Q1 2026: Impact BioMedical (NYSE: IBO) posts larger loss and flags going concern risk
Impact BioMedical, Inc. reported very limited operating revenue and a larger loss for the quarter ended March 31, 2026. The company generated only $7,000 in biotech retail sales from its Celios air purification products, while total costs and expenses rose to $2,296,000.
Net loss was $2,284,000, compared with $1,278,000 a year earlier, driven mainly by a sharp increase in stock-based compensation to $1,440,000. Cash and cash equivalents were $20,000 at quarter end, and operations were funded partly by $482,000 of new related-party borrowings.
Total assets were $17,086,000, largely made up of $16,709,000 in intangible assets. Accumulated deficit widened to $51,794,000, and management disclosed that recurring losses and negative operating cash flows raise substantial doubt about the company’s ability to continue as a going concern. Material weaknesses in internal control over financial reporting remained unremediated.
Positive
- None.
Negative
- Going concern uncertainty: Management states that recurring losses, negative operating cash flows and low cash raise substantial doubt about Impact BioMedical’s ability to continue as a going concern within one year of the financial statement issuance date.
Insights
IBO shows minimal revenue, heavy stock compensation and going concern risk.
Impact BioMedical posted Q1 2026 revenue of only $7,000 from Celios retail sales against operating expenses of $2,296,000. Net loss reached $2,284,000, with stock-based compensation alone accounting for $1,440,000 of costs.
Cash was just $20,000 at March 31, 2026, while the company relied on $482,000 of new related-party borrowings and carried $1,103,000 due to that related party. Intangible assets of $16,709,000 dominate the $17,086,000 asset base, so tangible liquidity is very limited.
Management explicitly states that recurring losses and negative operating cash flows raise substantial doubt about the ability to continue as a going concern. Material weaknesses in internal control over financial reporting remain. Future disclosures in periodic filings will show whether capital-raising efforts or IP monetization reduce this risk.
Key Figures
Key Terms
going concern financial
noncontrolling interest financial
stock-based compensation financial
intangible assets financial
related party financial
material weaknesses financial
Earnings Snapshot
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.) |
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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
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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.
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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 May 5, 2026 there were
IMPACT BIOMEDICAL, INC.
FORM 10-Q
TABLE OF CONTENTS
| PART I | FINANCIAL INFORMATION | |
| Item 1 | Condensed Consolidated Financial Statements | |
| Condensed Consolidated Balance Sheets as of March 31, 2026 (Unaudited) and December 31, 2025 | 2 | |
| Condensed Consolidated Statements of Operations for the three months ended March 31, 2026 and 2025 (Unaudited) | 3 | |
| Condensed Consolidated Statement of Changes in Stockholders’ (Deficit) Equity for the three months ended March 31, 2026 and 2025 (Unaudited) | 4 | |
| Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025 (Unaudited) | 5 | |
| Notes to Interim Condensed Consolidated Financial Statements | 6 | |
| Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16 |
| Item 4 | Controls and Procedures | 20 |
| PART II | OTHER INFORMATION | 21 |
| Item 1 | Legal Proceedings | 21 |
| Item 1A | Risk Factors | 21 |
| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 21 |
| Item 3 | Defaults upon Senior Securities | 21 |
| Item 4 | Mine Safety Disclosures | 21 |
| Item 5 | Other Information | 21 |
| Item 6 | Exhibits | 22 |
| 1 |
| Table of Contents |
Impact BioMedical, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
| March 31, 2026 (unaudited) | December 31, 2025 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| 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, $ | - | - | ||||||
| Common stock, $ | ||||||||
| 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 condensed consolidated financial statements.
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Impact BioMedical, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(unaudited)
| 2026 | 2025 | |||||||
| For the Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenue: | ||||||||
| Biotech retail sales | $ | $ | - | |||||
| Total revenue | - | |||||||
| Costs and expenses: | ||||||||
| 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 | ||||||||
| 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 condensed consolidated financial statements.
