IMPACT BIOMEDICAL INC

Previous wording

Global BioLife has established a collaboration with U.S.-based Chemia Corporation (“Chemia”) to develop specialized fragrances to counter mosquito-borne diseases such as Zika and Dengue, among other medical applications. The 3F mosquito fragrance product is made from specialized oils sourced from botanicals that mosquitos avoid. 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 (Note 10).

Current wording

Global BioLife has entered into a royalty agreement with U.S.-based Chemia Corporation (“Chemia”), a leading developer and manufacturer of fragrances, to manufacture the 3F technology. This arrangement, under the terms of the agreement, allows Chemia to create fragrances based on Global BioLife’s patents. The 3F product is made from specialized oils sourced from botanicals that insects avoid. Global BioLife aims to commercialize this product, with any potential profits from the 3F project being split between Global BioLife and Chemia pursuant to the terms of the 20-year Royalty Agreement. (Note 10)

Previous wording

Selling, general and administrative compensation costs increased 270% for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023 due to increased cost incurred associated with the Company’s registration with the SEC and the NYSE American.

Current wording

Selling, general and administrative compensation costs increased 254% for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023 and increased 260% for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023 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.

Previous wording

Sales and marketing costs, which includes internet and trade publication advertising, press releases, travel and entertainment costs. These costs decreased 53% for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023 due primarily to costs incurred for advertising during the first quarter of 2023.

Current wording

Sales and marketing costs, which includes internet and trade publication advertising, press releases, travel and entertainment costs. These increased 80% for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023 and decreased 4% for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023. The increase in cost for the three months ended June 30, 2024 are associated with cost to attend trade shows while the decrease in cost for the six months ended June 30, 2024 is due primarily to costs incurred for advertising during the first quarter of 2023.

Previous wording

Professional fees decreased 1% for the three months ended March 31, 2024 as compared to March 31, 2023. These cost consist primarily of consulting and legal services associated with developing and implementing Impact BioMedical’s business plan, cost to patent newly developed technologies and other related fees for the development of new technologies.

Current wording

Professional fees decreased 59% for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023 and decreased 35% for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023. These cost consist primarily of consulting and legal services associated with developing and implementing Impact BioMedical’s business plan, cost to patent newly developed technologies and other related fees for the development of new technologies. These costs decreased in 2024 in anticipation of the Company’s IPO.

Previous wording

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 decreased 72% for the three months ended March 31, 2024 as compared to March 31, 2023, due primarily to the cessation of the Company’s research and development contract with GRDG at the end of 2023.

Current wording

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 decreased 100% for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023 and decreased 89% for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, due primarily to the cessation of the Company’s research and development contract with GRDG at the end of 2023.

Previous wording

Depreciation and amortization expense is flat for the three months ended March 31, 2024 as compared to March 31, 2023 and represents the amortization of the associated with the developed technology and patents acquired as part of the acquisition of Impact BioMedical by DSS.

Current wording

Depreciation and amortization expense is flat for the three and six months ended June 30, 2024 as compared to June 30, 2023 and represents the amortization of the associated with the developed technology and patents acquired as part of the acquisition of Impact BioMedical by DSS.

Previous wording

Other operating expenses consist primarily of office supplies, IT support, sales and marketing costs, travel and insurance costs. These costs were flat for three months ended March 31, 2024 as compared to March 31, 2023.

Current wording

Other operating expenses consist primarily of office supplies, IT support, sales and marketing costs, travel and insurance costs. These costs increased 200% for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023 and increased 25% for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023.

Previous wording

Interest income is recognized on the Company’s notes receivable. Interest income was flat for three months ended March 31, 2024 as compared to March 31, 2023 as the outstanding principal balance remained flat.

Current wording

Interest income is recognized on the Company’s notes receivable. Interest income was flat for three and six months ended June 30, 2024 as compared to June 30, 2023 as the outstanding principal balance remained flat.

Previous wording

Interest expense is recognized on the Company’s debt to DSS. Interest expense increased 128% for three months ended March 31, 2024 as compared to March 31, 2023 due to the increased outstanding balance of the debt due.

Current wording

Interest expense is recognized on the Company’s debt to DSS. Interest expense increased 125% and 126% for three and six months ended June 30, 2024 as compared to June 30, 2023, respectively, due to the increased outstanding balance of the debt due.

Previous wording

For the three months ended March 31, 2024 and 2023, the Company recorded net losses of $998,000 and $849,000, respectively. The increase in net loss is attributable to the increase in cost associated with the Company’s efforts towards it initial public offering.

Current wording

For the three and six months ended June 30, 2024 and 2023, the Company recorded decreases in net losses of 21% and 5%, respectively. The decrease in net loss is attributable to the Company’s 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.

Previous wording

The Company has historically met its liquidity and capital requirements primarily through debt financing. As of March 31, 2024, the Company had cash of approximately $2,000. As of March 31, 2024, the Company believes that it has sufficient availability to cash via its revolving promissory note with DSS to meet its cash requirements for at least the next 12 months from the filing date of this Quarterly Report.

Current wording

The Company has historically met its liquidity and capital requirements primarily through debt financing. As of June 30, 2024, the Company had cash of approximately $2,000. To continue as a going concern, the Company has entered into an updated revolving promissory note which extended the maturity through September 30, 2030, and DSS, Inc. (“DSS”), the majority shareholder of the Company, intends to continue to fund the operations of the Company through a year from the date these financial statements were available to be issued. The Company’s management intends to take 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 has increased its efforts to raise additional capital through an initial public offering. The Company has engaged an underwriter and has been approved by the NYSE American for listing on its exchange. However, the Company cannot be certain that such capital (from its stockholders or third parties) will be available to the Company or whether such capital will be available on terms that are acceptable to the Company.

Previous wording

Net cash used for continuing operating activities was $712,000 for the three months ended March 31, 2024 as compared to cash used for operating activities of $1,014,000 for the three months ended March 31, 2023. This flucuation is driven by less payments of the Company’s accounts payable by approximately $544,000.

Current wording

Net cash used by operating activities was $1,378,000 for the six months ended June 30, 2024 as compared to cash used by operating activities of $1,747,000 for the six months ended June 30, 2023. This fluctuation is driven by less payments of the Company’s accounts payable by approximately $392,000, as well as decrease in net loss after reconciling items of approximately $88,000

Previous wording

Net cash used for investing activities was $0 for the three months ended March 31, 2024 as compared to cash used for investing activities of $4,000 for the three months ended March 31, 2023. This fluctuation is driven by the purchase of capital assets approximating $5,000 during the three months ended March 31, 2023 without similar activities during 2024.

Current wording

Net cash provided by investing activities was $1,000 for the six months ended June 30, 2024 as compared to cash used by investing activities of $15,000 for the six months ended June 30, 2023. This fluctuation is driven by the purchase of capital assets approximating $17,000 during the six months ended June 30, 2023 without similar activities during 2024.

Previous wording

Net cash provided by financing activities was $713,000 for the three months ended March 31, 2024 and represents borrowings from DSS. During the three months ended March 31, 2023, net cash provided by financing activities was driven by borrowings from DSS of $1,017,000.

Current wording

Net cash provided by financing activities was $1,378,000 for the six months ended June 30, 2024 and represents borrowings from DSS. During the six months ended June 30, 2023, net cash provided by financing activities was driven by borrowings from DSS of $1,763,000.