United States securities and exchange commission logo
October 26, 2021
Heng Fai Ambrose Chan
Chief Executive Officer
Impact BioMedical, Inc..
200 Canal View Boulevard, Suite 104
Rochester, NY 14623
Re: Impact BioMedical,
Inc.
Amendment No. 1 to
Registration Statement on Form S-1
Filed September 29,
2021
File No. 333-253037
Dear Mr. Chan:
We have reviewed your registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Amendment No. 1 to Form S-1 filed September 29, 2021
What are the U.S. federal income tax consequences to me of the
Distribution?, page iv
1. We note your disclosure
that the U.S. federal income tax treatment of the issuance of the
Impact Shares to DSS
shareholders is unclear at this stage. Please clarify, if true,
that DSS expects the
Distribution to be treated as a taxable non-liquidating distribution to
its stockholders as
indicated on page 16. Please expand your disclosure on page 16 to
indicate the basis for
the uncertainty.
Business Overview, page 1
2. We note your disclosure
that you have five wholly owned subsidiaries and six partially
owned subsidiaries.
Please provide an organizational chart showing this ownership
structure and indicate
the minority interests held by any related party in your partially
Heng Fai Ambrose Chan
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owned subsidiaries.
Equivir, page 2
3. Please disclose the regulatory status of Equivir in the United States
or other appropriate
jurisdictions. If this product candidate has not received
Pre-Investigational New Drug
Application by the FDA, please make that clear.
4. We note your disclosure that Global BioLife and Sweet Sense have
engaged a consulting
firm in the biopharmaceutical and life sciences industry to assist in
your goal of licensing
each of Linebacker and Equivir/Nemovir. Please identify the consulting
firm and clarify
whether your activities will be limited to licensing arrangements or
whether you intend to
conduct any pre-clinical or clinical studies on these candidates.
Please also provide the
disclosure required by Regulation S-K Item 101(h)(4)(viii) and (ix) in
an appropriate
location in your prospectus.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of operations for the year ended December 31, 2020 as compared to the
year ended
December 31, 2019, page 19
5. We note your results of operations discussion for the year ended
December 31, 2020
combines the results of the predecessor and successor companies.
Please revise your
MD&A to provide a separate discussion of the historical results of the
predecessor and the
successor periods for 2020.
6. Additionally please revise your presentation to ensure that your
combined results are
prepared on a pro forma basis in accordance with Article 11 of
Regulation S-X. You
should clearly identify this information as being presented on a pro
forma basis, explain to
your readers how the pro forma presentation was derived, why you
believe this
presentation to be useful, and any potential risks associated with
using such a presentation.
7. We note your reference to allocation of costs from DSS shared
resources. Please revise
your disclosure to explain how these costs impacted your selling,
general and
administrative costs. Also tell us how these costs are allocated and
why you are not
required to disclose this agreement in your related party footnote.
Refer to ASC 850-10-
50. Please tell us your consideration of the guidance in Staff
Accounting Bulletin Topic
1:B.
8. We note that your research and development costs increased due to
continued research
and development of acquired product formulations. Please disclose the
costs incurred
during each period presented for each of your key research and
development
products/projects. If you do not track your research and development
costs by project,
please disclose that fact and explain why you do not maintain and
evaluate research and
development costs by project. Provide other quantitative or
qualitative disclosure that
provides more transparency as to the type of research and development
expenses incurred
(i.e., by nature or type of expense) which should reconcile to total
research and
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development expense on the Consolidated Statements of Operations.
Liquidity and Capital Resources, page 19
9. Please revise your discussion of future liquidity and capital resource
requirements to
analyze material cash requirements from known contractual and other
obligations.
Specify the type of obligation and the relevant period for the related
cash requirements
and discuss the anticipated source of funds needed to satisfy such
obligations. Refer to
Item 303(b)(1) of Regulation S-K.
10. Please revise your MD&A to provide a discussion of your critical
accounting estimates.
Refer to Item 303(b)(3) of Regulation S-K.
11. We note your disclosure that there was no goodwill impairment at
December 31, 2020 or
June 30, 2021. Please expand your disclosures to discuss your goodwill
impairment
testing given your recurring operating losses, negative working
capital and negative
operating cash flows. Your discussion should address:
the percentage by which fair value of your reporting unit
exceeded its carrying value
at the date of the most recent test;
a detailed description of the methods and key assumptions used
and how the key
assumptions were determined;
a discussion of the degree of uncertainty associated with the
assumptions; and
a description of potential events and/or changes in
circumstances that could
reasonably be expected to negatively affect the key assumptions.
Refer to Item 303(b)(3) of Regulation S-K.
Business, page 21
12. We note your statement on page 22 that Equivir has "broad antiviral
efficacy against
multiple types of infectious disease." Determinations of efficacy are
solely within the
authority of the FDA. Please remove any references to efficacy.
13. We note your disclosure that Linebacker, 3F and Equivir have
demonstrated promising
results or may be promising candidates. Please revise your
disclosure to focus on the
specific factual details of the studies, including the studies
conducted and the quantitative
information regarding the range of results observed, that lead you to
believe that the
results are as disclosed. In your prospectus summary, and in this
section, clarify whether
these results are based on any human trials or were powered for
statistical significance.
Also, as safety and efficacy determinations are solely within the
FDA's authority, please
refrain from referring to any results as promising since that
may imply safety or efficacy
or eventual FDA approval.
14. We note your disclosure of various collaborations, joint ventures and
partnerships
throughout your prospectus. Please include a description of the
material terms of the
following agreements in the prospectus, including the rights and
obligations of the parties
Heng Fai Ambrose Chan
Impact BioMedical, Inc..
