpairBioMedicalit intotalityfullasduringathesingleyear endedreportingDecemberunit.31,The Company is committed to both funding research and developing intellectual property portfolio.2024.
Full comparison: every changed paragraph (42)
By
leveraging technology and new science with strategic partnerships, we provide advances in biopharmaceuticals, over the counter direct
to consumer wellness offerings, and drug discovery for the prevention, inhibition, and treatment of neurological, oncologic, and inflammatory
diseases. In addition to our existing efforts, we continually search for, and evaluate, other potential new offerings to add to our portfolio.
Global
BioLife, Inc. Through our majority owned subsidiary Global Biomedical, Inc., we own 81.8% of the issued and outstanding equitycommon
stock of Global
BioLife, Inc.
Sweet
Sense, Inc. We are the ownerown of 95.5% of the issued and outstanding equitycommon stock of Sweet Sense.
Laetose
has a unique composition patent allowed in the United States and patents are pending in other countries worldwide.
The
information in the two paragraphs below does not assume or give effect to (1) a 1:55 reverse split of the Company’s outstanding
common stock and (2) an exchange by a shareholder of common stock for Series A Convertible Preferred Stock.
On
March 12, 2020 Alset International Limited (“Alset”), a related party, Global BioMedical Pte Ltd., a related party, DSS,
Inc (“DSS”), a related party, and DSS BioHealth Security Inc. (“DSS BioHealth”), a related party, signed Term
Sheets and subsequently on April 21, 2020, these four companies entered into Share Exchange Agreement (“Share Exchange”),
based on which Global BioMedical Pte Ltd., agreed to sell all of the issued and outstanding shares of the Company to DSS BioHealth in
exchange for the combination of common and preferred shares of DSS. Under the terms of the Share Exchange, DSS issued 483,334 shares
of the DSS Common Stock nominally valued at $6.48 per share, and 46,868 newly issued shares of the DSS Series A Convertible Preferred
Stock (“Series A Preferred Stock”), with a stated value of $46,868,000, or $1,000 per share, for a total consideration valued
at $50 million. Due to several factors, including a discount for illiquidity, the value of the Series A Preferred Stock was discounted
from $46,868,000 to $35,187,000, thus reducing the final consideration given to approximately $38,319,000. The Company’s Chairman,
Heng Fai Ambrose Chan, a related party, who is also the largest shareholder of Alset, at the time of the signing of the Share Exchange
Agreement was the beneficial owner of approximately 18.3% of the outstanding shares of DSS and is the Chairman of the Board of Directors
of DSS. On August 21, 2020, the transaction was concluded, and the Company became a direct wholly owned subsidiary of DSS BioHealth.
In connection with the acquisition, and the related accounting determination, DSS BioHealth has elected to apply push-down accounting
and reflect in its financial statements of Impact BioMedical, the fair value of its assets and liabilities. Utilizing an income approach,
the Company has completed its valuations of certain developed technology and pending patents assets acquired in the transaction as well
the fair value of the non-controlling interests. More specifically, a Multi-Period Excess Earnings Method (“MPEEM”) estimates
the value of an intangible asset by quantifying the amount of residual (or excess) estimated cash flows generated by the asset and discounting
those cash flows to the present. These have been valued at approximately $22,260,000 and $3,910,000, respectively, and are included on
the Consolidated Balance Sheet on December 31, 2020. Estimated useful life of these assets is twenty years, based on the remaining terms
of the related patents, with annual amortization approximating $1,113,000. The Company has also completed its valuation of goodwill and
deferred tax liabilities of Impact BioMedical, and has recorded goodwill of approximately $25,093,000, driven by other intangible assets
that do not qualify for separate recognition, and a deferred tax liability of approximately $5,234,000. TheDuring goodwillthe isCompany’s notannual deductible
forreview taxof purposesgoodwill, andit haswas beendeemed allocatednecessary to Impactimpair BioMedicalit in totalityfull asduring athe singleyear
ended reportingDecember unit.31, The Company is committed to both
funding research and developing intellectual property portfolio.2024.