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| Table of Contents |
Impact BioMedical, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ (Deficit) Equity
(unaudited)
| Share | Amount | Share | Amount | Capital | Deficit | Equity | Subsidiary | Total | ||||||||||||||||||||||||||||
| Common Stock | Preferred Stock | Additional Paid-in | Accumulated | Total Impact | Non- controlling Interest in | |||||||||||||||||||||||||||||||
| Share | Amount | Share | Amount | Capital | Deficit | Equity | Subsidiary | Total | ||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||||
| - | ||||||||||||||||||||||||||||||||||||
| Acquisition of DSS PureAir | - | - | - | - | ||||||||||||||||||||||||||||||||
| Issuance of common stock for professional services | - | - | - | - | - | |||||||||||||||||||||||||||||||
| Stock-based payments | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||||
| Balance, December 31, 2025 | $ | - | $ | - | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Balance | $ | - | $ | - | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance, March 31, 2026 | $ | - | $ | - | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Balance | $ | - | $ | - | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
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Impact BioMedical, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31,
(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 | - | |||||||
| Decrease in assets: | ||||||||
| Accounts receivable | - | |||||||
| Prepaid expenses and other current assets | ||||||||
| Increase (decrease) in liabilities: | ||||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses | ||||||||
| Net cash used by operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Borrowings on notes receivable | ( | ) | - | |||||
| Payments received on notes receivable | - | |||||||
| Net cash (used) provided by investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Borrowings from related party | - | |||||||
| Net provided by financing activities | - | |||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
See accompanying notes to the condensed consolidated financial statements.
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Impact Biomedical, Inc. and Subsidiaries
Notes to Condensed 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.
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.
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Impact Biomedical, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
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.
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.
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 March 31, 2026and 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.
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Impact Biomedical, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
The condensed consolidated financial statements include all accounts of the entities as of the reporting period ending dates and for the reporting periods as follows:
Schedule of Condensed Financial Statements
Name of subsidiary | State or other jurisdiction of | Date of incorporation or formation | Attributable interest as of March 31, 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 March 31, 2026, and December 31, 2025, the aggregate noncontrolling interest was equity of $
Use of estimates
The preparation of condensed 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.
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 $
(Loss) Earnings per Share
Basic (loss) earnings per share is computed by dividing the net (loss) earnings 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) earnings 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 three months ended March 31, 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.
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Impact Biomedical, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
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.
At
March 31, 2026, and December 31, 2025, the Company had not established a reserve for credit losses. Accounts receivable at March 31,
2026, and December 31, 2025, was $0, 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 condensed 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 March 31, 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 three months ended March 31, 2026, and 2025 (Note 6).
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Impact Biomedical, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
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 March 31, 2026, and December 31, 2025, amounts due to the related party totaled $
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.
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 March 31, 2026 and December 31, 2025 the Company has deemed that no reserve on credit losses were necessary.
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Impact Biomedical, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Share-Based Payments
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 expense of approximately
$
Research and Development
Research
and development costs are expensed as incurred. Total research and development costs were $
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 $
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Impact Biomedical, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
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.
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 March 31, 2026, none of these pronouncements is 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.
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Impact Biomedical, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 3. Inventory
Inventory consisted of the following as of:
Schedule of Inventory
| March 31, 2026 | December 31, 2025 | |||||||
| Finished Goods | $ | $ | ||||||
| Less allowance for obsolescence | - | - | ||||||
| Inventory, net | $ | $ | ||||||
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, and cash equivalents, by significant investment category as of:
Schedule of Cash, Cash Equivalents, Restricted Cash, and Note Payable, Related Party by Significant Investment
| March 31, 2026 | ||||||||||||||||||||
Adjusted Cost | Unrealized (Gain)/Loss | Fair Value | Cash and Cash Equivalents | Note Payable, Related Party | ||||||||||||||||
| Cash | $ | $ | - | $ | $ | $ | - | |||||||||||||
| Total | $ | $ | - | $ | $ | $ | - | |||||||||||||
| December 31, 2025 | ||||||||||||||||||||
Adjusted Cost | Unrealized (Gain)/Loss | Fair Value | Cash and Equivalents | Note Payable, Related Party | ||||||||||||||||
| Cash | $ | $ | - | $ | $ | $ | - | |||||||||||||
| Total | $ | $ | - | $ | $ | $ | - | |||||||||||||
Note 6. Intangible Assets
The definite-lived intangible assets, to be amortized between 1 and 20 years, balances, and activity for the three months ended March 31, 2026 and year ended December 31, 2025 consisted of the following:
Schedule of Intangible Assets
| March 31, 2026 | 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 | $ | $ | $ | $ | ||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
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Impact Biomedical, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Amortization
expense for the three months ended March 31, 2026 and 2025 was approximately $
The following table represents future amortization of developed technologies for the years ending December 31:
Schedule of Future Amortization of Developed Technologies
| 2027 | $ | |||
| 2028 | $ | |||
| 2029 | $ | |||
| 2030 | $ | |||
| 2031 | $ | |||
| thereafter | $ |
Note 7. Stockholders’ Equity
On
October 31, 2023, DSS BioHealth Securities, Inc., the Company’s largest shareholder converted
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,
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
On
September 23, 2025, the Company issued
On
October 16, 2025, the Company converted its Note payable, related party (Note 8) to
In
January 2026, the Company granted and issued
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 three months ended March 31, 2026, the Company incurred approximately $
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Impact Biomedical, Inc. and Subsidiaries
Notes to Condensed 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 March 31, 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 three months ended March 31, 2026 and 2025:
Schedule of Supplemental Cash Flows of Noncash Investing and Financing Activities
| 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 May 12, 2026, the date that the condensed consolidated financial statements were available to be issued and noted no subsequent events requiring financial statement recognition or disclosure.
