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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended
Commission file number
| (Exact name of registrant as specified in its charter) |
| (State or other Jurisdiction of | (IRS Employer | |
| incorporation- or Organization) | Identification No.) |
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | Smaller
reporting company |
|
| Emerging
growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Ticker symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A |
As of August 4, 2026 there were shares of the registrant’s common stock, $ par value, outstanding.
IMPACT BIOMEDICAL, INC.
FORM 10-Q
TABLE OF CONTENTS
| 1 |
Impact BioMedical, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
| June 30, 2026 (unaudited) |
December 31, 2025 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventory | ||||||||
| Current portion of notes receivable | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Other intangible assets, net | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Due to related party | ||||||||
| Total current liabilities | ||||||||
| Deferred tax liability, net | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 9) | ||||||||
| Stockholders’ equity | ||||||||
| Preferred stock, $ par value; shares authorized, shares issued and outstanding ( on December 31, 2025) | ||||||||
| Common stock, $ par value; shares authorized, shares issued and outstanding ( on December 31, 2025) | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Total stockholders’ equity of the Company | ||||||||
| Non-controlling interest in subsidiaries | ||||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to the consolidated financial statements.
| 2 |
Impact BioMedical, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(unaudited)
|
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
|||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue: | ||||||||||||||||
| Biotech retail sales | $ | $ | $ | $ | ||||||||||||
| Total revenue | ||||||||||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of revenue | ||||||||||||||||
| Sales, general and administrative compensation (inclusive of stock-based compensation) | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| Professional Fees | ||||||||||||||||
| Research and development | ||||||||||||||||
| Depreciation and Amortization | ||||||||||||||||
| Rent and utilities | ||||||||||||||||
| Other operating expenses | ||||||||||||||||
| Total costs and expenses | ||||||||||||||||
| Operating loss | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | ||||||||||||||||
| Change in fair value of note payable, related party | ( |
) | ( |
) | ||||||||||||
| Interest expense | ( |
) | ( |
) | ||||||||||||
| Loss from operations before income taxes | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Income tax benefit | ||||||||||||||||
| Net loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Loss (income) from operations attributed to noncontrolling interest | ( |
) | ||||||||||||||
| Net loss attributable to common stockholders | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Loss per common share: | ||||||||||||||||
| Basic | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Diluted | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Shares used in computing loss per common share: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
See accompanying notes to the consolidated financial statements.
| 3 |
Impact BioMedical, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholder’s Equity
(unaudited)
| Common Stock | Preferred Stock | Additional Paid-in | Accumulated |
Total Impact |
Non- controlling Interest in | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | Subsidiary | Total | ||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||||||||||
| - | ||||||||||||||||||||||||||||||||||||
| Acquisition of DSS PureAir, Inc. assets | - | |||||||||||||||||||||||||||||||||||
| Stock based payments for professional services rendered | - | |||||||||||||||||||||||||||||||||||
| Stock based payments | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | |||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||||||||||||||||||
| Net income (loss) | - | - | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Balance, June 30, 2026 | $ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||||
See accompanying notes to the consolidated financial statements.
| 4 |
Impact BioMedical, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30,
(unaudited)
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss from operations | $ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile loss from operations to net cash used by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock based compensation | ||||||||
| Stock based payment for professional services received | ||||||||
| Accrued interest on notes payable, related party | ||||||||
| Change in fair value of note payable, related party | ||||||||
| Decrease (increase) in assets: | ||||||||
| Accounts receivable | ||||||||
| Inventory | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Increase (decrease) in liabilities: | ||||||||
| Accounts payable | ( |
) | ||||||
| Accrued expenses | ||||||||
| Due to related party | ||||||||
| Net cash provided (used) by operating activities | ( |
) | ||||||
| Cash flows from investing activities: | ||||||||
| Payments received on notes receivable | ||||||||
| Net cash provided by investing activities | ||||||||
| Net increase (decrease) in cash | ( |
) | ||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
See accompanying notes to the consolidated financial statements.
| 5 |
Impact Biomedical, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 1. Nature of Operations and Basis of Presentation
Nature of Operations
Impact
BioMedical, Inc., incorporated in the State of
Our business model includes partnering and potentially direct sales for commercialization and distribution. Potential licensors and development partners include pharmaceutical, consumer packaged goods companies and others, who would commercialize IBO technologies in exchange for milestone, and royalty payments. Currently, our operations are conducted, and our assets are owned through our principal subsidiaries: (i) Global BioLife, Inc. (“Global BioLife”), which was incorporated on April 14, 2017, (ii) Impact BioLife Science, Inc. (“Impact BioLife”), which was incorporated on August 28, 2020, (iii) Global BioMedical, Inc. (“Global BioMedical”), which was incorporated on April 18, 2017, and (iv) Sweet Sense, Inc. (“Sweet Sense”), which was incorporated on April 30, 2018.
Impact has several unique and proprietary technologies that are in continuing development:
Linebacker™
Linebacker is a platform of small molecule electrophilically enhanced polyphenol compounds with potential application in oncology (solid tumors), inflammatory disorders, and neurology. Polyphenols are substances found in many nuts, vegetables, and berries. Linebacker compounds are modified Myricetin, which is a common plant-derived flavonoid. Myricetin exhibits a wide range of activities that include strong antioxidant and anti-inflammatory activities (source: NIH).