Revenue - Consists of sales of the Company’s retail sales of its Celios air purification technology. It includes online and third party distributor sales. This is a new product line acquired in February of 2025 via the Company’s transaction with DSS PureAir (see Note 10).
Revenue
- The Company has not generated revenue for the years ended December 31,
2024 or 2023.
Costs of revenue includes all direct costs of the Company’s retail sales of its Celios air purification technology. It includes online and third party distributor sales and consists of materials, and transportation costs. This asset was acquired during the first quarter of 2025 and the Company did not incur any related costs in 2024. At December 31, 2025, approximately $419,000 of Celios inventory was impaired.
Selling,
general and administrative compensation costs increased 122%23% for the year ended December 31, 2024,2025, as compared to the year ended December
December 31, 20232024 due to increasesadditional inheadcount headyear countover atyear theas well as bonuses paid or accrued for certain Company due to increased cost incurred associated with the Company’s registration
with the SEC and the NYSE American, and efforts toward the Company’s IPO.personnel.
Stock
based compensation includes expense charges for all stock-based awards to employees, directors, and consultants. Such awards can
include option grants, warrant grants, and restricted and unrestricted stock awards. These types of awards were not used prior to the
Company’s IPO in September 2024.
Sales
and marketing costs, which includes internet and trade publication advertising, press releases, travel and entertainment costs,costs. sales-broker commissions,These
and trade show participation expenses, increase 874% during 2024 as compared to 2023, primarily due to increased associated with cost
to attend trade shows and marketing efforts pre and post IPO Professional
fees decreased 38%96% for the year ended December 31, 2024,2025 as compared to the year ended December 31, 2023.2024 Thesedue coststo consistCompany primarilyefforts to reduce travel,
of consultingmarketing and legalentertainment services associated with developing and implementing Impact BioMedical’s business plan, These costs decreased
in 2024 in anticipation of the Company’s IPO.costs.
Professional fees increased 125% for the year ended December 31, 2025, as compared to year ended December 31, 2024. These costs consist primarily of consulting and legal services associated with developing and implementing Impact BioMedical’s business plan, these costs increased in 2025 as the Company began to enact its business plan post IPO as well as due diligence in connection with potential mergers and/or acquisitions.
Research
and development costs represent costs consisting primarily of independent, third-party testing of the various properties of each
technology the Company owns possesses as well as research on new technologies. Research and development decreasedincreased 84%22% for the year ended
December 31, 2024,2025, as compared to year ended December 31, 20232024 due to severalcosts cost-cuttingincurred activitieson inclusive of the cessation of the
Company’s researchexisting and developmentdeveloping contract with GRDG at the end of 2023.patents.
Depreciation
and amortization expense remainedincreased flat2% for year ended December 31, 20242025 compared to year ended December 31, 20232024 and represents the
amortization of the associated with the developed technology and patents acquiredas well as partthe amortization of the acquisitionCelios patents acquired during
the first quarter of Impact BioMedical by
DSS. Amortization of these assets began on January 1, 2021, and will have a 20-year term.2025.
Rent and utilities represents cost associated with office space located at 1400 Broadfield Blvd, Suite 100 Houston TX which the Company began subletting from DSS during the first quarter of 2024. During the forth quarter of 2024, the Company increased the amount of space sublet from DSS, driving the increase year over year.
Impairment of fixed asset is
the impairment of marketing assets in development that the Company decided to forego completion.
Impairment
of goodwill during the 4th quarter of 2024, the Company performed qualitative and quantitative assessments of the goodwill value
associated with the Company determined that as of December 31, impairment was required (see Note 7).required.
Impairment of fixed asset is the impairment of marketing assets in development that in 2024 the Company decided to forego completion.
Loss on disposal of fixed assets represents the net book value of certain assets of the Company that were disposed of during the year ended December 31, 2025.
Other
operating expenses consist primarily of office supplies, IT support, sales and marketing costs, travel and insurance costs. These
costs increased 44%144% for year ended December 31, 2024,2025, as compared to year ended December 31, 2023,2024, due primarily due to increasedincreases ITin supportdirectors
and travelofficers costs.insurance obtained post IPO as well as incurring third party warehousing cost associated with storage of the Company’s
Celios technology acquired during Q1 of 2025.
