What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-03-28 compared with 2024-02-20 · 643 added, 566 removed, 267 unchanged (82% of the section changed)

3 unchanged sentences

Financial Statements:

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Cash Flows

Consolidated Statements of Changes in Stockholders’ Equity

Notes to the Consolidated Financial Statements

Balance Sheets

Statements of Operations

Statements of Cash Flows

Statements of Changes in Stockholders’ Equity

to the Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and Stockholders of Impact Biomedical, Inc.

To the Board of Directors and Stockholders of

Biomedical, Inc.

on the Financial Statements

have audited the accompanying consolidated balance sheets of Impact Biomedical, Inc., and its subsidiaries (the “Company”)

as of December 31, 2023 and 2022, and the related consolidated statements of operations, stockholders’ equity, and cash flows for

the years then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the

financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022,

and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted

in the United States of America.

as of December 31, 2024 and 2023, and the related consolidated statements of operations, changes in stockholders’ equity, and cash

flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial

statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the

Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the year then ended, in conformity

with accounting principles generally accepted in the United States of America.

Doubt Regarding the Company’s Ability to Continue as a Going Concern

1 unchanged sentence

As described in Note

2 to the financial statements, the Company has incurred operating losses as well as negative cash flows from operating and investing

activities over the past two years, which raise substantial doubt about its ability to continue as a going concern.

plans in regard to these matters are described in Note 2.

The financial statements do not include any adjustments that might result from

the outcome of this uncertainty.

Our opinion is not modified with respect to this matter.

Basis for Opinion

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

2 to the 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.

Management’s plans in regard to these matters are described in Note

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Our opinion is not

modified with respect to this matter.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion

on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting

Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

19 unchanged sentences

Balance Sheets

As of December 31,

of December 31,

Current assets:

Cash and cash equivalents

Current portion of notes receivable

Other receivables

Prepaid expenses and other current assets

Cash and cash

Current portion of notes

expenses and other current assets

Total current assets

Property, plant and equipment, net

Other investments

Notes receivable

Other intangible assets, net

LIABILITIES AND STOCKHOLDERS’ EQUITY

Other intangible assets,

LIABILITIES AND STOCKHOLDERS’

Current liabilities:

Accounts payable

Accrued expenses

Note payable, related party

payable, related party

Total current liabilities

Deferred tax liability, net

Deferred tax liability,

Total liabilities

Commitments and contingencies (Note 12)

Commitments and contingencies

Stockholders’ equity

Preferred stock, $ 0.001

shares authorized, 60,496,041

shares issued and outstanding ( 0

shares issued and outstanding on December 31, 2022);

Liquidation value $ 0.001

per share, $ 60,000 ,

($ 0 aggregate on December 31, 2022).

Common stock, $ 0.001

4,000,000,000 shares authorized,

10,000,000 shares issued and outstanding

( 70,496,041 on

December 31, 2022)

Preferred stock, $ .001 par value;

shares authorized, 60,496,041 shares issued and outstanding ( 60,496,041 on December 31, 2023);

Liquidation value $ 0.001 per share,

$ 60,000 aggregate.

$ 60,000 on December 31, 2023).

Common stock, $ .001 par value;

4,000,000,000

shares authorized, 11,503,955 shares issued and outstanding ( 10,000,000 on December 31, 2023)

Additional paid-in capital

Accumulated deficit

( 37,669,000 )

( 12,961,000 )

Total stockholders’ equity of the company

Non-controlling interest in subsidiary

Total stockholder’s equity

Total liabilities and stockholders’ equity

stockholders’ equity of the Company

Non-controlling

interest in subsidiaries

Total stockholders’

liabilities and stockholders’ equity

accompanying notes.

1 unchanged sentence

and Subsidiaries

Consolidated Statements of Operations

Statements of Operations

the Years Ended December 31,

Costs and expenses:

Selling, general and administrative (including stock-based compensation)

Professional Services

Research & Development

Other General Expenses

general and administrative compensation (inclusive of stock based compensation)

Sales and marketing

Professional Fees

Research and development

Depreciation and Amortization

Rent and utilities

Impairment of fixed assets

Impairment of goodwill

operating expenses

Total costs and expenses

2 unchanged sentences

( 4,028,000 )

Other income (expense):

income (expense):

Interest income

Interest expense

Impairment of investment

Change in fair value of

note payable, related party

( 1,065,000 )

Loss from operations before income taxes

operations before income taxes

( 24,737,000 )

( 4,407,000 )

Income tax benefit

Income tax expense

$ ( 24,770,000 )

$ ( 4,407,000 )

Loss from operations attributed to noncontrolling interest

Net loss attributable to common stockholders

from operations attributed to noncontrolling interest

income (loss) attributable to common stockholders

$ ( 24,708,000 )

$ ( 4,336,000 )

Loss per common share:

Shares used in computing loss per common share:

Earnings (loss) per common

Shares used earnings (loss) per common share:

accompanying notes.

2 unchanged sentences

Statements of Cash Flows

For the Years Ended December 31,

Cash flows from operating activities:

the Years Ended December 31,

Cash flows from operating

$ ( 24,770,000 )

$ ( 4,407,000 )

Adjustments to reconcile net loss to net cash used by operating activities:

to reconcile net loss to net cash used by operating activities:

Depreciation and amortization

Deferred tax benefit

Impairment of other investments

Decrease (increase) in assets:

Other receivables

Prepaid expenses and other current assets

Increase (decrease) in liabilities:

Stock based compensation

Change in fair value of

note payable, related party

( 5,068,000 )

Change in deferred tax liability

of fixed assets

Impairment of goodwill

Decrease (increase) in

Other receivable

Prepaid expenses and other

current assets

Increase (decrease) in

Accounts payable

Accrued expenses

Net cash used by operating activities

Net cash used by operating

( 3,919,000 )

( 2,851,000 )

Cash flows from investing activities:

Purchase of property, plant and equipment

Purchase of investment

Note receivable investment, net

Net cash used by investing activities

Cash flows from financing activities:

Borrowings from note payable, related party

Net cash provided by financing activities

Net decrease in cash

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Cash flows from investing

Purchase of property, plant

and equipment

received on notes receivable

cash provided (used) by investing activities

Cash flows from financing

Borrowings from revolving

lines of credit, net

of common stock, net of issuance costs

Net cash provided by

financing activities

Net increase (decrease)

and cash equivalents at beginning of year

and cash equivalents at end of year

accompanying notes.

3 unchanged sentences

the Years Ended December 31,

Preferred Stock

controlling Interest in

December 31, 2021

Balance, December 31, 2022

$ ( 8,625,000 )

Conversion of common stock to preferred stock

( 60,496,041 )

( 4,336,000 )

December 31, 2022

( 4,336,000 )

of common stock to preferred stock

( 4,407,000 )

Balance, December 31,

$ ( 12,961,000 )

Balance, December 31, 2023

$ ( 12,961,000 )

December 31, 2023

$ ( 12,961,000 )

Issuance of common stock, net of expenses

Fractional shares as a result of reverse stock

Stock based payments

Net (loss) income

( 24,708,000 )

( 24,770,000 )

Balance, December 31,

$ ( 37,669,000 )

accompanying notes.