October 26, 2021
Page 4
thereto, financial terms including amounts paid to date, aggregate
milestone amounts to be
paid or received, the royalty range and term, as applicable, term and
termination
provisions:
the joint venture with Quality Ingredients, LLC;
the Royalty Agreement, as amended, any any collaboration
agreement with Chemia
Corporation;
the exclusive distribution agreement with BioMed; and
any agreements with GRDG related to research and development of
biomedical
products.
With regard to the royalty range, please disclose a royalty range of
not more than 10
percentage points.
15. We note your disclosure that Equivir is a patented medication. Please
expand your
disclosure to clarify the specific products, product groups and
technologies to which
the patents relate, whether the patents are owned or licensed, the
type of patent protection
(composition of matter, use, or process), the patent expiration dates,
and the jurisdictions
of the patents. If the patent is licensed from a third party pursuant
to a license agreement,
please specify.
16. In addition to the patent information for Equivir, please revise to
provide all information
required by Regulation S-K Item 101(h)(4)(vii) for Linebacker, Laetose
and 3F.
17. Please provide any disclosures required by Regulation S-K Item 103.
DSS Note, page 24
18. We note the disclosure that DSS intends continue to fund the
operations of the company
through a year from the date the financial statements were available
to be issued. Please
clarify the end date of this arrangement and indicate whether there is
any maximum
amount that may be obtained from DSS under this note.
Management, page 27
19. We note your disclosure that your research and development efforts are
headed by Mr.
Daryl Thompson in his capacity as Director of Scientific Initiatives
in Global BioLife Inc.
Please provide the disclosures for Mr. Thompson as required by Item
401(c) of Regulation
S-K.
Certain Relationships and Related Party Transactions, page 34
20. We note your disclosure that prior to the execution of the Share
Exchange Agreement,
FirstName LastNameHeng Fai Ambrose Chan
your ownership of a suite of antiviral and medical technologies was
valued at $382
Comapany NameImpact
million through a BioMedical, Inc..
required independent valuation that was completed by
Destum Partners.
OctoberPlease file the
26, 2021 Pageconsent
4 of Destum Partners as required by Securities
Act Rule 436.
FirstName LastName
Heng Fai Ambrose Chan
FirstName LastNameHeng
Impact BioMedical, Inc.. Fai Ambrose Chan
Comapany
October 26,NameImpact
2021 BioMedical, Inc..
October
Page 5 26, 2021 Page 5
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Exhibit Index, page 40
21. We note your disclosure on page 1 that Global BioLife has biomedical
intellectual
property, including intellectual property, assigned to it by one of
its shareholders. We also
note your disclosure on page 25 that certain services are provided to
you and your
subsidiaries by GRDG, a related party, pursuant to the Stockholders
Agreement, dated as
of December 2020. Please file these agreements as exhibits to your
registration statement
or tell us why that would not be required.
Interim Financial Statements
Note 5 - Investments , page F-11
22. Please tell us how you are accounting for your investment in Vivacitas
Oncology Inc. and
the applicable GAAP guidance used. In this respect we note that the
company will be
allocated two seats on the board of Vivacitas and the Seller is a
related party. Revise your
disclosure to provide any disclosure required by ASC 320-10-50, ASC
321-10-50, ASC
323-10-50, or any other applicable guidance.
Annual Financial Statements
Note 1 - Nature of Operations and Basis of Presentation
Nature of Operations, page F-20
23. We note that you elected to apply pushdown accounting for the
acquisition of Impact
BioMedical and determined that the fair value of the consideration
transferred was
approximately $38,319,000. Please reconcile this with your disclosure
on page 34 that
states total consideration was $50 million. Also explain how the
consideration amount
was determined.
24. We also note that you determined that the fair value of certain
developed technology and
pending patents assets acquired was approximately $22,260,000. Please
address the
following:
explain how you determined the fair value of these assets
including a description of
the methodology and key assumptions used;
given that Alset International Limited is a related party, tell
us how you considered
SAB Topic 5G when determining the fair value; and
explain how you determined the useful lives of the intangible
assets acquired.
General
25. Since you appear to qualify as an emerging growth company, as
defined in the
Jumpstart Our Business Startups Act, please disclose that you are an
emerging growth
company and revise your registration statement to:
describe how and when a company may lose emerging growth
company status;
Heng Fai Ambrose Chan
Impact BioMedical, Inc..
October 26, 2021
Page 6
briefly describe the various exemptions that are available to you,
such as exemptions
from Section 404(b) of the Sarbanes-Oxley Act of 2002 and Section
14A(a) and (b)
of the Securities Exchange Act of 1934; and
state your election under Section 107(b) of the JOBS Act:
o if you have elected to opt out of the extended transition
period for complying
with new or revised accounting standards pursuant to Section
107(b), include a
statement that the election is irrevocable; or
o if you have elected to use the extended transition period for
complying with new
or revised accounting standards under Section 102(b)(2),
provide a risk factor
explaining that this election allows you to delay the adoption
of new or revised
accounting standards that have different effective dates for
public and private
companies until those standards apply to private companies.
Please state in
your risk factor that, as a result of this election, your
financial statements may
not be comparable to companies that comply with public company
effective
dates. Include a similar statement in your critical accounting
policy disclosures.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Eric Atallah at 202-551-3663 or Mary Mast at
202-551-3613 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Jordan Nimitz at 202-551-5831 or Tim Buchmiller at 202-551-3635 with
any other
questions.
Sincerely,
FirstName LastNameHeng Fai Ambrose Chan
Division of
Corporation Finance
Comapany NameImpact BioMedical, Inc..
Office of Life
Sciences
October 26, 2021 Page 6
cc: Darrin M. Ocasio, Esq.
FirstName LastName