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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.
In addition to our existing efforts, we continually search and evaluate other potential new offerings to add to our portfolio.
Below is a list of our principal subsidiaries:
Impact BioLife Science, Inc. We are the sole owner of the issued and outstanding common stock of Impact BioLife Science, Inc.
Global Biomedical, Inc. We own 90.9% of Global Biomedical, Inc. issued and outstanding common stock.
Global BioLife, Inc. Through our majority owned subsidiary Global Biomedical, Inc., we own 81.8% of the issued and outstanding common stock of Global BioLife, Inc.
Sweet Sense, Inc. We own approximately 95.5% of the issued and outstanding common stock of Sweet Sense.
Impact BioMedical has several unique and proprietary technologies that are in continuing development.
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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.
Composition and method patents are issued to the Company for Linebacker in the U.S. and other countries.
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 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.
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.
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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.
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 March 31, 2026 | Three months ended March 31, 2025 | % Change | ||||||||||
| Biotech retail sales | $ | 7,000 | $ | - | N/A | |||||||
| Total revenue | $ | 7,000 | $ | - | N/A | |||||||
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 March 31, 2026 | Three months ended March 31, 2025 | % Change | ||||||||||
| Sales, general and administrative compensation | $ | 180,000 | $ | 246,000 | (27 | )% | ||||||
| Stock-based compensation | 1,440,000 | 2,000 | 71900 | % | ||||||||
| Sales and marketing | 1,000 | 19,000 | (95 | )% | ||||||||
| Professional Fees | 258,000 | 223,000 | 16 | % | ||||||||
| Research and development | 46,000 | 103,000 | (55 | )% | ||||||||
| Depreciation and Amortization | 285,000 | 283,000 | 1 | % | ||||||||
| Rent and utilities | 19,000 | 19,000 | 0 | % | ||||||||
| Other operating expenses | 67,000 | 115,000 | (42 | )% | ||||||||
| Total costs and expenses | $ | 2,296,000 | $ | 1,010,000 | 127 | % | ||||||
Selling, general and administrative compensation costs decreased 27% for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025 due to reductions in pay for a certain employee of the Company as well as a reduction in bonus accruals year over year.
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Stock-based compensation includes expense charges for all stock-based awards to employees, directors, and consultants. Such awards can include option grants, warrant grants, and restricted and unrestricted stock awards
Sales and marketing costs, which includes internet and trade publication advertising, press releases, travel and entertainment costs. These decreased 95% for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The decrease in costs for the three months ended March 31, 2026 is due to Company efforts to reduce travel, marketing and entertainment costs.
Professional fees increased 16% for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. These costs consist primarily of consulting and legal services associated with developing and implementing Impact BioMedical’s business plan. These costs increased in 2026 as a result of due diligence in connection with potential mergers and/or acquisitions.
Research and development 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 costs to patent newly developed technologies and other related fees for the development of new technologies. Research and development decreased 55% for the three months ended March 31, 2026, as compared to the three months ended March 31, 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 increased 1% for the three months ended March 31, 2026 as compared to March 31, 2025 and represents the amortization of the associated with the developed technology and patents as well as the amortization of the Celios patents acquired during the first quarter of 2025.