2 unchanged sentences

DESCRIPTION OF BUSINESS

BioMedical, Inc.

(the “Company”, “Impact BioMedical”, “We”), incorporated in the State of Nevada on October 16, 2018, through the utilization of its intellectual

property rights, or through investment in, or through acquisition of companies in the biohealth and biomedical fields, focuses on the

advancement of drug discovery and prevention, inhibition, and treatment of neurological, oncological, and immune related diseases.

Company is also developing open-air defense initiatives, which curb transmission of air-borne infectious diseases, such as tuberculosis

and influenza.

BioLife, Inc.

(“Global BioLife”), one of the Company’s subsidiaries and the main operating company of the group, focuses

on research in four main areas:

(i) the “Linebacker” project, which aims to develop a universal therapeutic drug platform;

(ii) a new sugar substitute called “Laetose,”;

(iii) a multi-use fragrance called “3F” (Functional Fragrance

Formulation);

and (iv) Equivir/Nemovir, a blend of natural polyphenols designed as an antimicrobial medication.

the traditional approach to treat individual diseases with specific drugs, the Linebacker platform seeks to offer a breakthrough therapeutic

option for multiple diseases.

Linebacker is designed to work by inhibiting a cascade of inflammatory responses responsible for many diseases.

Its design is in direct contrast to the traditional approach of targeting individual diseases with specific drugs.

have also developed a low-calorie, low glycemic level, natural modified sugar through Global BioLife.

The product, “Laetose,”

is designed to possess low glycemic properties and mitigate inflammation.

The Company is presently seeking to license Laetose.

BioLife established a joint venture, Sweet Sense, Inc.

(“Sweet Sense”), with Quality Ingredients, LLC for the development,

manufacture, and global distribution of the new sugar substitute.

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

In addition to our existing efforts, we continually search for, and evaluate, other potential new offerings to add to our portfolio.

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,

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:

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.

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.

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).

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.

Fragrance Formulation (“3F”)

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.

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.

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.

is a polyphenol compound that is believed to be successful in antiviral infection treatments.

Equivir is a patented medication, which

has broad antiviral efficacy against multiple types of infectious disease.

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.

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 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

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Consolidation – The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in

the United States of America (“U.S.

The consolidated financial statements include all accounts of the Company and

its majority owned and controlled subsidiaries.

The Company consolidates entities in which it owns more than 50 % of the voting common

stock and controls operations.

All intercompany transactions and balances among consolidated subsidiaries have been eliminated.

Non–controlling

interest represents the minority equity investment in the Company’s subsidiaries, plus the minority investors’ share of the

net operating results and other components of equity relating to the non–controlling interest.

of Consolidation – The Company’s consolidated financial statements have been prepared in accordance with accounting

principles generally accepted in the United States of America (“U.S.

The consolidated financial statements include

all accounts of the Company and its majority owned and controlled subsidiaries.

The Company consolidates entities in which it owns more

than 50 % of the voting common stock and controls operations.

All intercompany transactions and balances among consolidated subsidiaries

have been eliminated.

Non–controlling interest represents the minority equity investment in the Company’s subsidiaries, plus

the minority investors’ share of the net operating results and other components of equity relating to the non–controlling

consolidated financial statements include all accounts of the entities as of the reporting period ending dates and for the reporting

periods as follows:

of Condensed Financial Statements

OF CONSOLIDATED FINANCIAL STATEMENTS INCLUDE ENTITIES REPORTING PERIOD AND ATTRIBUTABLE INTEREST

Name of consolidated

State or other

jurisdiction of

25 unchanged sentences

differ from these estimates.

Earnings (Loss) per Share - Basic

earnings (loss) per share is computed by dividing the net income (loss) attributable to the common stockholders by weighted average number

of shares of common stock outstanding during the period.

Fully diluted earnings (loss) per share is computed like basic income (loss)

per share except that the denominator is increased to include the number of additional common shares that would have been outstanding

if the potential common shares had been issued and if the additional common shares were dilutive.

There were no dilutive financial instruments

issued or outstanding for the years ended December 31, 2023 or 2022.

Reclassifications

- Costs associated with Professional fees for the years ended December 31, 2024, and 2023 have been reclassified to Research

and development to conform with current period presentation.

For the year ended December 31, 2023, Sales and marketing costs have been reclassified from Other operating costs

to Sales and marketing to conform with current period presentation.

(Loss) per Share - Basic earnings (loss) per share is computed by dividing the net income (loss) attributable to the common

stockholders by weighted average number of shares of common stock outstanding during the period.

Fully diluted earnings (loss) per share

is computed like basic income (loss) per share except that the denominator is increased to include the number of additional common shares

that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

financial instruments issued or outstanding for the years ended December 31, 2024 include 60,496,041 shares of Series A Convertible Preferred

Shares which are not eligible for conversion until April 10, 2027, 880,000 options priced at $ 3.00 per share expiring on October 31,

2031 and 75,000 warrants priced at $ 3.75 per share expiring on June 13, 2025 .

were no dilutive financial instruments issued or outstanding for the year ended December 31, 2023.

Value of Financial Instruments – Fair value is defined as the price that would be received to sell an asset or paid

12 unchanged sentences

such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

carrying amounts reported in the balance sheet of cash, prepaids, 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.

The Company’s investments

are recorded at cost as the fair value of these investment in is not readily available.

The fair value of notes payable approximates

its carrying value as the stated interest rate reflects recent market conditions.

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.

Notes payable, related party are recorded at fair value based on several factors (see Note 9).

receivable, unearned interest, and related recognition – The Company records all future payments of principal and interest

4 unchanged sentences

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.

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.

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.

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.

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.

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 December 31, 2024,

31, 2023, none of these pronouncements is expected to have a material effect on the financial position, results of operations or

cash flows of the Company.

January 1, 2022, the Company adopted amended accounting guidance “ ASU No.2016-13 – Credit Losses” 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.

Prior to 2022, the allowance for credit losses represented the amount that in management’s judgment reflected incurred credit losses

inherent in the loan and lease portfolio as of the balance sheet date.

As of year-ended December 31, 2023 the Company has deemed that no reserve

on credit losses were necessary.

– Investments in equity securities with a readily determinable fair value, not accounted for under the equity method, are

recorded at fair value with unrealized gains and losses included in earnings.

For equity securities without a readily determinable fair

value, the investment is recorded at cost, less any impairment, plus or minus adjustments related to observable transactions for the

same or similar securities, with unrealized gains and losses included in earnings.

For equity method investments, the Company regularly

reviews its investments to determine whether there is a decline in fair value below book value.

If there is a decline that is other-than-temporary, the investment is written down to fair value.

(See Note 5 for further discussion on

none of these pronouncements is expected to have a material effect on the financial position, results of operations or cash flows of

November 2023, the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”)

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure

through enhanced disclosures about significant segment expenses.