Linebacker can potentially be developed as monotherapy or co-therapy to down-regulate PIM (proviral integration site for Moloney murine leukemia virus) kinase which plays a key role as an oncogene in various cancers (e.g. colon, lung, prostate, breast). Additional potential applications include inflammatory disorders and neurology.
Linebacker-1 and Linebacker-2 compounds have been licensed to ProPhase Laboratories (NASDAQ: PRPH) for development and commercialization worldwide, from which Impact Biomedical could receive future milestone and royalty payments.
Laetose™
Laetose™ technology demonstrates compelling potential in reducing caloric intake and glycemic index in foods, while also inhibiting tumor necrosis factor alpha (TNF-α), a cytokine associated with inflammatory chronic diseases (data on file with IBO).
The patented formulation has potential to inhibit the inflammatory and metabolic response of sugar alone and has potential applications in therapeutic administration to reduce or limit inflammatory or metabolic diseases (e.g., diabetes). Use of Laetose in a daily diet, compared to sugar, could result in 30% lower sugar consumption and lower caloric and glycemic index/load.
Functional Fragrance Formulation (“3F”)
3F is a suite of “functional fragrances” containing specialized botanical ingredients (e.g., terpenes) with potential application as an antimicrobial, or as an additive in insect repellents, detergents, lotions, shampoo, fabrics and other substances to increase effectiveness. Global BioLife is seeking to commercialize this product. Together with Chemia, we are attempting to license 3F. Any potential profits from the 3F project will be split between Global BioLife and Chemia pursuant to the terms of the 20- year Royalty Agreement.
| 6 |
Impact Biomedical, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Equivir™/Equivir G
Equivir/Equivir G technology is a novel blend of FDA Generally Recognized as Safe (GRAS) eligible polyphenols (e.g. Myricetin, Hesperetin, Piperine) which have demonstrated antiviral effects with additional potential application as health supplements or medication. Polyphenols are substances found in many nuts, vegetables, and berries. Myricetin is a member of the flavonoid class of polyphenolic compounds with antioxidant properties. Hesperitin is a flavanone and Piperine is an alkaloid, commonly found in black pepper. Equivir/Equivir G is licensed to ProPhase Laboratories for development and commercialization worldwide
Emerging Technology
IBO continually evaluates additional technologies that are in various phases of development which can be advanced to patent filings and allowances. These include, and are not limited to biopharmaceuticals, indoor air quality products, preservatives, bioplastics, personalized medicine (e.g., genomics, diagnostics), nanotechnology, cannabis products and technology, pain management, and others. These activities include discussions with inventors, scientists, universities, research foundations, and other parties, which, subject to completion of diligence, and approval of the respective management, could potentially expand the offerings of IBO.
Reporting Operating Segment
The Company reports its segment information to reflect the manner in which the Company’s Chief Operating Decision Maker (“CODM”) reviews and assesses performance. The Company’s Chief Executive Officer and Chief Operating Officer have joint responsibilities as the CODM and review and assess the performance of the Company as a whole. The primary financial measures used by the CODM to evaluate performance and allocate resources are net income (loss) and operating income (loss).
As of the date of this report, we have not generated significant revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including possible delays in our research, testing and marketing efforts or wider economic downturns.
Note 2. Summary of Significant Accounting and Reporting Policies
Basis of Presentation and Principles of Consolidation
The accompanying condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments, unless otherwise indicated) necessary to present fairly our consolidated financial position as of June 30, 2026 and December 31, 2025, and the results of our consolidated operations for the interim periods presented. We follow the same accounting policies when preparing quarterly financial data as we use for preparing annual data. These statements should be read in conjunction with the consolidated financial statements and the notes included in our latest annual report on Form 10-K, for the fiscal year ended December 31, 2025 (“Form 10-K”), and our other reports on file with the Securities and Exchange Commission (the “SEC”).
The
Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“U.S. GAAP”). The condensed consolidated financial statements include all accounts of the
Company and its majority owned and controlled subsidiaries.
| 7 |
Impact Biomedical, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
The consolidated financial statements include all accounts of the entities as of the reporting period ending dates and for the reporting periods as follows:
|
Name of subsidiary |
State or other jurisdiction of |
Date of incorporation or formation |
Attributable interest as of June 30, 2026 |
Attributable interest as of December 31, 2025 |
||||||||
| Global BioMedical, Inc. | % | % | ||||||||||
| Global BioLife, Inc. | % | % | ||||||||||
| BioLife Sugar, Inc | % | % | ||||||||||
| Happy Sugar Inc | % | % | ||||||||||
| Sweet Sense Inc. | % | % | ||||||||||
| Global Sugar Solutions Inc. | % | % | ||||||||||
| Impact Biolife Science, Inc. | % | % | ||||||||||
| DSS Biomedical International, Inc. | % | % | ||||||||||
| DSS Biolife International, Inc. | % | % | ||||||||||
As
of June 30, 2026, and December 31, 2025, the aggregate noncontrolling interest was equity of $
Use of estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates of the balance sheets and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates.