Rent and utilities represents cost associated with office space located at 1400 Broadfield Blvd, Suite 100 Houston TX which the Company began subletting from DSS during the first quarter of 2024. These costs remained flat year over year as there were no scheduled rent increases scheduled.
Other operating expenses consist primarily of office supplies, IT support, travel, third party warehousing cost, and insurance costs. These costs decreased 42% for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025 due primarily to efforts by management of the Company to control such costs.
Other Income (Expense)
Three months ended March 31, 2026 | Three months ended March 31,2025 | % Change | ||||||||||
| Interest income | $ | 5,000 | $ | 3,000 | 67 | % | ||||||
| Interest expense | - | (271,000 | ) | (100 | )% | |||||||
| Total other income | $ | 5,000 | $ | (268,000 | ) | 102 | % | |||||
Interest income is recognized on the Company’s notes receivable. Although payments are being received in accordance with the note receivable terms, interest income increased for three months ended March 31, 2026 as compared to March 31, 2025 as the outstanding principal balance increased slightly.
Interest expense is recognized on the Company’s debt to DSS. Interest expense decreased 100% for the three ended March 31, 2026 as compared to March 31, 2025, due to the settlement and payoff of the outstanding debt in October 2025.
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Net loss
Three months ended March 31, 2026 | Three months ended March 31, 2025 | % Change | ||||||||||
| Net loss | $ | (2,284,000 | ) | $ | (1,278,000 | ) | 79 | % | ||||
For the three months ended March 31, 2026 and 2025, the Company incurred a net loss of $2,284,000 and $1,278,000 respectively. The increase in net loss is attributable to the stock-based compensation awarded to certain officers, directors and other employees of the Company during the first quarter of 2026 with an approximate value of $1,440,000.
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 Operating Activities
Net cash used by operating activities was $464,000 for the three months ended March 31, 2026 as compared to cash used by operating activities of $682,000 for the three months ended March 31, 2025. This fluctuation is driven by less payments of accounts payable by approximately $125,000 as well as an improvement of adjustments to reconcile loss from operations to net cash used by operating activities of approximately $134,000.
Cash Flow from Investing Activities
Net cash used by investing activities was $1,000 for the three months ended March 31, 2026, as compared to net cash provided by investing activities was $1,000 for the three months ended March 31, 2025, and represents activity on the Company’s notes receivable.
Cash Flow from Financing Activities
Net cash provided by financing activities was $482,000 for the three months ended March 31, 2026 and represents borrowings from a DSS, a related party. During the three months ended March 31, 2025 net cash provided by financing activities was $0 as no such activities took place.
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 March 31, 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 March 31, 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 March 31, 2026, our principal executive officer and principal financial officer concluded that as of, 2025, 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 March 31, 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 March 31, 2026, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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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.
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ITEM 6 - EXHIBITS
| Exhibit Number | Exhibit Description | |
| 1.1 | Form of Underwriting Agreement between the Company and Aegis Capital Corp. incorporated by reference to Exhibit 1.1 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 3.1 | Amended and Restated Articles of Incorporation of Impact BioMedical Inc. dated July 29, 2020 incorporated by reference to Exhibit 3.1 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 3.2 | Certificate of Amendment to the Amended and Restated Articles of Incorporation of Impact BioMedical Inc. incorporated by reference to Exhibit 3.2 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 3.3 | Certificate of Amendment to the Amended and Restated Articles of Incorporation of Impact BioMedical Inc. incorporated by reference to Exhibit 3.3 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 3.4 | Certificate of Amendment to the Amended and Restated Articles of Incorporation of Impact BioMedical Inc. incorporated by reference to Exhibit 3.4 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 3.5 | Bylaws of the Company incorporated by reference to Exhibit 3.5 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 3.6 | Certificate of Designation of Series A Convertible Preferred Stock incorporated by reference to Exhibit 3.6 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 4.1 | Form of Underwriter Warrant incorporated by reference to Exhibit 4.1 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 10.1 | Share Exchange Agreement dated as of April 27, 2020, among Document Security Systems, Inc., DSS BioHealth Security, Inc., Singapore Development Limited and Global BioMedical Pte Ltd. incorporated by reference to Exhibit 10.1 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 10.2 | Subscription Agreement dated December 19, 2020, between the Company and BioMed Technologies Asia Pacific Holdings Limited incorporated by reference to Exhibit 10.2 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 10.3 | Promissory Note with Dustin Michael Crum dated February 21, 2021 incorporated by reference to Exhibit 10.3 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 10.4 | Stock Purchase Agreement dated March 15, 2021 between the Company and Vivacitas Oncology Inc. incorporated by reference to Exhibit 10.4 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 10.5 | Convertible Promissory Note dated May 14, 2021 incorporated by reference to Exhibit 10.5 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. |