The amendment is effective for fiscal years beginning after December

15, 2023 and for interim periods within fiscal years beginning after December 15, 2024 and early adoption is permitted.

The amendments

should be applied retrospectively to all prior periods presented in the financial statements.

The Company has adopted the enhanced segment

disclosures of the year ended December 31, 2024.

The Company reports its segment information to reflect the manner in which the Company’s

chief operating decision maker (“CODM”) reviews and assesses performance.

The Company’s Chief Executive Officer and

Chief Operating Officer have joint responsibilities as the CODM and review and assess the performance of the Company as a whole.

primary financial measures used by the CODM to evaluate performance and allocate resources are net income (loss) and operating income

The CODM uses net income (loss) and operating income (loss) to evaluate the performance of the Company’s ongoing operations

and as part of the Company’s internal planning and forecasting processes.

Information on Net income (loss) and Operating income

(loss) is disclosed in the Consolidated Statements of Operations.

Segment expenses and other segment items are provided to the CODM on

the same basis as disclosed in the Consolidated Statements of Operations.

CODM does not evaluate performance or allocate resources based on segment assets, and therefore such information is not presented in

the notes to the financial statements

December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures” which is intended to simplify various

aspects related to accounting for income taxes.

ASU 2023-09 removes certain exceptions to the general principles in Topic 740

and also clarifies and amends existing guidance to improve consistent application.

The amendments in ASU 2023-09 are effective

for public business entities for fiscal years beginning after December 15, 2024, including interim periods therein.

Early adoption of

the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued.

The Company is currently evaluating this ASU, but does not expect it to have material impact to its financial statements.

November 2024, the FASB issued ASU No.

2024-03 (“ASU 2024-03”), Disaggregation of Income Statement Expenses (“DISE”) .

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.

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

Plant and Equipment – Property, plant and equipment are recorded at cost.

11 unchanged sentences

assumed in a business combination.

Goodwill is subject to impairment testing at least annually and will be tested for impairment between

annual tests, which takes place during the fourth quarter, if an event occurs or circumstances change that would indicate the carrying

amount may be impaired.

FASB ASC Topic 350 provides an entity with the option to first assess qualitative factors to determine whether

the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting

unit is less than its carrying amount.

Some of the qualitative factors considered in applying this test include consideration of macroeconomic

conditions, industry and market conditions, cost factors affecting the business, and overall financial performance of the business.

after completing the assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than

its carrying value, the Company will proceed to a quantitative test.

If qualitative factors are not deemed sufficient to conclude that

the fair value of the reporting unit more likely than not exceeds its carrying value, then a one-step approach is applied in making an

The evaluation utilizes an income approach (discounted cash flow analysis).

The computations require management to make significant

estimates and assumptions, including, among other things, selection of comparable publicly traded companies, the discount rate applied

to future earnings reflecting a weighted average cost of capital, and earnings growth assumptions.

The Company believes the estimates

and assumptions used in our impairment assessments are reasonable and based on available market information, but variations in any of

the assumptions could result in materially different calculations of fair value and determinations of whether or not an impairment is

A discounted cash flow analysis requires management to make various assumptions about future sales, operating margins, capital

expenditures, working capital, and growth rates.

Cash flow projections are derived from one-year budgeted amounts plus an estimate of

later period cash flows, all of which are determined by management.

Subsequent period cash flows are developed for each reporting unit

using growth rates that management believes are reasonably likely to occur.

Goodwill is subject to impairment testing at least annually and will be tested for impairment

between annual tests, which takes place during the fourth quarter, if an event occurs or circumstances change that would indicate

the carrying amount may be impaired.

FASB ASC Topic 350 provides an entity with the option to first assess qualitative factors to

determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair

value of a reporting unit is less than its carrying amount.

Some of the qualitative factors considered in applying this test include

consideration of macroeconomic conditions, industry and market conditions, cost factors affecting the business, and overall

financial performance of the business.

If, after completing the assessment, it is determined that it is more likely than not that

the fair value of a reporting unit is less than its carrying value, the Company will proceed to a quantitative test.

If qualitative

factors are not deemed sufficient to conclude that the fair value of the reporting unit more likely than not exceeds its carrying

value, then a one-step approach is applied in making an evaluation.

The evaluation utilizes an income approach (discounted cash flow

The computations require management to make significant estimates and assumptions, including, among other things,

selection of comparable publicly traded companies, the discount rate applied to future earnings reflecting a weighted average cost

of capital, and earnings growth assumptions.

The Company believes the estimates and assumptions used in our impairment assessments

are reasonable and based on available market information, but variations in any of the assumptions could result in materially

different calculations of fair value and determinations of whether or not an impairment is indicated.

A discounted cash flow

analysis requires management to make various assumptions about future sales, operating margins, capital expenditures, working

capital, and growth rates.

Cash flow projections are derived from one-year budgeted amounts plus an estimate of later period cash

flows, all of which are determined by management.

Subsequent period cash flows are developed for each reporting unit using growth

rates that management believes are reasonably likely to occur.

Impairment of goodwill is measured as the excess of the carrying

amount of goodwill over the fair values of recognized and unrecognized assets and liabilities of the reporting unit.

No impairment was

recognized during the year-ended December 31, 2023 or year ended December 31, 2022.

As of December

31, 2024, the Company fully impaired goodwill.

impairment was recognized during the year ended December 31, 2023.

Assets - The estimated fair values of acquired intangibles are generally determined based upon future economic benefits such

6 unchanged sentences

Impairment is tested under ASC 350.

No impairment was recognized as of year-ended December 31, 2023 or the year ended December 31, 2022.

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,

such as the impact of the COVID-19 pandemic.

Our assessment of the recoverability of long-lived assets involves significant judgment and

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.

No impairment was recognized as of year ended

December 31, 2024 or the year ended December 31, 2023.

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, such as the impact of the COVID-19 pandemic.

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.

- 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

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;

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.

- The Company has adopted ASC Topic 606 , Revenue from Contracts with Customers (“Topic 606”).

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

(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.

(v) recognition of revenue when or as the Company satisfies each performance obligation.

Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration to which it

5 unchanged sentences

amount of the transaction price that is allocated to the respective performance obligation when or as the performance obligation is satisfied.

for Credit Losses - On January 1, 2022, the Company

adopted amended accounting guidance “ ASU No.2016-13 – Credit Losses” 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.

Prior to 2022, the allowance

for credit losses represented the amount that in management’s judgment reflected incurred credit losses inherent in the loan and

lease portfolio as of the balance sheet date.

As of December 31, 2023 the Company has deemed that no reserve on credit losses were necessary.

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

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 December 31, 2024 and 2023 the Company has deemed that no reserve on credit losses

were necessary.

Operations and Going Concern - The accompanying consolidated financial statements have been prepared assuming that the Company

3 unchanged sentences

As reflected in the accompanying financial statements the Company has incurred operating losses as

well as negative cash flows from operating and investing activities over the past two years.

well as negative cash flows from operating activities over the past two years.