Reclassifications
Costs in the amount of $
Revision of prior period financial statements
The
Company identified and corrected immaterial classification errors in our previously reported Consolidated balance sheet as of December
31, 2025 and 2024. The correction of this error resulted in a reclassified $
Basic loss per share is computed by dividing the net loss attributable to the common stockholders by weighted average number of shares of common stock outstanding during the period. Fully diluted earnings per share is computed like basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no dilutive financial instruments issued or outstanding for the six months ended June 30, 2026, and the year ended December 31, 2025
Fair Value of Financial Instruments
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 at the measurement date. The Fair Value Measurement Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
● Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets,
● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
The carrying amounts reported in the balance sheet of cash, other receivables, accounts payable and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments. The fair value of notes receivable approximates their carrying value as the stated or discounted rates of the notes do reflect recent market conditions.
| 8 |
Impact Biomedical, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Cash and cash equivalents
The Company considers all highly liquid investments with a maturity of three months or less at the date of acquisition to be cash equivalents. There were no cash equivalents as of June 30, 2026 and December 31, 2025.
Accounts receivable
The Company extends credit to its customers in the normal course of business. The Company performs ongoing credit evaluations and generally does not require collateral. Payment terms are generally 30 days. The Company carries its trade accounts receivable at invoice amounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for credit losses based upon management’s estimates that include a review of the history of past write-offs and collections and an analysis of current credit conditions. In estimating expected losses in the accounts receivable portfolio, customer-specific financial data and macro-economic assumptions are utilized to project losses over a reasonable and supportable forecast period. Assumptions and judgment are applied to measure amounts and timing of expected future cash flows, collateral values and other factors used to determine the customers’ abilities to pay.
Accounts receivable at June 30,
2026, and December 31, 2025, was $,
and $
Notes receivable, unearned interest, and related recognition
The Company records all future payments of principal and interest on notes as notes receivable, which are then offset by the amount of any related unearned interest income. For financial statement purposes, the Company reports the net investment in the notes receivable on the consolidated balance sheet as current or long-term based on the maturity date of the underlying notes. Such net investment is comprised of the amount advanced on the loans, adjusting for net deferred loan fees or costs incurred at origination, amounts allocated to warrants received upon origination, and any payments received in advance, if applicable. The unearned interest is recognized over the term of the notes and the income portion of each note payment is calculated so as to generate a constant rate of return on the net balance outstanding. If applicable, any net deferred loan fees or costs, together with discounts recognized in connection with warrants acquired at origination, are accreted as an adjustment to yield over the term of the loan. (Note 4)
Inventory
Inventories consist of filtration systems, which and are stated at the lower of cost or net realizable value on the first-in, first-out (“FIFO”) method. At the closing of each reporting period, the Company evaluates its inventory in order to adjust the inventory balance for obsolete and slow-moving items. No allowance for obsolescence was deemed necessary as of June 30, 2026, and December 31, 2025.
Intangible Assets
The estimated fair values of acquired intangibles are generally determined based upon future economic benefits such as earnings and cash flows. Acquired identifiable intangible assets are recorded at fair value and are amortized over their estimated useful lives. Acquired intangible assets with an indefinite life are not amortized but are reviewed for impairment at least annually as of December 31st, or more frequently whenever events or changes in circumstances indicate that the carrying amounts of those assets are below their estimated fair values. Impairment is tested under ASC 350. No impairment was recognized for the six months ended June 30, 2026, and 2025 (Note 6).
Recoverability of Long-Lived Assets
We evaluate long-lived assets such as property, equipment and definite lived intangible assets, such as patents, for impairment whenever events or circumstances indicate that the carrying value of the assets recognized in our financial statements may not be recoverable. Factors that we consider include whether there has been a significant decrease in the market value of an asset, a significant change in the way an asset is being utilized, or a significant change, delay or departure in our strategy for that asset, or a significant change in the macroeconomic environment. Our assessment of the recoverability of long-lived assets involves significant judgment and estimation. These assessments reflect our assumptions, which, we believe, are consistent with the assumptions hypothetical marketplace participants use. Factors that we must estimate when performing recoverability and impairment tests include, among others, forecasted revenue, margin costs and the economic life of the asset. If impairment is indicated, we determine if the total estimated future cash flows on an undiscounted basis are less than the carrying amounts of the asset or assets. If so, an impairment loss is measured and recognized.
Our impairment loss calculations require that we apply judgment in identifying asset groups, estimating future cash flows, determining asset fair values, and estimating asset’s useful lives. The Company reviews identifiable amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Determination of recoverability is based on the lowest level of identifiable estimated undiscounted cash flows resulting from use of the asset and its eventual disposition. Measurement of any impairment loss is based on the excess of the carrying value of the asset over its fair value. Based on the uncertainty of forecasts inherent with a new product, events such as the failure to generate forecasted revenue from new products could result in a non-cash impairment in future periods.
Due to related party
The
Company has amounts due to DSS, a related party, resulting from funding advances and shared expenses in the ordinary course of business.
As of June 30, 2026, and December 31, 2025, amounts due to the related party totaled $
| 9 |
Impact Biomedical, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Revenue Recognition
The Company has adopted ASC Topic 606, Revenue from Contracts with Customers (“Topic 606”). The Company enters into licensing and development agreements with collaborators for the development of its technologies. The terms of these agreements contain multiple performance obligations which may include (i) licenses, or options to obtain licenses, to the Company’s technology, (ii) rights to future technological improvements, and/or (iii) research activities to be performed on behalf of the collaborative partner. Payments to the Company under these agreements may include upfront fees, option fees, exercise fees, payments based upon the achievement of certain milestones, and royalties on product sales. Revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under the agreements, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when or as the Company satisfies each performance obligation.
