| Summary of Significant Accounting and Reporting Policies | Note
2. Summary of Significant Accounting and Reporting Policies Basis
of Presentation and Principles 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. GAAP”). 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. IMPACT
Biomedical, Inc. and Subsidiaries Notes
to Consolidated Financial Statements The
consolidated financial statements include all accounts of the entities as of the reporting period ending dates and for the reporting
periods as follows: Schedule
of Condensed Financial Statements
Name of consolidated State or other Date of incorporation Attributable
Attributable
Global BioMedical, Inc. Nevada April
18, 2017 90.9 % 90.9 %
Global BioLife, Inc. Nevada April
14, 2017 81.8 % 81.8 %
BioLife Sugar, Inc Nevada April
23, 2018 90.9 % 90.9 %
Happy Sugar Inc Nevada August
17, 2018 81.8 % 81.8 %
Sweet Sense Inc. Nevada April
30, 2018 95.5 % 95.5 %
Global Sugar Solutions Inc. Nevada November
7, 2019 100 % 100 % As
of June 30, 2024, and December 31, 2023, the aggregate noncontrolling interest was equity of $ 3,009,000
and $ 3,040,000 ,
respectively, which are separately disclosed on the Consolidated Balance Sheets. Use
of estimates The
preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates of the balance
sheets and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. Reclassifications
Costs
associate with Sales and marketing have been reclassed from Other operating expenses for the three and six months ended June 30, 2023
to conform with current period presentation. Also, Other operating expenses have been reclassed to Other income for the six months ended
June 30, 2023 to conform with current period presentation. Loss
per Share Basic
loss per share is computed by dividing the net loss attributable to the common stockholders by weighted average number of shares of common
stock outstanding during the period. Fully diluted loss per share is computed like basic loss per share except that the denominator is
increased to include the number of additional common shares that would have been outstanding if the potential common shares had been
issued and if the additional common shares were dilutive. There were no dilutive financial instruments issued or outstanding for the
three and six months ended June 30, 2024 or 2023. Fair
Value of Financial Instruments Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The Fair Value Measurement Topic of the Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) establishes a three-tier fair value hierarchy which prioritizes the inputs used
in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include: ●
Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets, ●
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted
prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;
and ●
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The
carrying amounts reported in the balance sheet of cash and cash equivalents, 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. IMPACT
Biomedical, Inc. and Subsidiaries Notes
to Consolidated Financial Statements Cash
and cash equivalents The
Company considers all highly liquid investments with a maturity of three months or less at the date of acquisition to be cash equivalents.
There were no cash
equivalents as of June 30, 2024 and December 31, 2023. Notes
receivable, unearned interest, and related recognition The
Company records all future payments of principal and interest on notes as notes receivable, which are then offset by the amount of any
related unearned interest income. For financial statement purposes, the Company reports the net investment in the notes receivable on
the consolidated balance sheet as current or long-term based on the maturity date of the underlying notes. Such net investment is comprised
of the amount advanced on the loans, adjusting for net deferred loan fees or costs incurred at origination, amounts allocated to warrants
received upon origination, and any payments received in advance, if applicable. The unearned interest is recognized over the term of
the notes and the income portion of each note payment is calculated so as to generate a constant rate of return on the net balance outstanding.
If applicable, any net deferred loan fees or costs, together with discounts recognized in connection with warrants acquired at origination,
are accreted as an adjustment to yield over the term of the loan. (Note 3) Goodwill Goodwill
is the excess of cost of an acquired entity over the fair value of amounts assigned to assets acquired and liabilities assumed in a business
combination. Goodwill is subject to impairment testing at least annually and will be tested for impairment between annual tests, which
will take place during the fourth quarter in 2024, 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 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 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 three
or six months ended June 30, 2024 or year ended December 31, 2023. (Note 5) Intangible
Assets The
estimated fair values of acquired intangibles are generally determined based upon future economic benefits such as earnings and cash
flows. Acquired identifiable intangible assets are recorded at fair value and are amortized over their estimated useful lives. Acquired
intangible assets with an indefinite life are not amortized but are reviewed for impairment at least annually as of December 31 st No
impairment was recognized for the three
or six months ended June 30, 2024, and 2023. (Note 6) Recoverability
of Long-Lived Assets We
evaluate long-lived assets such as property, equipment and definite lived intangible assets, such as patents, for impairment whenever
events or circumstances indicate that the carrying value of the assets recognized in our financial statements may not be recoverable.