Other
Income (Expense) Income
Other
income represents income generated from the Company’s distribution agreement with BioMed Technologies (“BioMed”).
during the first quarter of 2023. BioMed’s products focus on natural probiotics.
Change
in fair value of note payable, related party is related to the promissory note with DSS (“DSS Note”). During the fiscal
year ended 2024, the Company amended the terms of its outstanding principal balance of the DSS Note. Previously, the Note required repayment
solely in cash; however, pursuant to the second amendment executed which went into effect on September 16, 2024, the Company now has
the option to settle the Note in either cash or shares of the Company’s common stock, subject to certain conditions. In accordance
with with
ASC 480, Distinguishing Liabilities and Equity, and ASC 825, Financial Instruments, the Company remeasured the fair value
of the
DSS Note as of the modification date and again as of December 31, 2024.2025. As a result, the Company recognized a fair value adjustment (loss)
of $9,388,000 for the year ended December 31, 2025 as compared to a gain of $5,068,000 for the year ended December 31, 2024 (see Note 9).
Interest
expense is recognized on the Company’s debt to DSS increaseddecreased year over year due to thedebt increasebeing converted to equity in debtOctober
of balance year over year.2025.
For the year ended December 31, 2025, the Company recorded net loss of $11,870,000, as compared to a net loss of $24,770,000 for the year ended December 31, 2024. Net loss for the year ended December 31, 2025 loss is attributable to the Company’s cost associated with additional head count, the incurring 12 months of directors’ and officers’ insurance post IPO, the increase in professional fees associated with the execution of the Company’s business plan, As well as the fair value adjustment (loss) on the Note payable, related party. The decrease in net loss over year is attributable to the Company’s impairment of goodwill as of December 31, 2024 offset the change in fair value (gain) of the amended Note payable, related party. Further, The company recorded a tax benefit of $2,580,000 for the tax year ending December 31, 2025. (See Note 11)
For
the year ended December 31, 2024, the Company recorded net loss of $24,770,000, as compared to a net loss of $4,407,000 for the year
ended December 31, 2023. The increase in net loss over year is attributable to the Company’s impairment of
goodwill as of December 31, 2024 offset by cost cutting measures in taken with both its professional and research and development
costs as the Company shifts efforts to taking to market its existing technologies as well as the change in fair value of with the
amended Note payable, related party.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of our assets and the satisfaction of liabilities in the normal course of business. As reflected in the accompanying financial statements the Company has incurred operating losses as well as negative cash flows from operating activities over the past two years. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. These consolidated financial statements do not include any adjustments to the specific amounts and classifications of assets and liabilities, which might be necessary should we be unable to continue as a going concern.
The
Company has historically met its liquidity and capital requirements primarily through debt financing. On September 16, 2024, the Company
completed an initial public offering raising $3,726,000 net of issuance costs and is currently listed on the NYSE American under the
ticker symbol IBO. The Company’s management intends to take additional actions necessary to continue as a going concern. Management’s
plans concerning these matters include, among other things, monetization of its intellectual properties, and tightly controlling operating
costs.
Net cash used by operating activities was $1,890,000 for the year ended December 31, 2025 as compared to cash used by operating activities of $2,854,000 for the year ended December 31, 2024. This decrease driven by a reduction in prepaid and other current assets of approximately $391,000, as well as a reduction in cash outlay for accounts payable of approximately $906,000.
Net
cash used by continuing operating activities was $3,919,000 for the year ended December 31, 2024 as compared to cash used for
operating activities of $2,851,000 for the year ended December 31, 2023. This increase is driven by the increase in Operating loss
adjusted for reconciling items from operations of approximately $300,000 year over year as well as the decrease in accounts payable and
the increase of prepaid expenses and other current assets.
Net cash provided by investing activities was $3,000 for the year ended December 31, 2025 as compared to $2,000 for the year ended December 31, 2024. This activity remains flat and is associated with interest collected on a Company’s notes receivable.