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 at a specific point in time.
The Company recognizes its revenue on the sale of its Celios technology when control of the Company’s Celios technology products is transferred to the customer in an amount that reflects the consideration the Company expects to receive in exchange for the product, generally when the product is shipped.
The Company’s Celios sales are retail product sales. Customer contracts generally consist of purchase orders, sales confirmations, or similar arrangements. The Company’s primary performance obligation is the delivery of the product to the customer. Revenue is recognized at a point in time, generally upon shipment or delivery, depending on the applicable terms of sale, when control, title, and risk of loss have transferred to the customer and the Company has a right to payment. The transaction price is generally fixed at the stated retail sales price, net of any applicable discounts, returns, credits, or allowances. The Company estimates variable consideration, including returns and allowances, if applicable, and includes such amounts in revenue only to the extent it is probable that a significant reversal of revenue will not occur. Sales, use, and other taxes billed to and collected from customers are excluded from revenue. Shipping and handling activities, if any, are treated as fulfillment activities. Payment terms are generally short-term, and the Company does not have significant financing components, contract assets, or contract liabilities related to its retail sales.
| 10 |
Impact Biomedical, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Compensation cost for stock awards are measured at fair value and the Company recognizes compensation expense over the service period for which awards are expected to vest. The Company uses the Black-Scholes option pricing model for determining the estimated fair value for stock-based awards. The Black-Scholes model requires the use of subjective assumptions which determine the fair value of stock-based awards, including the option’s expected term and the price volatility of the underlying stock. For equity instruments issued to consultants and vendors in exchange for goods and services the Company determines the measurement date for the fair value of the equity instruments issued at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement. The Company record stock-based compensation for the three months ended June 30, 2026 and June 30, 2025 approximated $ and $, respectively. The Company record stock-based compensation expense of approximately $ and $ for the six months ended June 30, 2026 and 2025, respectively. These cost included in Sales, general and administrative compensation (inclusive of stock-based compensation) on the accompanying Condensed Consolidated Statement of Operations.
Research and Development
Research
and development costs are expensed as incurred. The Company recorded research and development cost for the three months ended June 30, 2026 and June 30, 2025 approximated
$
Provision for Credit Losses
The Company adopted amended accounting guidance ASC Topic 326 which requires an allowance for credit losses to be deducted from the amortized cost basis of financial assets to present the net carrying value at the amount that is expected to be collected over the contractual term of the asset considering relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. In estimating expected losses in the loan and lease portfolio, borrower-specific financial data and macro-economic assumptions are utilized to project losses over a reasonable and supportable forecast period. Assumptions and judgment are applied to measure amounts and timing of expected future cash flows, collateral values and other factors used to determine the borrowers’ abilities to repay obligations. After the forecast period, the Company utilizes longer-term historical loss experience to estimate losses over the remaining contractual life of the loans. As of June 30, 2026 and December 31, 2025 the Company has deemed that no reserve on credit losses were necessary.
Acquisitions
Acquisition of assets are recorded at their relative fair value based on total accumulated costs of the acquisition. Direct acquisition-related costs are expensed as incurred. This includes all costs related to finding, analyzing and negotiating a transaction. The allocation of the purchase price is an area that requires judgment and significant estimates. Tangible and intangible assets include land, building and improvements, furniture, fixtures and equipment, acquired above market and below market leases, in-place lease value (if applicable). Acquisition-date fair values of assets and assumed liabilities are determined based on replacement costs, appraised values, and estimated fair values using methods like those used by independent appraisers and that use appropriate discount and/or capitalization rates and available market information.
On
February 25, 2025, the Company completed the acquisition of certain assets owned by DSS Pure Air, Inc. (DSS PureAir”), a related
party, for $
Continuing Operations and Going Concern
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.
To continue as a going concern the Company is exploring several options to raise capital including but not limited to, capital raises via its listing on the NYSE American under the ticker symbol IBO as well as debt financing. Although there is no certainty that management plans will be able to satisfy the requirements to continue operating as a going concern, 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.
| 11 |
Impact Biomedical, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Recent Accounting Standards
The Financial Accounting Standards Board (FASB) issues various Accounting Standards Updates relating to the treatment and recording of certain accounting transactions. There are several new accounting pronouncements issued by FASB which are not yet effective. Each of these pronouncements, as applicable, has been or will be adopted by the Company. As of June 30, 2026, none of these pronouncements are expected to have a material effect on the financial position, results of operations or cash flows of the Company.