Factors that we consider include whether there has been a significant decrease in the market value of an asset, a significant change
in the way an asset is being utilized, or a significant change, delay or departure in our strategy for that asset, or a significant change
in the macroeconomic environment. Our assessment of the recoverability of long-lived assets involves significant judgment and estimation.
These assessments reflect our assumptions, which, we believe, are consistent with the assumptions hypothetical marketplace participants
use. Factors that we must estimate when performing recoverability and impairment tests include, among others, forecasted revenue, margin
costs and the economic life of the asset. If impairment is indicated, we determine if the total estimated future cash flows on an undiscounted
basis are less than the carrying amounts of the asset or assets. If so, an impairment loss is measured and recognized. Our
impairment loss calculations require that we apply judgment in identifying asset groups, estimating future cash flows, determining asset
fair values, and estimating asset’s useful lives. The Company reviews identifiable amortizable intangible assets for impairment
whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Determination of recoverability
is based on the lowest level of identifiable estimated undiscounted cash flows resulting from use of the asset and its eventual disposition.
Measurement of any impairment loss is based on the excess of the carrying value of the asset over its fair value. Based on the uncertainty
of forecasts inherent with a new product, events such as the failure to generate forecasted revenue from new products could result in
a non-cash impairment in future periods. Revenue
Recognition The
Company has adopted ASC Topic 606 Revenue from Contracts with Customers (“Topic 606”). The
Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration to which it
is entitled in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined
to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that
are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the
amount of the transaction price that is allocated to the respective performance obligation when or as the performance obligation is satisfied. Research
and Development Research
and development costs are expensed as incurred. Total research and development costs were $ 50,000
for the six months ended June 30, 2024,
and $ 445,000 for
six months ended June 30, 2023. IMPACT
Biomedical, Inc. and Subsidiaries Notes
to Consolidated Financial Statements Provision
for Credit Losses On
January 1, 2022, the Company adopted amended accounting guidance “ ASU No.2016-13 – Credit Losses” Continuing
Operations and Going Concern The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. This basis
of accounting contemplates the recovery of our assets and the satisfaction of liabilities in the normal course of business. As reflected
in the accompanying financial statements the Company has incurred operating losses as well as negative cash flows from operating and
investing activities over the past two years. These factors raise substantial doubt about the Company’s ability to continue as
a going concern within one year of the date that the financial statements are issued. These consolidated financial statements do not
include any adjustments to the specific amounts and classifications of assets and liabilities, which might be necessary should we be
unable to continue as a going concern. To
continue as a going concern, the Company 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. Recent
Accounting Standards The
Financial Accounting Standards Board (FASB) issues various Accounting Standards Updates relating to the treatment and recording of certain
accounting transactions. There are several new accounting pronouncements issued by FASB which are not yet effective. Each of these pronouncements,
as applicable, has been or will be adopted by the Company. As of June 30, 2024, none of these pronouncements are expected to have a material
effect on the financial position, results of operations or cash flows of the Company. IMPACT
Biomedical, Inc. and Subsidiaries Notes
to Consolidated Financial Statements | 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Summary of Significant Accounting and Reporting Policies Principles
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. GAAP”). 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. The
consolidated financial statements include all accounts of the entities as of the reporting period ending dates and for the reporting
periods as follows: Schedule
of Condensed Financial Statements
Name of consolidated State or other Date of incorporation Attributable Attributable
Global BioMedical, Inc. Nevada April
18, 2017 90.9 % 90.9 %
Global BioLife, Inc. Nevada April
14, 2017 81.8 % 81.8 %
BioLife Sugar, Inc Nevada April
23, 2018 90.9 % 90.9 %
Happy Sugar Inc Nevada August
17, 2018 81.8 % 81.8 %
Sweet Sense Inc. Nevada April
30, 2018 95.5 % 95.5 %
Global Sugar Solutions Inc. Nevada November
7, 2019 100 % 100 % As
of December 31, 2023, and December 31, 2022, the aggregate noncontrolling interest was equity of $ 3,040,000 and $ 3,111,000
respectively, which are separately disclosed on the Consolidated Balance Sheets. Use
of Estimates – The preparation of
consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates of the balance sheets
and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. Earnings