Net
cash provided by investing activities was $2,000 for the year ended December 31, 2024 as compared to net cash used of $15,000 for the
year ended December 31, 2023. This fluctuation is driven by the purchase of property, plant and equipment of $18,000 during the year
ended December 31, 2023 without similar activities during 2024.
Net
cash providedused by financing activities for the year ended December 31, 2024 2025
was $5,915,000$109,000 and represents $2,189,000borrowings from DSS of $184,000, offset by payments of $293,000. Financing activities for the year ended December
31, 2024 represents $1,124,000 in borrowings from
DSS and $3,726,000 in proceeds from the Company’s IPO, net of issuances costs. Net cash provided by financing activities for the
year ended December 31, 2023 was $2,865,000 and represents borrowings from DSS.
To
continue as a going concern, the Company completed an initial public offering on September 16, 2024 raising $3,726,000 net of issuance
costs and is currentlyexploring listedseveral options to raise capital including but not limited to, capital raises
via its listing on the NYSE American under the ticker symbol IBO.IBO as well as debt financing. The Company’s management intends to take additional actions
actions necessary to continue as a going concern. Management’s plans concerning these matters include, among other things,
monetization monetization
of its intellectual properties, and tightly controlling operating costs.
Investments
Investments
in equity securities with a readily determinable fair value, not accounted for under the equity method, are recorded at fair value with
unrealized gains and losses included in earnings. For equity securities without a readily determinable fair value, the investment is
recorded at cost, less any impairment, plus or minus adjustments related to observable transactions for the same or similar securities,
with unrealized gains and losses included in earnings.
For
equity method investments, the Company regularly reviews its investments to determine whether there is a decline in fair value below
book value. If there is a decline that is other-than-temporary, the investment is written down to fair value.
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 business
combination. Goodwill is subject to impairment testing at least annually and will be tested for impairment between annual tests if an
event occurs or circumstances change that would indicate the carrying amount may be impaired. FASB ASC Topic 350 provides an entity with
the option to first assess qualitative factors to determine whether
the existence of events or circumstances leads to a determination
that it is more likely than not that the fair value of a reporting
unit is less than its carrying amount. Some of the qualitative factors
considered in applying this test include consideration of
macroeconomic conditions, industry and market conditions, cost factors affecting
the business, and overall financial performance of
the business. If, after completing the assessment, it is determined that it is more
likely than not that the fair value of a
reporting unit is less than its carrying value, the Company will proceed to a quantitative test.
If qualitative factors are not
deemed sufficient to conclude that the fair value of the reporting unit more likely than not exceeds its
carrying value, then a
one-step approach is applied in making an evaluation. The evaluation utilizes multiple valuation methodologies,
including a market approach (market price multiples of comparable companies) and an income approach (discounted cash flow analysis).
The computations require management to make significant estimates and assumptions, including, among other things, selection of
comparable comparable
publicly traded companies, the discount rate applied to future earnings reflecting a weighted average cost of capital,
and earnings growth
assumptions. The Company believes the estimates and assumptions used in our impairment assessments are
reasonable and based on available
market information, but variations in any of the assumptions could result in materially different
calculations of fair value and determinations
of whether or not an impairment is indicated. A discounted cash flow analysis requires
management to make various assumptions about future
sales, operating margins, capital expenditures, working capital, and growth
rates. Cash flow projections are derived from one-year budgeted
amounts plus an estimate of later period cash flows, all of which
are determined by management. Subsequent period cash flows are developed
for each reporting unit using growth rates that management
believes are reasonably likely to occur. Impairment of goodwill is measured
as the excess of the carrying amount of goodwill over
the fair values of recognized and unrecognized assets and liabilities of the reporting
unit. ImpairmentProjected testingcash wasflows, performedevaluated using a
26.3% discount rate and 3.0% terminal growth, indicated equity fair value far below the carrying amount, driven by limited
historical revenues and sustained operating losses. Additional working-capital and related-party debt balance considerations further
reduced equity value in the analysis. Taken together, these factors constituted triggering events and supported recording a goodwill
impairment in the amount of $25,093,000 as of December 31, 2024 andrepresenting the Company deemed it appropriate to fully impairfull goodwill balance. Goodwill is $0 as of December
31, 2024.2025.