In November 2024, the FASB issued ASU No. 2024-03 (“ASU 2024-03”), Disaggregation of Income Statement Expenses (“DISE”). ASU 2024-03 requires disaggregated disclosure of income statement expenses for public business entities. ASU 2024-03 does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. As revised by ASU No. 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures, the provisions of ASU 2024-03 are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. With the exception of expanding disclosures to include more granular income statement expense categories, we do not expect the adoption of ASU 2024-03 to have a material effect on our consolidated financial statements taken as a whole.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which amends the guidance related to the measurement of credit losses for accounts receivable and contract assets. The amendments are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company has adopted this standard and no material effect on its consolidated financial statements has resulted.
| 12 |
Impact Biomedical, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 3. Inventory
Inventory consisted of the following as of:
|
June 30, 2026 |
December 31, 2025 |
|||||||
| Finished Goods | $ | $ | ||||||
| Less allowance for obsolescence | ||||||||
| $ | $ | |||||||
Note 4. Notes Receivable
On
February 19, 2021, Impact BioMedical, Inc, entered into a promissory note with an individual. The Company loaned the principal sum of
$
Note 5. Financial Instruments
Cash
The following tables show the Company’s cash by significant investment category as of:
| June 30, 2026 | ||||||||||||||||
|
Adjusted Cost |
Unrealized (Gain)/Loss |
Fair Value |
Cash and Cash Equivalents |
|||||||||||||
| Cash | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| December 31, 2025 | ||||||||||||||||
|
Adjusted Cost |
Unrealized (Gain)/Loss |
Fair Value |
Cash and Cash Equivalents |
|||||||||||||
| Cash | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
Note 6. Intangible Assets
The definite-lived intangible assets, to be amortized between 1 and 20 years, balances, and activity for the six months ended June 30, 2026 and year ended December 31, 2025 consisted of the following:
| June 30,
2026 (unaudited) |
December 31, 2025 | |||||||||||||||||||||||||
| Useful Life | Gross Carrying Amount |
Accumulated Amortization |
Net Carrying Amount |
Gross Carrying Amount |
Accumulated Amortization |
Net Carrying Amount |
||||||||||||||||||||
| Developed technology assets |
|
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
| Acquired assets |
|
|||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| 13 |
Impact Biomedical, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Amortization
expense for the six months ended June 30, 2026 and 2025 was approximately $
The following table represents future amortization of developed technologies for the years ending December 31:
| 2026 | $ | |||
| 2027 | $ | |||
| 2028 | $ | |||
| 2029 | $ | |||
| 2030 | $ | |||
| thereafter | $ |
Note 7. Stockholders’ Equity
On
October 31, 2023, DSS BioHealth Securities, Inc., the Company’s largest shareholder converted shares of Common Stock
into shares of
The
Company records stock-based payment expense related to options and warrants based on the grant date fair value in accordance with FASB
ASC 718. Stock-based compensation includes expense charges for all stock-based awards to employees, directors and consultants. Such awards
include option grants, warrant grants, and restricted stock awards. On October 1, 2024, option grants with a purchase price of
$ per share were awarded to certain officers, directors and consultants of the Company. These options have various vesting periods,
and all expire on October 31, 2031. Potential proceeds of these grants is $ and are fair valued using a Black-Scholes model
at approximately $
On
February 25, 2025, the Company completed the acquisition of certain assets owned by DSS Pure Air, Inc. (DSS PureAir”), a related
party, for $
On February 26, 2025, the Company issued shares of the Company’s common stock as payment of legal fees incurred associated with the Company’s initial public offering (“IPO”), registration of shares associated with its equity incentive plan as well as other related services.
On June 23, 2025, the Company issued shares of the Company’s common stock as payment of legal fees incurred associated with the Company’s merger and share exchange agreement with Dr. Ashleys Limited.
On October 16, 2025, the Company converted its Note payable, related party to shares common stock as agreed upon by the Company and DSS (lender).
In January 2026, the Company granted and issued 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 $ for the six months ended June 30, 2026, and is included in Sales, general and administrative compensation (inclusive of stock-based compensation) on the accompanying Condensed Consolidated Statement of Operations
Note 8. Related Party Transactions
General and Administrative Costs
There
are certain general and administrative costs incurred by DSS, a related party, on behalf of the Company which are passed through to the
Company on a monthly basis. These costs consist of primarily payroll costs for certain DSS employees and are allocated based on estimated
time spent on behalf of the Company For the six months ended June 30, 2025, the Company incurred approximately $
| 14 |
Impact Biomedical, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note payable, related party
On
December 31, 2020, and later amended, the Company executed a Revolving Promissory Note (“Note”) with DSS, a related party,
which accrues interest at a rate of
Acquisition of DSS PureAir Assets
On
February 25, 2025, the Company completed the acquisition of certain assets owned by DSS Pure Air, Inc. (DSS PureAir”), a related
party, for $
Due to related party
Impact
BioMedical Inc. from time to time receives funding from DSS to cover its capital needs. DSS, Inc., beneficially owns approximately
Note 9. Commitments and Contingencies
On
August 15, 2018, the Company entered into Royalty Agreement with Chemia Corporation (“Chemia”) pursuant to which Chemia transferred
to the Company all of its right to 3F (Functional Fragrance Formulation). This agreement has a 20-year term and auto renews for a period
of 1 year unless mutually agreed upon by both parties. 3F consists of 3F Mosquito Repellant and 3F Anti-Viral formulations. Based on
the Royalty Agreement, the Company should cover all the costs to prepare and finalize necessary patent application and other intellectual
property related to 3F. Chemia agreed to support the Company in efforts leading to development of 3F intellectual property and it is
licensing. Based on Royalty Agreement any payments received from development, sales, licensing or transfer of 3F technology will be paid
On
March 19, 2022, Impact BioMedical entered into a License Agreement (“Equivir License”) with a third-party (“Licensee”)
where the Licensor is granted the right, amongst other things, to develop, commercialize, and sell the Company’s Equivir technology.