(Loss) per Share - Fair
Value of Financial Instruments –
Fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The Fair Value Measurement Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest
priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority
to unobservable inputs (Level 3 measurements). These tiers include: ●
Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets. ●
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted
prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;
and ●
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The
carrying amounts reported in the balance sheet of cash, 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. Notes
receivable, unearned interest, and related recognition –
The Company records all future payments of principal and interest on notes as notes receivable, which are then offset by the amount of
any related unearned interest income. For financial statement purposes, the Company reports the net investment in the notes receivable
on the consolidated balance sheet as current or long-term based on the maturity date of the underlying notes. Such net investment is
comprised of the amount advanced on the loans, adjusting for net deferred loan fees or costs incurred at origination, amounts allocated
to warrants received upon origination, and any payments received in advance, if applicable. The unearned interest is recognized over
the term of the notes and the income portion of each note payment is calculated so as to generate a constant rate of return on the net
balance outstanding. 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. Recent
Accounting Standards - The
Financial Accounting Standards Board (FASB) issues various Accounting Standards Updates relating to the treatment and recording of certain
accounting transactions. There are several new accounting pronouncements issued by FASB which are not yet effective. Each of these pronouncements,
as applicable, has been or will be adopted by the Company. As of December 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. On
January 1, 2022, the Company adopted amended accounting guidance “ ASU No.2016-13 – Credit Losses” Investments
– 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 investments) Property,
Plant and Equipment –
Property, plant and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful
lives or lease period of the assets whichever is shorter. Expenditures for renewals and betterments are capitalized. Expenditures for
minor items, repairs and maintenance are charged to operations as incurred. Any gain or loss upon sale or retirement due to obsolescence
is reflected in the operating results in the period the event takes place. Research
and Development - Research
and development costs are expensed as incurred. Total research and development costs were $ 1,147,000 for the year-ended December 31, 2023,
and $ 1,226,000 for
year-ended December 31, 2022 Goodwill
– Goodwill is the excess of cost
of an acquired entity over the fair value of amounts assigned to assets acquired and liabilities 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. 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 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 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. (Note 7) Intangible
Assets - The estimated fair values of
acquired intangibles are generally determined based upon future economic benefits such as earnings and cash flows. Acquired identifiable
intangible assets are recorded at fair value and are amortized over their estimated useful lives. Acquired intangible assets with an
indefinite life are not amortized but are reviewed for impairment at least annually as of December 31 st No
impairment was recognized as of year-ended
December 31, 2023 or the year ended December 31, 2022. (Note 8). 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. Revenue
- The Company has adopted ASC Topic
606 Revenue from Contracts with Customers (“Topic 606”). The
Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration to which it
is entitled in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined
to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that
are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the
amount of the transaction price that is allocated to the respective performance obligation when or as the performance obligation is satisfied. Provision
for Credit Losses - On January 1, 2022, the
Company adopted amended accounting guidance “ ASU No.2016-13 – Credit Losses” Continuing
Operations and Going Concern - The accompanying
consolidated financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting
contemplates the recovery of our assets and the satisfaction of liabilities in the normal course of business. As reflected in the accompanying
financial statements the Company has incurred operating losses as well as negative cash flows from operating and investing activities
over the past two years. These factors raise substantial doubt about the Company’s ability to continue as a going concern within
one year of the date that the financial statements are issued. These consolidated financial statements do not include any adjustments
to the specific amounts and classifications of assets and liabilities, which might be necessary should we be unable to continue as a
going concern. To
continue as a going concern, the Company 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. |