To
continue as a going concern, the Company completed an initial public offering on September 16, 2024 raising $3,726,000 net of issuance
costs and is currentlyexploring
several listedoptions to raise capital including but not limited to, capital raises via its listing on the NYSE American under the ticker symbol
IBO IBO.as well as debt financing. The Company’s management intends to take additional
actions necessary to continue as a going concern.
Management’s plans concerning these matters include, among other things, monetization
of its intellectual properties, and tightly
controlling operating costs.
The
Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration to which it
is entitled in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined
to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that
are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the
amount of the transaction price that is allocated to the respective performance obligation when or as the performance obligation is satisfied.satisfied
at a specific point in time.
The Company recognizes its revenue on the sale of its Celios technology based on when the product is shipped to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for shipped product. Sales and other taxes billed and collected from customers are excluded from revenue.
What changed in the latest 10-Q
Risk Factors
Smaller reporting companies are not required to provide the information required by this item.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
Removed heading “Cash Flow from Financing Activities”
Largest changes
“Change in fair value of note payable, related party is related to the promissory note with DSS (“DSS Note”). During the fiscal year ended 2024, the Company amended the terms of its outstanding principal balance of the DSS Note. Previously, the Note required repayment solely in cash; however, pursuant to the second amendment executed which went into effect on September 16, 2024, the Company now has the option to settle the Note in either cash or shares of the Company’s common stock, subject to certain conditions. …”see in full comparison
“Stock based compensation includes expense charges for all stock-based awards to employees, directors, and consultants. Such awards can include option grants, warrant grants, and restricted and unrestricted stock awards. In January 2026, the Company granted and issued 3,200,000 shares of Common Stock to various individuals including executives, board members, audit committee members, etc. The agreement included the individuals rescinding and cancelling any and all unexercised stock options previously granted. The Company recorded stock-based compensation expense of approximately $1,440,000.”see in full comparison
“These activities include discussions with potential companies/technologies which, subject to completion of diligence, and approval of the respective management boards, could potentially expand the offerings of Impact Biomedical Inc. There is no assurance that anyone, or all, of these will result in a material transaction and this is exemplary of consistent and ongoing search and discovery efforts within Impact Biomedical Inc.”see in full comparison
Net cashsee in full comparisonusedprovided by operating activities was$464,000$6,000 for thethreesix months endedMarchJune31,30, 2026 as compared to cash used by operating activitiesactivitiesof$682,000$1,376,000 for thethreesix months endedMarchJune31,30, 2025. This fluctuation is driven by less payments of the Company’s accounts payable by approximately$125,000$279,000, amounts due to related party of approximately $709,000, as well asandecreaseimprovement of adjustments to reconcile loss from operations toin netcashloss afterusedreconcilingbyitemsoperating activitiesof approximately$134,000.$419,000
see in full comparisonStock-based compensation includes expense charges for all stock-based awards to employees, directors, and consultants. Such awards can include option grants, warrant grants, and restricted and unrestricted stock awardsSales and marketing costs, which includes internet and trade publication advertising, press releases, travel and entertainment costs. These decreased 100% and 95% for the three and six months endedMarchJune31,30, 2026, as compared to the three and six months endedMarchJune31,30, 2025. The decrease incostscost for the three and six months endedMarchJune31,30,20262025 is due toCompanyefforts to reducetravel, marketing and entertainment costs.cost.
Full comparison: every changed paragraph (28)
In
addition to our existing efforts, we continually search and evaluate other potential new offerings to add to our portfolio.
Impact
BioLife Science, Inc. We are the sole owner of the issued and outstanding common stockequity of Impact BioLife Science, Inc.
Global
Biomedical, Inc. We own 90.9% of Global Biomedical, Inc. issued and outstanding common stock.equity.
Global
BioLife, Inc. Through our majority owned subsidiary Global Biomedical, Inc., we own 81.8% of the issued and outstanding common
stockequity of Global
BioLife, Inc.
Sweet
Sense, Inc. We ownare approximatelythe owner of 95.5% of the issued and outstanding common stockequity of Sweet Sense.