In exchange, the Licensee shall pay the Company a royalty of
Employment
Agreements – Impact BioMedical has an employment agreement with it CEO Frank Heuszel in which Mr. Heuszel’s agreement
contains a mandatory bonus clause of $
Contingent Litigation Payments – The Company retains the services of professional service providers, including law firms that specialize in intellectual property licensing, enforcement and patent law. These service providers are often retained on an hourly, monthly, project, contingent or a blended fee basis. In contingency fee arrangements, a portion of the legal fee is based on predetermined milestones or the Company’s actual collection of funds. The Company accrues contingent fees when it is probable that the milestones will be achieved, and the fees can be reasonably estimated. As of June 30, 2026 and December 31, 2025, the Company had not accrued any contingent legal fees pursuant to these arrangements.
Contingent Payments – The Company is not party to any agreements with funding partners who have rights to portions of intellectual property monetization proceeds that the Company receives.
Note 10. Supplemental Cash Flow Information
The following table summarizes supplemental cash flows of noncash investing and financing activities for the six months ended June 30, 2026 and 2025:
| 2026 | 2025 | |||||||
| Shares issued in lieu of cash as payment for legal services | $ | $ | ||||||
| Shares issued for acquisition of DSS PureAir assets | $ | $ | ||||||
Note 11. Subsequent Events
The Company has evaluated all subsequent events and transactions through August 7, 2026, the date that the consolidated financial statements were available to be issued and noted no subsequent events requiring financial statement recognition or disclosure.
| 15 |
ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
Certain statements contained herein this report constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “1995 Reform Act”). Except for the historical information contained herein, this report contains forward-looking statements (identified by words such as “estimate,” “project”, “anticipate”, “plan”, “expect”, “intend”, “believe”, “hope”, “strategy” and similar expressions), which are based on our current expectations and speak only as of the date made. These forward-looking statements are subject to various risks, uncertainties and factors that could cause actual results to differ materially from the results anticipated in the forward-looking statements.
Overview
Impact Biomedical Inc. (“IBO”. “Impact”, “Impact BioMedical”, “we”, “us”, “our” or the “Company”) discovers, confirms, and patents unique science and technologies which can be developed into new offerings in human healthcare and wellness in collaboration with external partners through licensing, co-development, joint ventures, and other relationships, and currently trades on the NYSE American under ticker symbol IBO.
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.
Our business model includes partnering and potentially direct sales for commercialization and distribution. Potential licensors and development partners include pharmaceutical, consumer packaged goods companies and others, who would commercialize IBO technologies in exchange for milestone, and royalty payments. Currently, our operations are conducted, and our assets are owned through our principal subsidiaries: (i) Global BioLife, Inc. (“Global BioLife”), which was incorporated on April 14, 2017, (ii) Impact BioLife Science, Inc. (“Impact BioLife”), which was incorporated on August 28, 2020, (iii) Global BioMedical, Inc. (“Global BioMedical”), which was incorporated on April 18, 2017, and (iv) Sweet Sense, Inc. (“Sweet Sense”), which was incorporated on April 30, 2018.
Below is a list of our principal subsidiaries:
| ● | Impact BioLife Science, Inc.; | |
| ● | Global Biomedical, Inc.; | |
| ● | Global BioLife, Inc.; and | |
| ● | Sweet Sense, Inc. |
| 16 |
Impact BioLife Science, Inc. We are the sole owner of the outstanding equity of Impact BioLife Science, Inc.
Global Biomedical, Inc. We own 90.9% of Global Biomedical, Inc. outstanding equity.
Global BioLife, Inc. Through our majority owned subsidiary Global Biomedical, Inc., we own 81.8% of the outstanding equity of Global BioLife, Inc.
Sweet Sense, Inc. We are the owner of 95.5% of the outstanding equity of Sweet Sense.
Impact BioMedical has several unique and proprietary technologies that are in continuing development.
Linebacker
Linebacker is a platform of small molecule electrophilically enhanced polyphenol compounds with potential application in oncology (solid tumors), inflammatory disorders, and neurology. Polyphenols are substances found in many nuts, vegetables, and berries. Linebacker compounds are modified Myricetin, which is a common plant-derived flavonoid. Myricetin exhibits a wide range of activities that include strong antioxidant and anti-inflammatory activities (source: NIH).
Linebacker can potentially be developed as monotherapy or co-therapy to down-regulate PIM (proviral integration site for Moloney murine leukemia virus) kinase which plays a key role as an oncogene in various cancers (e.g. colon, lung, prostate, breast). Additional potential applications include inflammatory disorders and neurology.
Linebacker-1 and Linebacker-2 compounds have been licensed to ProPhase Laboratories (NASDAQ: PRPH) for development and commercialization worldwide, from which Impact Biomedical could receive future milestone and royalty payments.
Laetose
Laetose™ technology demonstrates compelling potential in reducing caloric intake and glycemic index in foods, while also inhibiting tumor necrosis factor alpha (TNF-α), a cytokine associated with inflammatory chronic diseases (data on file with IBO).