These factors raise substantial doubt about

2 unchanged sentences

which might be necessary should we be unable to continue as a going concern.

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.

Reclassifications

– Certain amounts on the accompanying consolidated statement of operations for the year ended December 31, 2022, have been

reclassified to conform to current period presentation.

continue as a going concern, the Company completed an initial public offering on September 16, 2024 raising $ 3,726,000

net of issuance costs and is currently listed

on the NYSE American under the ticker symbol IBO.

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.

plans concerning these matters include, among other things, monetization of its intellectual properties, and tightly controlling operating

Financial Instruments

Cash, Note payable, related party

The following tables show the Company’s cash,

cash equivalents, and note payable, related party by significant investment category as of:

Schedule of Cash,

Cash Equivalents, Restricted Cash, and Note Payable Related Party by Significant Investment Category

Note Payable, Related Party

Note payable, related party

( 5,068,000 )

$ ( 5,068,000 )

Notes Receivable

February 19, 2021, Impact BioMedical, Inc, entered into a promissory note with an individual.

The Company loaned the principal sum

of $ 206,000 , with interest at a rate of 6.5 %, and maturity date of August 19, 2022 later amended to February 19, 2024 .

payments are due on the twenty-first day of each month and continuing each month thereafter until February 19, 2024.

secured by certain real property situated in Collier County, Florida.

The outstanding principal and interest as of December 31,

2023, approximately $ 203,000 and is classified in current notes receivable on the accompanying consolidated balance sheets.

outstanding principal and interest as of December 31, 2022 is approximately $ 206,000 with $ 16,000 classified in Current portion of

notes receivable and $ 190,000 classified as Notes receivable on the accompanying consolidated balance sheets.

The Company loaned the principal sum of

$ 206,000 , with interest at a rate of 6.5 %, and maturity date of August 19, 2022 later amended to February 19, 2026.

Monthly payments

are due on the twenty-first day of each month and continuing each month thereafter until February 19, 2026.

This note is secured by certain

real property situated in Collier County, Florida.

The outstanding principal and interest as of December 31, 2024 is approximately $ 201,000

with $ 184,000 classified in Current portion of notes receivable and $ 17,000 classified as Notes receivable on the accompanying consolidated

balance sheet.

The outstanding principal and interest as of December 31, 2023, approximately $ 203,000 and is classified in current notes

receivable on the accompanying consolidated balance sheet.

Prepaid Expenses and other current assets

were no prepaid

expenses for year-ended December 31, 2023.

Prepaid expenses at December 31, 2022 of $ 104,000

including research and development costs to GRDG, a related party approximating $ 43,000 .

December 19, 2020, Impact BioMedical, entered into a subscription agreement (the “Subscription Agreement”) with BioMed Technologies

Asia Pacific Holdings Limited (“BioMed”), a limited liability company incorporated in the British Virgin Islands, pursuant

to which the Company agreed to purchase 525 ordinary shares or 4.99 % of BioMed at a purchase price of approximately $ 632,000 .

The Subscription

Agreement provides, among other things, the Company has the right to appoint a new director to the board of BioMed.

With respect to an

issuance of shares to a third party by BioMed, the Company will have the right of first refusal to purchase such shares, as well as customary

tag-along rights.

In connection with the Subscription Agreement, Impact Biomedical entered into an exclusive distribution agreement (the

“Distribution Agreement”) with BioMed, to directly market, advertise, promote, distribute, and sell certain BioMed products,

which focus on manufacturing natural probiotics, to resellers.

This investment is valued at cost, as it does not have a readily determined

This asset and associated Note payable, related party were transferred in June 2022 to DSS BioHealth, Inc, which is a related

January 1, 2021, the Company entered into a securities purchase agreement (“SPA”) with Nano9, LLC.

a Utah limited partnership.

For the consideration of $ 150,000 the Company obtained 1,000 membership units, or approximately 10 % equitable

ownership of Nano9.

Nano9 is a scientifically driven company, specializing in the development and production of leading nano-sized health

& wellness products utilizing their proprietary nano technology.

This asset and associated Note payable, related party were transferred

June 2022 to DSS BioHealth, Inc, which is a related party.

March 15, 2021, the Company, through one of its subsidiaries, entered into a Stock Purchase Agreement (the “Vivacitas Agreement

#1”) with Vivacitas Oncology Inc.

(“Vivacitas”), to purchase 500,000 shares of its common stock at the per share price

of $ 1.00 , with an option to purchase 1,500,000 additional shares at the per share price of $ 1.00 .

This option will terminate upon one

of the following events:

(i) Vivacitas’ board of directors cancels this option because it is no longer in the best interest of

(ii) December 31, 2022;

or (iii) the date on which Vivacitas receives more than $1.00 per share of the Company’s common

stock in a private placement with gross proceeds of $ 500,000 .

Under the terms of the Vivacitas Agreement #1, the Company will be allocated

two seats on the board of Vivacitas.

On March 18, 2021, the Company entered into an agreement with Alset EHome International, Inc.

to purchase from the Seller’s wholly owned subsidiary Impact Oncology PTE Ltd.

(“IOPL”) for a purchase price of $ 2,480,000 .

The acquisition of IOPL has been treated as an asset acquisition as IOPL does not meet the definition of a business as defined in Topic

IOPL owns 2,480,000 shares of common stock of Vivacitas along with the option to purchase an additional 250,000 shares of common

The Sellers largest shareholder is Mr.

Chan Heng Fai Ambrose, the Chairman of the Company’s board of directors and its largest

April 1, 2021, the Company entered into an additional stock purchase agreement with Vivacitas (“Vivacitas Agreement #2”),

whereas Vivacitas wished to employ the service of the Chief Business Officer of Impact Biomedical, and in return for the services of

this individual, Vivacitas shall issue to the Company, the aggregate purchase price for the Class A Common Shares of Vivacitas at the

value of $ 1.00 per share shall be $ 120,000 to be paid in twelve (12) equal monthly installments for the period between April 1, 2021

and March 31, 2022.

July 22, 2021, the Company exercised 1,000,000 of the available options under the Vivacitas Agreement #1 for $ 1,000,000 .

with the shares received as part Vivacitas Agreement #2 increased the Company’s equity position in Vivacitas to approximately 16 %

as of December 31, 2022.

As of December 31, 2022, the Company determined to impair 100 % of its investment in Vivacitas, in the amount

of $ 4,100,000 .

expenses at December 31, 2024 of $ 265,000 driven by $ 263,000 of prepaid insurance.

There were no prepaid expenses for year ended December

Property, Plant and Equipment, Net

plant and equipment consisted of the following as of:

Schedule of Property plant and Equipment

of Property, Plant and Equipment

Machinery and equipment

1 unchanged sentence

Less accumulated depreciation

Property, plant and equipment, net

expense for the years-ended December 31, 2023 and 2022 were approximately $ 6,000 and $ 0 , respectively.

