IMPACT BIOMEDICAL INC

Previous 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.

Current wording

Selling, general and administrative compensation costs increased 31% for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023 and increased 133% for the nine months ended September 30, 2024, as compared to the nine months ended September 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 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.

Current wording

Sales and marketing costs, which includes internet and trade publication advertising, press releases, travel and entertainment costs. These increased 2,612% for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023 and decreased 1,007% for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023. The increase in cost for the three and nine months ended September 30, 2024 are associated with cost to attend trade shows and marketing efforts pre and post IPO.

Previous 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.

Current wording

Professional fees decreased 62% for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023 and decreased 58% for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023. These cost consist primarily of consulting and legal services associated with developing and implementing Impact BioMedical’s business plan, 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 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.

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, 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 decreased 100% for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023 and decreased 93% for the nine months ended September 30, 2024, as compared to the nine months ended September 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 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.

Current wording

Depreciation and amortization expense is flat for the three and nine months ended September 30, 2024 as compared to September 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 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.

Current wording

Other operating expenses consist primarily of office supplies, IT support, sales and marketing costs, travel and insurance costs. These costs increased 650% for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023 and increased 222% for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.

Previous 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.

Current wording

Interest income is recognized on the Company’s notes receivable. Interest income was flat for three and nine months ended September 30, 2024 as compared to September 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 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.

Current wording

Interest expense is recognized on the Company’s debt to DSS. Interest expense increased 199% and 149% for three and nine months ended September 30, 2024 as compared to September 30, 2023, respectively, due to the increased outstanding balance of debt due.

Previous 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.

Current wording

For the three and nine months ended September 30, 2024 and 2023, the Company recorded increases in net income (loss) of 478% and 182%, respectively. The increase in net income (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 as well as the change in fair value of embedded derivatives associated with the amended Note payable, related party.

Previous 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.

Current wording

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 IBIO. 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.

Previous 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

Current wording

Net cash used by operating activities was $2,663,000 for the nine months ended September 30, 2024 as compared to cash used by operating activities of $2,418,000 for the nine months ended September 30, 2023. This fluctuation is driven by less payments of the Company’s accounts payable by approximately $232,000, as well as decrease in net loss after reconciling items of approximately $161,000

Previous 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.

Current wording

Net cash provided by investing activities was $2,000 for the nine months ended September 30, 2024 as compared to cash used by investing activities of $16,000 for the nine months ended September 30, 2023. This fluctuation is driven by the purchase of capital assets approximating $18,000 during the nine months ended September 30, 2023 without similar activities during 2024.

Previous 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.

Current wording

Net cash provided by financing activities was $5,328,000 for the nine months ended September 30, 2024 and represents $1,602,000 in borrowings from DSS as well as $3,726,000 in issuance of common stock, net of issuance costs. During the nine months ended September 30, 2023, net cash provided by financing activities was driven by borrowings from DSS of $2,633,000.

Previous wording

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, 2023, describe the significant accounting policies and methods used in the preparation of the financial statements. There have been no material changes to such critical accounting policies as of the Quarterly Report on Form 10-Q for the quarter ended June 30, 2024.

Current wording

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, 2023, describe the significant accounting policies and methods used in the preparation of the financial statements. Accounting for derivatives has been added to Footnote 2 of the accompanying 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 September 30, 2024.