The patented formulation has potential to inhibit the inflammatory and metabolic response of sugar alone and has potential applications in therapeutic administration to reduce or limit inflammatory or metabolic diseases (e.g., diabetes). Use of Laetose in a daily diet, compared to sugar, could result in 30% lower sugar consumption and lower caloric and glycemic index/load.
Laetose has a unique composition patent allowed in the United States and patents are pending in other countries worldwide.
IBO is actively seeking potential partners for further development and commercialization of Laetose as a consumer-packaged or biopharmaceutical offering worldwide.
Functional Fragrance Formulation (“3F”)
3F is a suite of “functional fragrances” containing specialized botanical ingredients (e.g., terpenes) with potential application as an antimicrobial, or as an additive in insect repellents, detergents, lotions, shampoo, fabrics and other substances to increase effectiveness.
IBO has partnered with the Chemia Corporation (St. Louis, MO) to pursue development of the 3F technology. Chemia is a leading developer and manufacturer of fragrances and flavors.
In addition to Chemia, IBO is actively seeking potential partners for further development and commercialization of 3F worldwide, given the broad application of this technology.
Composition patents have been issued in the U.S. and are pending in other countries.
| 17 |
Equivir
Equivir/Equivir G technology is a novel blend of FDA Generally Recognized as Safe (GRAS) eligible polyphenols (e.g. Myricetin, Hesperetin, Piperine) which have demonstrated antiviral effects with additional potential application as health supplements or medication. Polyphenols are substances found in many nuts, vegetables, and berries. Myricetin is a member of the flavonoid class of polyphenolic compounds with antioxidant properties. Hesperitin is a flavanone and Piperine is an alkaloid, commonly found in black pepper.
Equivir/Equivir G is licensed to ProPhase Laboratories for development and commercialization worldwide. ProPhase Lab’s initial focus is for use as an over-the-counter offering for upper respiratory wellness. Additional applications could be pursued in the future.
Method and composition patents are issued in the U.S. and other countries.
Emerging Technology
Impact BioMedical continually evaluates additional proprietary technologies that are in various phases of development. These include, and are not limited to biopharmaceuticals, indoor air quality products, preservatives, bioplastics, personalized medicine (e.g. genomics, diagnostics), nanotechnology, cannabis products and technology, pain management, and others.
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.
Revenue
| Three months ended June 30, 2026 |
Three months ended June 30, 2025 |
% Change |
Six months ended June 30, 2026 |
Six months ended June 30, 2025 |
% Change |
|||||||||||||||||||
| Biotech retail sales | $ | 3,000 | $ | 7,000 | -57 | % | $ | 10,000 | $ | 7,000 | 43 | % | ||||||||||||
| Total revenue | $ | 3,000 | $ | 7,000 | -57 | % | $ | 10,000 | $ | 7,000 | 43 | % | ||||||||||||
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.
Costs and expenses
|
Three months ended June 30, 2026 |
Three months ended June 30, 2025 |
% Change |
Six months ended June 30, 2026 |
Six months ended June 30, 2025 |
% Change |
|||||||||||||||||||
| Cost of revenue | $ | 1,000 | $ | 1,000 | 0 | % | $ | 1,000 | $ | 1,000 | 0 | % | ||||||||||||
| Sales, general and administrative compensation | 167,000 | 244,000 | -32 | % | 346,000 | 492,000 | -30 | % | ||||||||||||||||
| Stock-based compensation | - | 2,000 | -100 | % | 1,440,000 | 3,000 | 47900 | % | ||||||||||||||||
| Sales and marketing | - | 1,000 | -100 | % | 1,000 | 20,000 | -95 | % | ||||||||||||||||
| Professional Fees | 92,000 | 411,000 | -78 | % | 350,000 | 634,000 | -45 | % | ||||||||||||||||
| Research and development | 76,000 | 75,000 | 1 | % | 123,000 | 178,000 | -31 | % | ||||||||||||||||
| Depreciation and Amortization | 284,000 | 288,000 | -1 | % | 569,000 | 571,000 | 0 | % | ||||||||||||||||
| Rent and utilities | 18,000 | 18,000 | 0 | % | 36,000 | 37,000 | -3 | % | ||||||||||||||||
| Other operating expenses | 67,000 | 120,000 | -44 | % | 134,000 | 236,000 | -43 | % | ||||||||||||||||
| Total costs and expenses | $ | 705,000 | $ | 1,160,000 | -39 | % | $ | 3,000,000 | $ | 2,172,000 | 38 | % | ||||||||||||
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 32% and 30%, respectively for the three and six months ended June 30, 2026 and 2025, due to reductions in pay for a certain employee of the Company as well as a reduction in bonus accruals year over year.
| 18 |
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.
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 June 30, 2026, as compared to the three and six months ended June 30, 2025. The decrease in cost for the three and six months ended June 30, 2025 is due to efforts to reduce cost.
Professional fees decreased 78% and 45% for the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025. These costs consist primarily of consulting and legal services associated with developing and implementing Impact BioMedical’s business plan as well as cost 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 the Company owns, research on new technologies as well as cost to patent newly developed technologies and other related fees for the development of new technologies. Research and development increased 1% and decreased 31% for the three and six months ended June 30, 2026, as compared to the three and six months ended June 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 decreased 1% remained flat for the three and six months ended June 30, 2026 as compared to the 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 costs 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 for the three and six months ended June 30, 2026 as compared to the same periods for June 30, 2025 as there were no rent 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 June 30, 2026, as compared to the three and six months ended June 30, 2025 due primarily to efforts by management of the Company to control such costs.