Property, plant and

equipment, net

expense for the years ended December 31, 2024 and 2023 were approximately $ 7,000

and $ 6,000 ,

respectively.

balances and activity for the year ended December 31, 2024 and year ended December 31, 2023 consisted of the following:

Schedule of Goodwill

Balance at December 31, 2023

Goodwill adjustment

( 25,093,000 )

Balance at December 31, 2024

During 2023 and 2022, management performed annual

goodwill impairment testing.

No goodwill impairment was identified as a result of these tests.

As of September 30, 2023, a quantitative

analysis was prepared utilizing the Market Approach and Income Approach valuing the Company.

The guideline public company Market Approach

produced a mean business enterprise value indication using estimated 2026 results of $ 49.8 million.

The Income Approach was based upon

the use of a discounted pro forma cash flow model and produced a business enterprise value indication of $ 44.9 million.

of December 31, 2024, management performed annual goodwill impairment testing., A quantitative analysis was prepared utilizing the Market Approach and Income Approach

valuing the Company and an impairment of goodwill was identified as result of these tests.

the year ended December 31, 2023, management performed annual goodwill impairment testing and no impairment was deemed necessary.

The guideline public company Market Approach produced a mean business enterprise value indication using estimated 2026 results of

The Income Approach was based upon the use of a discounted pro forma cash flow model and produced a business enterprise

value indication of $ 44.9

A weighting of 30 %

30 % to the weighted value indicated was applied under the Market Approach, and a weighting of 70 % to the value indicated under the Income

A lower weighting was applied to the Market Approach due to the fact of using forecasted earnings of the Company.

the above weightings, an initial value of $ 46.4 million for Impact was calculated.

Adding cash of $ 201,000 to the initial business enterprise

value produced a concluded business enterprise value of $ 46.6 million (rounded) for Impact.

to the weighted value indicated was applied under the Market Approach, and a weighting of 70 %

to the value indicated under the Income Approach.

A lower weighting was applied to the Market Approach due to the fact of using

forecasted earnings of the Company.

Based upon the above weightings, an initial value of $ 46.4

million for Impact was calculated.

Adding cash of $ 201,000

to the initial business enterprise value produced a concluded business enterprise value of $ 46.6

million (rounded) for Impact.

Subtracting interest-bearing debt of $ 11.9

million, results in a Fair Value for the common equity of Impact of $ 34.7 million.

As of September 30, 2023, the indicated equity value

exceeded the carrying amount by approximately $ 5.1 million or 14.7 % .

million, results in a Fair Value for the common equity of Impact of $ 34.7

As of September 30, 2023, the indicated equity value exceeded the carrying amount by approximately $ 5.1

million or 14.7 %.

Intangible Assets

definite-lived intangible assets, to be amortized over 20 years, balances, and activity for the year-ended December 31, 2023

and year-ended December 31, 2022 consisted of the following:

Schedule of Intangible Assets

Definitive-lived:

Developed technology

$ ( 3,339,000 )

$ ( 2,226,000 )

$ ( 3,339,000 )

$ ( 2,226,000 )

definite-lived intangible assets, to be amortized over 20 years, balances, and activity for the year ended December 31, 2024 and year ended

December 31, 2023 consisted of the following:

of Intangible Assets

Developed technology assets

following table represents future amortization of developed technologies for the years ending December 31:

Schedule of Future Amortization of Developed Technologies

SHORT TERM DEBT

of Future Amortization of Developed Technologies

NOTE PAYABLE, RELATED PARTY

December 31, 2020, and later amended, the Company executed a Revolving Promissory Note (“Note”) with DSS, a related

1 unchanged sentence

and is due in full at the maturity date of September

The revolving nature of this Note permits principal amounts borrowed to be repaid and reborrowed.

the case of default, at DSS’s option, (i) eighteen percent (18%) per annum, or (ii) such lesser rate of interest as Lender in

its sole discretion may choose to charge;

but never more than the Maximum Lawful Rate.

In January 2024, this Note was amended

to extend the maturity date to September

30, 2030 with interest calculated at the Wall Street Journal prime rate plus 0.50 %.

The payment of principal and interest is on demand.

If no demand is made, interest is to be paid monthly beginning on February 29,

2024 through January 31, 2026.

Principal and interest in an amount approximating $ 126,000

is to be paid monthly thereafter until the Note matures.

As of December 31, 2023 and December 31, 2022, the outstanding balance,

inclusive of interest was $ 12,074,000

The Note was further amended on

July 24, 2024 with an effective date of September 16, 2024 to i) allow the Company to pay certain principal and/or interest payments

owing under the repayment terms in an exchange for potential of equity in the Company, ii) change the quarterly interest due dates

to the last day of each calendar quarter (i.e.

December 31, March 31, June 30 and September 30), iii) to adjust the On Demand

feature so that it starts after the 24th month, iv) continue the planned repayment program commencing on the 37th month and on the

last day of each month thereafter through August 31, 2030 to pay a fixed monthly payment of $ 126,381 ,

v) to continue the scheduled maturity date of September 30, 2030, and vi) adjusts the interest rate to be the WSJ Prime Rate plus 0.50 %.

This Note is secured by the assets of the Company.

As of December 31, 2024 and December 31, 2023 the outstanding balance, inclusive

of interest was $ 8,878,000 (net

of change in fair value of the Note of $ 5,068,000 )

and $ 12,074,000 ,

respectively.

The $ 8,878,000 is

recorded in Note payable, related party at December 31, 2024.

The $ 12,074,000 at

December 31, 2023 is included in Current portion of note payable, related party.

The Company accounts for this Note as a liability

under ASC 480, Distinguishing Liabilities form Equity (“ASC 480”).

In accordance with ASC 825-10, the carrying value

of the Note will be recorded at fair value and will be remeasured at each reporting period with the changes in fair value recognized in

We considered various valuation methodologies

in our analysis of the embedded derivative.

Valuation methodologies can generally be aggregated into the following three approaches:

the Market Approach, the Income Approach, and the Cost Approach.

Based on our analysis of the facts and circumstances, in estimating

the fair value of the Note payable, related party, we utilized a discounted cash flow method (income approach), in the form of a Monte

Carlo simulation of the Company’s stock price and volume weighted average price (“VWAP”) throughout 36-month period

from the Effective Date relative to its closing stock price and VWAP as of the Valuation Date, or $2.00 and $2.38, respectively.

simulated analysis estimates the expected note cash flow from the date the first payment is due and until the equity conversion rights

expire under the terms of the Note payable, related party based on the following steps:

the Note Payable repayment schedule

the following inputs underlying the simulation analysis

(i) and (ii), were assigned a normal probability distribution, which has a mean of 0 and a standard deviation of 1, and a correlation

of .9885 based on analysis of the guideline public companies

a simulation with 25,000 trials for purposes of capturing the key inputs discussed above (i.e., forecasting the stock price and VWAP).

the period from the 37th payment to maturity date, the DCF Method includes the remaining payments required to be made in cash.

the results of the simulation and concluded based on the simulation results

STOCKHOLDERS’ EQUITY

May 10, 2023, the Company, the Company’s Board of Directors approved an amendment to the Articles of Incorporation of the

Company to increase the total number of shares of Common Stock to 4,000,000,000 shares with a par value of $ 0.001 .