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| 10.6 | Revolving Promissory Note dated December 31, 2020 incorporated by reference to Exhibit 10.6 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 10.7 | Royalty Agreement by and between Global BioLife Inc. and Chemia Corporation, dated August 15, 2018 incorporated by reference to Exhibit 10.7 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 10.8 | Addendum to Royalty Agreement by and between Global BioLife Inc. and Chemia Corporation, dated November 27, 2018 incorporated by reference to Exhibit 10.8 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062 ) filed with the SEC on November 21, 2023. | |
| 10.9 | Distribution Agreement by and between BioMed Technologies Asia Pacific Holdings Limited and Impact BioMedical Inc., dated December 9, 2020 incorporated by reference to Exhibit 10.9 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 10.10 | Global BioLife, Inc. Stockholders’ Agreement among Global BioLife, Inc., Global BioMedical, Inc., Holista Colltech Limited, and GRDG Sciences, LLC, dated April 26, 2017 incorporated by reference to Exhibit 10.10 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 10.11 | Amendment No. 1 to Global BioLife, Inc. Stockholders’ Agreement among Global BioLife, Inc., Global BioMedical, Inc., Holista Colltech Limited, and GRDG Sciences, LLC, dated May 22, 2018 incorporated by reference to Exhibit 10.11 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 10.12 | Amendment No. 2 to Global BioLife, Inc. Stockholders’ Agreement among Global BioLife, Inc., Global BioMedical, Inc., Holista Colltech Limited, and GRDG Sciences, LLC, dated August 2020 incorporated by reference to Exhibit 10.12 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 10.13 | Impact BioLife Science, Inc. Stockholders Agreement among Impact BioLife Science, Inc., Impact BioMedical Inc. and GRDG Sciences, LLC, dated December 11, 2020 incorporated by reference to Exhibit 10.13 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 10.14 | Licensing Proceeds Distribution Agreement with GRDG Sciences, LLC dated May 16, 2022 incorporated by reference to Exhibit 10.14 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 10.15 | Amendment No. 1 to Revolving Promissory Note dated December 31, 2021 incorporated by reference to Exhibit 10.15 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 10.16 | Amendment No. 2 to Revolving Promissory Note dated March 31, 2022 incorporated by reference to Exhibit 10.16 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 10.17 | License Agreement with ProPhase Labs, Inc. dated March 17, 2022 incorporated by reference to Exhibit 10.17 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 10.18 | License Agreement with ProPhase Labs, Inc. dated July 18, 2022 incorporated by reference to Exhibit 10.18 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 10.19 | Licensing Proceeds Distribution Agreement with GRDG Sciences, LLC dated February 15, 2022 incorporated by reference to Exhibit 10.19 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 10.20 | Share Exchange Agreement between Impact BioMedical Inc. and DSS BioHealth Security, Inc. incorporated by reference to Exhibit 10.20 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 10.21 | Amendment to Promissory Note effective January 18, 2024 between Impact BioMedical Inc. and DSS, Inc. incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission File No. 333-253037) filed with the SEC on January 22, 2024. |
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| 14.1 | Impact BioMedical Employee Handbook incorporated by reference to Exhibit 14.1 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 16.1 | Letter from Turner Stone & Company LLP incorporated by reference to Exhibit 16.1 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 21.1 | List of subsidiaries of Impact BioMedical Inc. | |
| 23.2 | Consent of Grassi & Co., CPAs, P.C. incorporated by reference to Exhibit 23.2 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-275062) filed with the SEC on November 21, 2023. | |
| 31.1 | Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended. | |
| 31.2 | Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended. | |
| 32.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rules 13a-14(b) or 15d-14(b) of the Securities and Exchange Act, as amended, and 18 U.S.C. Section 1350. | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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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. | ||
| May 12, 2026 | By: | /s/ Frank D. Heuszel |
| Frank D. Heuszel | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| May 12, 2026 | By: | /s/ Todd D. Macko |
| Todd D. Macko | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) |
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