Other Income (Expense)
|
Three months ended June 30, 2026 |
Three months ended June 30, 2025 |
% Change |
Six ended June 30, 2026 |
Six
ended June 30, 2025 |
% Change |
|||||||||||||||||||
| Interest income | $ | 2,000 | $ | 3,000 | -33 | % | $ | 7,000 | $ | 7,000 | 0 | % | ||||||||||||
| Change in fair value of note payable, related party | - | (12,942,000 | ) | -100 | % | - | (12,942,000 | ) | -100 | % | ||||||||||||||
| Interest expense | - | (260,000 | ) | -100 | % | - | (531,000 | ) | -100 | % | ||||||||||||||
| Total other income | $ | 2,000 | $ | (13,199,000 | ) | 100 | % | $ | 7,000 | $ | (13,466,000 | ) | 100 | % | ||||||||||
Interest income is recognized on the Company’s notes receivable. Interest income was relatively flat for three and six months ended June 30, 2026 as compared to the same periods for June 30, 2025 as the outstanding principal balance 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 increased 33% and 0% for the three and six months ended June 30, 2026 as compared to June 30, 2025, due to the settlement and payoff of the outstanding debt in October 2025.
| 19 |
Net loss
|
Three months ended June 30, 2026 |
Three months ended June 30, 2025 |
% Change |
Six ended June 30, 2026 |
Six ended June 30, 2025 |
% Change |
|||||||||||||||||||
| Net loss | $ | (700,000 | ) | $ | (14,352,000 | ) | -95 | % | $ | (2,983,000 | ) | $ | (15,631,000 | ) | -81 | % | ||||||||
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..
LIQUIDITY AND CAPITAL RESOURCES
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. 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.
Cash Flow from Continuing Operating Activities
Net cash provided by operating activities was $6,000 for the six months ended June 30, 2026 as compared to cash used by operating activities of $1,376,000 for the six months ended June 30, 2025. This fluctuation is driven by less payments of the Company’s accounts payable by approximately $279,000, amounts due to related party of approximately $709,000, as well as decrease in net loss after reconciling items of approximately $419,000
Cash Flow from Investing Activities
Net cash provided by investing activities was $1,000 and $1,000 for the six months ended June 30, 2026 and June 30, 2025, respectively. This activity is due to payments received on notes receivable during 2026 and 2025.
Off-Balance Sheet Arrangements
We do not have any material off-balance sheet arrangements that have, or are reasonably likely to have, an effect on our financial condition, financial statements, revenues, or expenses.
Critical Accounting Policies and Estimates
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 June 30, 2026.
ITEM 4 - CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures for the quarter ended June 30, 2026, pursuant to Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation and on the material weaknesses disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025 which remained as of June 30, 2026, our principal executive officer and principal financial officer concluded that as of, 2026, our disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is being recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that our disclosure controls are not effectively designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is being accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Changes in Internal Control over Financial Reporting
While changes in the Company’s internal control over financial reporting occurred during the quarter ended June 30, 2026, as the Company began implementation of the remediation steps described in our annual report dated December 31, 2025, we believe that there were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
| 20 |
PART II
OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
We are not currently a party to any material legal proceedings. From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors.
ITEM 1A - RISK FACTORS
Smaller reporting companies are not required to provide the information required by this item.
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 - MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5 - OTHER INFORMATION
None.
| 21 |
ITEM 6 - EXHIBITS
| 22 |
| 23 |
| 24 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| IMPACT BIOMEDICAL, INC. | ||
| August 7, 2026 | By: | /s/ Frank D. Heuszel |
| Frank D. Heuszel | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| August 7, 2026 | By: | /s/ Todd D. Macko |
| Todd D. Macko | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) | ||
| 25 |
Exhibit 31.1
CERTIFICATION
I, Frank D. Heuszel, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Impact BioMedical Inc., a Nevada corporation (the “registrant”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 7, 2026 | |
| /s/ Frank D. Heuszel | |
| Frank D. Heuszel | |
|
Chief Executive Officer and Director (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION
I, Todd D. Macko certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Impact BioMedical, Inc., a Nevada corporation (the “registrant”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 7, 2026 | |
| /s/ Todd D. Macko | |
| Todd D. Macko | |
| Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
Exhibit 32.1
Certification Pursuant to 18 U.S.C. §1350, as Adopted
Pursuant to §906 of the Sarbanes-Oxley Act of 2002
Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), each of the undersigned hereby certifies in his capacity as an officer of Impact BioMedical, Inc. (the “Company”), that, to the best of his knowledge:
(1) the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026, to which this Certification is attached as Exhibit 32.1 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| /s/ Frank D. Heuszel | |
| Frank D. Heuszel | |
| Chief Executive Officer and Director | |
| (Principal Executive Officer) | |
| Date: August 7, 2026 |
| /s/ Todd D. Macko | |
| Todd D. Macko | |
| Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | |
| Date: August 7, 2026 |
A certification furnished pursuant to this Item will not be deemed “filed” for purposes of section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the small business issuer specifically incorporates it by reference.