Each share of

Common Stock when issued, shall have one (1) vote on all matters presented to the stockholders.

Our Amended and Restated Articles of

Incorporation also authorized 100,000,000 shares of preferred stock, par value $ 0.001 per share.

On May 11, 2023, the Company

effected a forward split.

As a result, there were 3,877,282,251 shares of our Common Stock and no shares of preferred stock issued

and outstanding.

Prior to the split, there were 125,073,621 shares of our Common Stock and no shares of preferred stock issued and

As of December 31,2023, and December 31, 2022, there were 3,877,282,251 shares of our Common Stock and no shares of

preferred stock issued and outstanding.

On May 10, 2023, the Company’s Board of Directors approved an amendment to the Articles of Incorporation of

the Company to increase the total number of shares of Common Stock to 4,000,000,000 shares with a par value of $ 0.001 .

Each share of Common

Stock when issued, shall have one (1) vote on all matters presented to the stockholders.

Our Amended and Restated Articles of Incorporation

also authorized 100,000,000 shares of preferred stock, par value $ 0.001 per share.

On May 11, 2023, the Company effected a forward split.

As a result, there were 3,877,282,251 shares of our Common Stock and no shares of preferred stock issued and outstanding.

split, there were 125,073,621 shares of our Common Stock and no shares of preferred stock issued and outstanding.

On October 31, 2023,

the Company effected a reverse stock split of 1 for 55 .

Also on October 31, 2023, DSS BioHealth Securities, Inc., the Company’s

largest shareholder converted 60,496,041 shares of Common Stock into 60,496,041 shares of Series A Convertible Preferred Shares, reducing its ownership of the Company’s Common Stock from approximately 88% to approximately 12%.

As of December 31, 2023, there were 10,000,000

shares of our Common Stock and 60,496,041 shares of preferred stock issued and outstanding.

August 8, 2023 DSS, the Company’s largest shareholder, distributed to its shareholders of record on July 10, 2023 4 shares of Impact

4 unchanged sentences

October 31, 2023, the Company effected a reverse stock split of 1 for 55 .

As of December 31, 2023 and December 31, 2022, there were

3,877,282,251 shares of our Common Stock issued and outstanding which was converted to 70,496,041 shares.

Also on October 31, 2023, DSS

BioHealth Securities, Inc., the Company’s largest shareholder converted 60,496,041 shares of Common Stock into 60,496,041 shares

of Series A Convertible Preferred Shares, reducing its ownership of the Company’s Common Stock from approximately 88% to approximately

Equity Incentive Plan – During

2023, the Company’s shareholders adopted the 2023 Employee, Director and Consultant Equity Incentive Plan (the “2023 Plan”).

The 2023 Plan provides for the issuance of an initial 10,574,000 shares of common stock authorized to be issued for grants of options,

restricted stock and other forms of equity to employees, directors and consultants.

In addition, on the first day of each calendar year,

for a period of not more than ten (10) years, commencing January 1, 2025, or the first business day of the calendar year if the first

day of the calendar year falls on a Saturday or Sunday, the shares available under this plan will automatically increase in an amount

equal to the lesser of (i) two percent (2%) of the total number of shares of Common Stock outstanding as of December 31 of the preceding

fiscal year or (ii) such number of shares of Common Stock as determined by the Board of Directors.

Under the terms of the 2023 Plan, options

granted thereunder may be designated as options which qualify for incentive stock option treatment (“ISOs”) under Section

422A of the Internal Revenue Code, or options which do not qualify (“NQSOs”).

As of December 31, 2023, there are 10,574,000

shares available under this plan.

As of December 31, 2023 there were 3,877,282,251

shares of our Common Stock issued and outstanding

which was converted to 70,496,041

Also on October 31, 2023, DSS BioHealth

Securities, Inc., the Company’s largest shareholder converted 60,496,041

shares of Common Stock into 60,496,041

shares of Series A Convertible Preferred Shares, reducing its ownership of the Company’s Common Stock from approximately 88% to approximately 12%.

The Series A Convertible Preferred Shares are

not eligible for conversion until April 10, 2027.

On September 16, 2024, Impact Biomedical

Inc., entered into an underwriting agreement (the “Underwriting Agreement”) with Revere Securities, LLC., as representative

(the “Representative”) of the underwriters named therein (the “Underwriters”), pursuant to which the Company

agreed to sell to the Underwriters in a firm commitment initial public offering (the “Offering”) an aggregate of 1,500,000

of the Company’s shares of common stock, par value $ 0.001

per share at a public offering price of $ 3.00

On September 17, 2024, the Company closed the Offering.

The total net proceeds to the Company from the Offering, after

deducting discounts, expenses allowance and expenses, was approximately $ 3,726,000 .

A final prospectus relating to this Offering was filed with the Commission on September 16, 2024.

The shares of Common Stock were approved

to list on the NYSE American under the symbol “IBO” and began trading there on September 16, 2024.

The Company also issued

warrants to the Representative and its affiliates (the “Representative’s Warrants”) warrants to purchase the number

of shares of Common Stock in the aggregate equal to 5 %

of the Common Stock to be issued and sold in this offering (including any Shares of Common Stock sold upon exercise of the over-allotment

option, if applicable).

The Representative’s Warrants are exercisable for a price per share equal to 125 %

of the public offering price.

The warrants are exercisable at any time, in whole or in part, commencing nine (9) months from the date

of commencement of sales of the offering and ending on the third anniversary thereof.

As of September 30, 2024, the Representative had

not exercised any of these warrants.

As of September 30, 2024, only the 1,500,000

shares included in the Offering are freely tradable on the NYSE.

The remaining 9,997,703

are restricted from trading for 180 days from the Offering date.

Incentive Plan – During 2023, the Company’s shareholders adopted the 2023 Employee, Director and Consultant Equity

Incentive Plan (the “2023 Plan”).

The 2023 Plan provides for the issuance of an initial 18,762,000 shares of common stock

authorized to be issued for grants of options, restricted stock and other forms of equity to employees, directors and consultants.

addition, on the first day of each calendar year, for a period of not more than ten (10) years, commencing January 1, 2025, or the first

business day of the calendar year if the first day of the calendar year falls on a Saturday or Sunday, the shares available under this

plan will automatically increase in an amount equal to the lesser of (i) two percent (2%) of the total number of shares of Common Stock

outstanding as of December 31 of the preceding fiscal year or (ii) such number of shares of Common Stock as determined by the Board of

Under the terms of the 2023 Plan, options granted thereunder may be designated as options which qualify for incentive stock

option treatment (“ISOs”) under Section 422A of the Internal Revenue Code, or options which do not qualify (“NQSOs”).

As of December 31, 2024, there are 18,037,079 shares available under this plan.

Compensation – 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.

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.

There were no

stock-based payments made during the twelve months ended December 31, 2023, or 2022.

On October 1, 2024, 880,000

option grants with a purchase price of $ 3.00

per share were awarded to certain officers, directors

and consultants of the Company.