Composition
and method patents are issued to the Company for Linebacker in the U.S. and other countries.
Laetose has a unique composition patent allowed in the United States and patents are pending in other countries worldwide.
These
activities include discussions with potential companies/technologies which, subject to completion of diligence, and approval of the respective
management boards, could potentially expand the offerings of Impact Biomedical Inc. There is no assurance that anyone, or all, of these
will result in a material transaction and this is exemplary of consistent and ongoing search and discovery efforts within Impact Biomedical
Inc.
Costs of revenue includes all direct costs of the Company’s retail sales of its Celios air purification technology. It includes online and third party distributor sales and consists of materials, third party warehousing, and transportation costs. This asset was acquired during the first quarter of 2025.
Selling,
general and administrative compensation costs decreased 27%32% and 30%, respectively for the three and six months ended MarchJune 31,30, 2026,2026
and as compared to the three months
ended March 31, 20252025, due to reductions in pay for a certain employee of the Company as well as a reduction in bonus accruals year over
year.
Stock based compensation includes expense charges for all stock-based awards to employees, directors, and consultants. Such awards can include option grants, warrant grants, and restricted and unrestricted stock awards. In January 2026, the Company granted and issued 3,200,000 shares of Common Stock to various individuals including executives, board members, audit committee members, etc. The agreement included the individuals rescinding and cancelling any and all unexercised stock options previously granted. The Company recorded stock-based compensation expense of approximately $1,440,000.
Stock-based compensation includes expense charges for all stock-based awards to employees, directors, and consultants. Such awards can
include option grants, warrant grants, and restricted and unrestricted stock awards Sales
and marketing costs, which includes internet and trade publication advertising, press releases, travel and entertainment costs. These
decreased 100% and 95% for the three and six months ended MarchJune 31,30, 2026, as compared to the three and six months ended MarchJune 31,30, 2025.
The decrease in costs
cost for the three and six months ended MarchJune 31,30, 20262025 is due to Company efforts to reduce travel, marketing and entertainment costs.cost.
Professional
fees increaseddecreased 16%78% and 45% for the three and six months ended MarchJune 31,30, 2026, as compared to the three and six months ended March 31,June
30, 2025. These costs consist
primarily of consulting and legal services associated with developing and implementing Impact
BioMedical’s business plan. These
costs increased in 2026plan as awell resultas ofcost associates with the due diligence in connection with potential merger and/or
acquisitions and have decreased as all other engagements of professional services have been eliminated or significantly reduced as
the Company explores potential mergers and/or acquisitions.
Research
and development costs represent costs consisting primarily of independent, third-party testing of the various properties of each
technology technology
the Company owns, research on new technologies as well as costscost to patent newly developed technologies and other related fees
for the
development of new technologies. Research and development increased 1% and decreased 55%31% for the three and six months ended March 31,June
30, 2026, as compared to the
three and six months ended MarchJune 31,30, 2025 due primarily to a decrease in spending on identifying new technologies
as well as pausing the spend
on several in-development technologies.
Depreciation
and amortization expense increaseddecreased 1% remained flat for the three and six months ended MarchJune 31,30, 2026 as compared to Marchthe 31,same periods
for June 30, 2025 and represents the
amortization of the associated with the developed technology and patents acquired as part of the
acquisition of Impact BioMedical by DSS as well as the amortization of the Celios patents acquired during
the first quarter of 2025.
Rent
and utilities represents costcosts associated with office space located at 1400 Broadfield Blvd, Suite 100 Houston TX which the Company
began subletting from DSS during the first quarter of 2024. These costs remained flat yearfor overthe yearthree and six months ended June 30, 2026
as compared to the same periods for June 30, 2025 as there were no scheduledrent rent
increases scheduled.increases.
Other
operating expenses consist primarily of office supplies, IT support, travel, third party warehousing cost, and insurance costs. These
costs decreased 43% and 42% for the three and six months ended MarchJune 31,30, 2026, as compared to the three and six months ended MarchJune 31, 30,
2025 due primarily to
efforts by management of the Company to control such costs.