These options have various vesting periods, and all expire on October 31, 2031.

Potential proceeds of

these grants is $ 2,640,000

and are fair valued using a Black-Scholes model

at approximately $ 50,000 .

The Company record stock based compensation expense of approximately $ 19,000

for the year ended December 31, 2024 and is included

in Sales, general and administrative compensation (inclusive of stock based compensation) on the accompanying Statement of Operations.

There were no stock-based

payments made during the twelve months ended December 31, 2023.

Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the

3 unchanged sentences

components of income tax benefit for the years ended December 31, 2024, and 2023 are as follows:

of Components of Income Tax Benefit

Income Tax Expense (Benefit)

December 31, 2023

December 31, 2022

SCHEDULE OF COMPONENTS OF INCOME TAX BENEFIT

Expense (Benefit)

Current tax payable

1 unchanged sentence

$ ( 1,014,000 )

Total deferred tax

$ ( 1,014,000 )

$ ( 1,784,000 )

Less increase in valuation allowance

Total income tax benefit

$ ( 621,000 )

Less increase in valuation

Total income tax expense

components of deferred tax assets and liabilities are approximately as follows:

of Deferred Tax Assets and Liabilities

Deferred Tax Assets & Liabilities:

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

Assets & Liabilities:

Deferred Tax assets:

Impairment of investment

Research & development cost

Net Operating loss

Research & development

Operating loss

Gross deferred tax assets

Deferred tax liability:

Intangible assets

Note payable, related party FMV adjustment

( 1,148,000 )

( 3,912,000 )

( 4,164,000 )

Gross deferred tax liability

7 unchanged sentences

$ ( 3,235,000 )

of Effective Income Tax Rate Reconciliation

Statutory United States federal rate

SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION

Statutory United States federal

State income taxes net of federal benefit

1 unchanged sentence

Effective rate

of December 31, 2023, and 2022, the Company has net operating loss carry forwards of approximately $ 9,209,000 and $ 7,109,000 respectively.

The Company does not have other temporary differences associated with the amortization of intangible assets.

As of December 31, 2023,

and 2022, the total deferred tax assets carry-forward were $ 3,554,000 and $ 2,790,000 , respectively.

The deferred tax assets could be

carried forward indefinitely.

The full utilization of the deferred tax assets in the future is dependent upon the Company’s ability

to generate taxable income.

Considering the development stage of the Company, management believed that it was probable that the Company

would not use tax assets in the near future.

Accordingly, a valuation allowance of an equal amount has been established.

During the years

ended December 31, 2023 and December 31, 2022, the valuation allowance increased by $ 1,014,000 and decreased by $ 1,163,000 , respectively.

of December 31, 2024, and 2023, the Company has net operating loss carry forwards of approximately $ 13,020,000 and $ 9,209,000

respectively.

The Company does not have other

temporary differences associated with the amortization of intangible assets.

As of December 31, 2024, and 2023, the total deferred tax

assets carry-forward were $ 4,416,000 and

$ 3,554,000 ,

respectively.

The deferred tax assets could be carried forward indefinitely.

The full utilization of the deferred tax assets in the future

is dependent upon the Company’s ability to generate taxable income.

Considering the development stage of the Company, management

believed that it was probable that the Company would not use tax assets in the near future.

Accordingly, a valuation allowance of an

equal amount has been established.

Company recognizes interest accrued and penalties related to unrecognized tax benefits in tax expense.

2 unchanged sentences

COMMITMENTS AND CONTINGENCIES

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.

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

Based on Royalty Agreement any payments received from development, sales, licensing or transfer of 3F technology will be paid

50 % to the Company and 50 % to Chemia.

On November 27, 2018, Company and Chemia signed an Addendum to Royalty Agreement (“Addendum”),

according to which the Company granted Chemia a royalty-based limited license for purposes of making and selling fragrances embodying

the 3F technology.

Based on the Addendum, Chemia should pay the Company 5 % of net sales in royalty.

On November 8, 2019, both companies

entered into Amendment no.1 to Royalty Agreement, based on which certain expenses borne by the Company towards patent application and

licensing should be reimbursed to the Company before any royalty payments are made.

For the years-ended December 31, 2023 and

2022, there were no reimbursements or royalties paid to the Company and the Company cannot be assured that Chemia’s efforts will

end up in any future sales of the technology.

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 50 %

to the Company and 50 %

On November 27, 2018, Company and Chemia signed an Addendum to Royalty Agreement (“Addendum”), according to

which the Company granted Chemia a royalty-based limited license for purposes of making and selling fragrances embodying the 3F

Based on the Addendum, Chemia should pay the Company 5 %

of net sales in royalty.

On November 8, 2019, both companies entered into Amendment no.1 to Royalty Agreement, based on which

certain expenses borne by the Company towards patent application and licensing should be reimbursed to the Company before any

royalty payments are made.

For the years ended December 31, 2024 and 2023, there were no

reimbursements or royalties paid to the Company and the Company cannot be assured that Chemia’s efforts will end up in any

future sales of the technology.

February 15, 2022, the Company and its subsidiaries, Global BioLife, Inc.

(“Global”), and Impact BioLife Sciences, Inc.

Sciences”), and GRDG entered into a Licensing Proceeds Distribution Agreement (“GRDG Agreement”), whereas GRDG would

transfer its 20 % equity position in both Global and BioLife Sciences to the Company in exchange for 20 % interest in Global and/or BioLife

Science revenue received from the exclusive or non-exclusive licensing of and/or the sale of Global Intellectual Property to a Third

Party, net of specific costs.

As of the date of this report, no contingent liability has been recognized under the GRDG Agreement.

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.

(“BioLife Sciences”), and GRDG entered into a Licensing Proceeds Distribution Agreement (“GRDG Agreement”),

whereas GRDG would transfer its 20 %

equity position in both Global and BioLife Sciences to the Company in exchange for 20 %

interest in Global and/or BioLife Science revenue received from the exclusive or non-exclusive licensing of and/or the sale of

Global Intellectual Property to a Third Party, net of specific costs.

This Licensing Agreement ended in September 2023 as core

technologies achieved significant development milestones.

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 5.5 % of net sales.

Under the terms

of the Equivir Agreement, the Company shall reimburse the Licensee for 50 % of the development costs provided that the development

costs shall not exceed $ 1,250,000 .

As of December 31, 2023 and December 31, 2022, $ 200,000 , and $ 0 , respectively, has been recorded in relation to the

Equivir License as development of the Equivir technology has not begun and no reasonable amount can be estimated.

Under the terms of the Equivir Agreement, the Company

shall reimburse the Licensee for 50 % of the development costs provided that the development costs shall not exceed $ 1,250,000 .

December 31, 2024 and December 31, 2023, $ 200,000 , and $ 200,000 , respectively, have been recorded in relation to the Equivir License as development

of the Equivir technology.

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 $ 150,000 for the first year of the employment term, $ 100,000 for the second year of the employment term, and $ 100,000 for the third

year of the employment term.

As of December 31, 2024, approximately $ 38,000 is accrued for year one of Mr.

Heuszel’s bonus.

Litigation Payments – The Company retains the services of professional service providers, including law firms that specialize

8 unchanged sentences

these arrangements.

Payments – The Company is party to certain agreements with funding partners who have rights to portions of intellectual

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.

As of December 31, 2023, there are no contingent payments due.

Related Party Transactions

and Development Activities

on Shareholders Agreement entered into on April 26, 2017, the Company would fund the scientific operations of GRDG, a company

involved in research and development of biomedical products which is a minority stockholder of two of the Company’s

subsidiaries and is owned by Daryl Thompson, a director of many subsidiaries of the Company, to do the development and research

works on the biomedical products for the Company.

on Shareholders Agreement entered into on April 26, 2017, the Company would fund the scientific operations of GRDG, a company involved

in research and development of biomedical products which is a minority stockholder of two of the Company’s subsidiaries and is

owned by Daryl Thompson, a director of many subsidiaries of the Company, to do the development and research works on the biomedical products

for the Company.

On February 15, 2022, the Company and its subsidiaries, Global BioLife, Inc.

(“Global”), and Impact BioLife Sciences, Inc.

(“BioLife Sciences”), and GRDG entered into a Licensing

Proceeds Distribution Agreement (“GRDG Agreement”), whereas GRDG would transfer its 20 % equity position in both Global

and BioLife Sciences to the Company in exchange for 20 % interest in Global and/or BioLife Science revenue received from the

exclusive or non-exclusive licensing of and/or the sale of Global Intellectual Property to a Third Party, net of specific costs.

of the date of this report, no contingent liability has been recognized under the GRDG Agreement.

As of December 31, 2023 and 2022,

this funding approximates $ 25,000

and $ 43,000 , respectively, per month.

December 31, 2023 and 2022, the Company incurred approximately $ 447,000

and $ 546,000 , respectively, in

(“Global”), and Impact BioLife

Sciences, Inc.

(“BioLife Sciences”), and GRDG entered into a Licensing Proceeds Distribution Agreement (“GRDG Agreement”),

whereas GRDG would transfer its 20 %

equity position in both Global and BioLife Sciences to the Company in exchange for 20 %

interest in Global and/or BioLife Science revenue received from the exclusive or non-exclusive licensing of and/or the sale of Global

Intellectual Property to a Third Party, net of specific costs.

As of the date of this report, no contingent liability has been recognized

under the GRDG Agreement.

As of December 31, 2024 and 2023, the Company incurred approximately $ 25,000

and $ 447,000 ,

respectively, in expenses.

and Administrative Costs

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.

These costs are approximately $ 12,000 per month.

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.

Beginning in January 2024 and through September 2024, these costs are approximately

Beginning October 2024, these costs are approximately $ 26,000 per month.

As of December 31, 2024, the Company incurred

in related expenses.

As of December 31, 2022, the Company incurred approximately $ 98,000 in related expenses.

Services Global Corp (“SHRG”)

2023, the Company, via a distribution agreement, sold approximately $ 94,000 of healthcare products to SHRG, a related party.

It was determined

that the amounts owed by SHRG were uncollectible and were subsequently written off and is included in Other general expenses.

Fai Ambrose Chan, chairman of the board of directors of Impact BioMedical is also the chairman of the board of SHRG.

As of December 31, 2023, the Company incurred approximately $ 144,000

in related expenses.

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 4.25 %

and is due in full at the maturity date of September

The Note was further amended on July 24, 2024 with an effective date of September 16, 2024 to i) allow the Company

to pay certain principal and/or interest payments owing under the repayment terms in an exchange for potential of equity in the

Company, ii) change the quarterly interest due dates to the last day of each calendar quarter (i.e.

December 31, March 31, June 30

and September 30), iii) to adjust the On Demand feature so that it starts after the 24th month, iv) continue the planned repayment

program commencing on the 37th month and on the last day of each month thereafter through August 31, 2030 to pay a fixed monthly

payment of $ 126,381 , v) to

continue the scheduled maturity date of September 30, 2030, and vi) adjusts the interest rate to be the WSJ Prime Rate plus 0.50 %.

As of December 31, 2024 and December 31, 2023 the outstanding balance, inclusive of interest was $ 8,878,000 (net

of change in fair value of the Note of $ 5,068,000 )

and $ 12,074,000 , respectively.

The $ 8,878,000 is

recorded in Note payable, related party at December 31, 2024.

The $ 12,074,000 at

December 31, 2023 is included in Current portion of note payable, related party.

SUBSEQUENT EVENTS

Company has evaluated all subsequent events and transactions through February 19, 2024, the date that the consolidated financial statements

Company has evaluated all subsequent events and transactions through March 24, 2025, the date that the consolidated financial statements

were available to be issued and noted no subsequent events requiring financial statement recognition or disclosure other than what was

identified in Note 9.

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

ON ACCOUNTING AND FINANCIAL DISCLOSURE

On June 29, 2022, the Company’s board of directors

approved replacing Turner Stone as our independent registered public accounting firm, with Grassi & Co.

Accountant”) as our independent registered public accounting firm, effective July 1, 2022.

For the year ended December 31, 2021, and

through the interim period ended June 30, 2022, there were no “disagreements” (as such term is defined in Item 304 of

Regulation S-K) with Turner Stone on any matter of accounting principles or practices, financial statement disclosure, or auditing

scope or procedures, which disagreements, if not resolved to the satisfaction of the Turner Stone, would have caused them to make

reference thereto in their reports on the financial statements for such periods.

Turner Stone’s audit report on our financial statements for the year

ended December 31, 2021 contained no adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit

scope or accounting principles.

We authorized the former accountants to respond fully

and without limitation to all requests of the New Accountant concerning all matters related to the audited periods by the former accountants,

including with respect to the subject matter of each reportable event.

Prior to retaining the New Accountant, the Company did not consult with the New Accountant regarding either:

the application of accounting principles to a specified transaction, either contemplated or proposed, or the type of audit opinion that

might be rendered on the Company’s financial statements;

or (ii) any matter that was the subject of a “disagreement”

or a “reportable event” (as those terms are defined in Item 304 of Regulation S-K).

identified below:

February 25, 2025, the Company completed the acquisition of certain assets owned by DSS Pure Air, Inc.

(“DSS PureAir”),

a related party, for $ 1,150,000

to be paid by 545,024

shares of the Company’s common stock calculated on a 10 day VWAP.

Assets acquired included inventory and intellectual

property of the Celios air purification system.

On February 26, 2025, the Company issued 36,433 shares of the Company’s common stock as payment of legal fees incurred associated

with the Company’s IPO, registration of shares associated with its equity incentive plan as well as other related services.

The Company and DSS have agreed

to settle a portion of the outstanding indebtedness that Impact BioMedical owes to DSS under the Promissory Note in the amount of $ 8,697,142.80

through the issuance of 2,415,873 shares of the Company’s common stock, at a conversion ratio of $ 3.60 per share, which was equal

to the closing market price of the Company’s common stock on March 24, 2025.

9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data