Interest
income is recognized on the Company’s notes receivable. Although payments are being received in accordance with the note receivable
terms, interestInterest income increasedwas relatively flat for three and six months ended
June March 31,30, 2026 as compared to Marchthe 31,same periods for June 30, 2025 as the outstanding principal balance
increased slightly.remained flat.
Change in fair value of note payable, related party is related to the promissory note with DSS (“DSS Note”). During the fiscal year ended 2024, the Company amended the terms of its outstanding principal balance of the DSS Note. Previously, the Note required repayment solely in cash; however, pursuant to the second amendment executed which went into effect on September 16, 2024, the Company now has the option to settle the Note in either cash or shares of the Company’s common stock, subject to certain conditions. In accordance with ASC 480, Distinguishing Liabilities and Equity, and ASC 825, Financial Instruments, the Company remeasured the fair value of the DSS Note as of the modification date and again as of June 30, 2025. As a result, the Company recognized a fair value adjustment of $12,942,000 for the three and six months ended June 30, 2025. This note was settled and paid off in October 2025.
Interest
expense is recognized on the Company’s debt to DSS. Interest expense decreasedincreased 100%33% and 0% for the three and six months ended
June March 31,30, 2026 as compared
to MarchJune 31,30, 2025, due to the settlement and payoff of the outstanding debt in October 2025.
For the three and six months ended June 30, 2026 and 2025, the Company recorded decreases in net loss of 95% and 81%. The decrease in net loss is attributable to the Company’s cost is driven by the fair value adjustment to the Company’s debt with DSS recorded during 2025 offset by increases in stock based compensation approximating $1,440,000 recorded in Q1 2026..
For
the three months ended March 31, 2026 and 2025, the Company incurred a net loss of $2,284,000 and $1,278,000 respectively. The
increase in net loss is attributable to the stock-based compensation awarded to certain officers, directors and other employees of
the Company during the first quarter of 2026 with an approximate value of $1,440,000.
Cash Flow from Continuing Operating Activities
Net
cash usedprovided by operating activities was $464,000$6,000 for the threesix months ended MarchJune 31,30, 2026 as compared to cash used by operating
activities activities
of $682,000$1,376,000 for the threesix months ended MarchJune 31,30, 2025. This fluctuation is driven by less payments of the Company’s
accounts payable
by approximately $125,000$279,000, amounts due to related party of approximately $709,000, as well as andecrease improvement of adjustments to reconcile loss from operations toin net cashloss
after usedreconciling byitems operating activities
of approximately $134,000.$419,000
Net
cash usedprovided by investing activities was $1,000 for the three months ended March 31, 2026, as compared to net cash provided by investing
activities wasand $1,000 for the threesix months ended MarchJune 31,30, 2026 and June 30, 2025, andrespectively. representsThis
activity activityis due to payments received on the Company’s notes receivable.receivable during 2026 and 2025.
Cash
Flow from Financing Activities
Net
cash provided by financing activities was $482,000 for the three months ended March 31, 2026 and represents borrowings from a DSS, a
related party. During the three months ended March 31, 2025 net cash provided by financing activities was $0 as no such activities took
place.
The
preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make judgments, assumptions
and estimates that affect the amounts reported in our financial statements and accompanying notes. The financial statements as of December
31, 2025, describe the significant accounting policies and methods used in the preparation of the financial statements. There are no
additional material changes to such critical accounting policies as of the Quarterly Report on Form 10-Q for the quarter ended MarchJune 30,
31, 2026.
IBO insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 1 filing (1 insider, 3 trade dates, 906 shares, about $1.7K). Net open-market shares: -906 (purchases minus sales); net value about -$1.7K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-24 | Dss, Inc. |
Open-market sale | 156 | $7.06 | $1.1K |
| 2026-09-23 | Dss, Inc. |
Open-market sale | 27 | $6.95 | $188 |
| 2026-09-22 | Dss, Inc. |
Open-market sale | 723 | $0.55 | $398 |
Well-known investors holding IBO (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 49,567 | $22.8K | 0.0% | New position |
| Two Sigma Investments | 2026-06-30 | 17,191 | $7.9K | 0.0% | Reduced 54% |