United States securities and exchange commission logo
July 21, 2022
Heng Fai Ambrose Chan
Chief Executive Officer
Impact BioMedical, Inc.
275 Wiregrass Pkwy
West Henrietta, NY 14586
Re: Impact BioMedical,
Inc.
Amendment No. 3 to
Registration Statement on Form S-1
Filed July 11, 2022
File No. 333-253037
Dear Mr. Chan:
We have reviewed your amended 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.
Unless we note
otherwise, our references to prior comments are to comments in our
October 26, 2021 letter.
Amendment No. 3 to Form S-1 filed July 11, 2022
Summary
Business Overview, page 2
1. Please revise your
summary to present a balanced view of your company and its current
stage of development by
focusing on the most material aspects of your company. As
currently written, your
summary focuses on the positive aspects of your business and
includes a lengthy
recitation of disclosures appearing in the Management's Discussion and
Analysis and Business
sections. Please balance the description of your strengths with
equally prominent
disclosure of the challenges you face and the risks and limitations that
could harm your
business or inhibit your strategic plans. Ensure that you discuss the risks
and obstacles you face
in developing your product candidates with the same level of detail
Heng Fai Ambrose Chan
FirstName LastNameHeng
Impact BioMedical, Inc. Fai Ambrose Chan
Comapany
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as you use to discuss the positive aspects of your operations. For
example, but without
limitation, balance your discussion to disclose the following:
that you have not conducted and do not have any current plans to
conduct any pre-
clinical testing for any of your product candidates;
that you have no FDA approved products;
that it may be several years before you seek FDA approval for any
of your products;
that you have not yet found any third-parties or customers that
are interested
in purchasing, licensing, or co-developing products that leverage
any of your
products;
that you cannot guarantee that you will be able to find such
third-parties or enter into
such agreements;
that you have not yet generated any revenue from your operations;
and
information regarding your history of net losses, negative class
flows, and
accumulated deficit over the last two years.
2. We note your revisions in response to our prior comment 2. We also
note that your
wholly-owned subsidiary, DSS PureAir, Inc., was not included in the
subsidiary chart.
Please revise your chart to include all subsidiaries of Impact
BioMedical, Inc.
3. We note what appear to be several apparent discrepancies in the
beneficial ownership
disclosures of your subsidiaries. For example, we note the following
statements:
On page 2, 18 and 27, you state that Impact Biomedical is the sole
owner of Global
Biomedical, Inc. and Impact Biolife Science, Inc. However, your
subsidiary chart
appears to indicate that Peggy Tang owns 9.09% of Global
Biomedical, Inc., and on
page 34, you state that GRDG is a stockholder of Impact BioLife.
On pages 2, 18 and 27, you state that Impact Biomedical owns 90%
of Global
BioLife Inc.'s outstanding equity through Global Biomedical, Inc.
However, you
state on page 5 that you own 80% of Global BioLife through Global
Biomedical and
on page F-24 you state that the attributable interest as of March
31, 2022 in Global
BioLife, Inc. was 81.8%.
The subsidiary chart does not convey Impact's 90% equity ownership
and Holista's
10% equity ownership of Biolife Sugar, Inc.
You disclose that you are the owner of 50% of the outstanding
equity of Sweet Sense,
that the other equity owner is BioLife Sugar, Inc., and that you
own 90% of Biolife
Sugar, Inc. and the other equity owner is Holista CollTech
Limited (10%). Please
reconcile this disclosure to the information on page F-24 that
the attributable interest
as of March 31, 2022 in Sweet Sense, Inc. was 95.5%.
Please revise your subsidiary chart and your disclosure throughout to
address these
apparent discrepancies in the equity interests of your subsidiaries.
4. We note the inclusion of several products in your Summary that are not
discussed in your
Business Section (i.e. Procombin, VanXin, Quantum, CRST 1, Keto Sweet,
Solarin, and
Bio Med). Given the limited amount of disclosure related to these
programs, please
explain why these programs are sufficiently material to your business
to warrant inclusion
Heng Fai Ambrose Chan
Impact BioMedical, Inc.
July 21, 2022
Page 3
in your Summary. If they are material, please expand your disclosure
in your Business
section to provide a more fulsome discussion of these programs,
including a description of
development activities conducted. Alternatively, remove any programs
that are not
currently material from your Summary on page 4.
5. We note your revision in response to our prior comment 12 and reissue.
We note your
statement that Equivir is a compound that is "believed to be
successful in antiviral
infection treatments" and your description of Equivir as
"viral-fighting." Efficacy and
safety are determinations that are solely within the authority of the
FDA. Please remove
these and all other statements of efficacy.
6. We also note your statement on page 4 that Equivir is "a novel blend
of FDA Generally
Recognized as Safe ("GRAS") eligible natural compounds which have
demonstrated anti
viral effects." Please balance your disclosure here by stating that
the FDA has not
approved this product, that GRAS designation means that the FDA does
not question the
basis for a notifier's GRAS determination, and that GRAS determination
does not increase
the likelihood that your product candidate will receive marketing
approval.
7. We note your disclosure on pages 20 and 21 that you have not conducted
preclinical
testing and have no plans to conduct any scientific testing relating
to Linebacker, Laetose,
or Equivir. Given the early stage of development of these programs,
please explain why
each program is sufficiently material to your business to warrant
discussion in this
prospectus. To the extent that these product candidates are material,
please clearly state
for each product candidate on page 4 that you have not conducted and
have no current
plans to conduct any preclinical testing for that product.
Stockholders Agreement between Impact BioLife and the Impact BioLife
Stockholders, page 6
8. We note that the Company contracted for the same consideration and
incurred the exact
same expenses for 2020 and 2021 under the Stockholders Agreement
between Global
BioLife and the Global BioLife Stockholders as it did under the
December
2020 Stockholders Agreement between Impact BioLife and the Impact
BioLife
Shareholders. Please clarify whether these terms are two separate
payment obligations to
GRDG, such that Impact BioMedical pays a total of $86,000 per month to
GRDG, or
whether they are one payment obligation, such that Impact BioMedical
pays $43,000 per
month.
Summary of the Distribution
Tax Consequences to DS Stockholders, page 10
9. We have reviewed your revisions in response to our prior comment 1. We
note your
FirstName LastNameHeng Fai Ambrose Chan
statement on page 10 that DSS shareholders "will potentially" be subject
to a taxable
Comapany
eventNameImpact BioMedical,
on the distribution of the Inc.
Impact Shares. Please revise to clarify
that DSS expects
the DSS shareholders
July 21, 2022 Page 3 to be subject to a taxable event on the
distribution.
FirstName LastName
Heng Fai Ambrose Chan
FirstName LastNameHeng
Impact BioMedical, Inc. Fai Ambrose Chan
Comapany
July NameImpact BioMedical, Inc.
21, 2022
July 21,
Page 4 2022 Page 4
FirstName LastName
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Fiscal Year Ended December 31, 2021 compared to Year Ended December 31, 2020,
page 23
10. We note your disclosure that your results of operations for the year
ended December 31,
2020 have been prepared on a combined proforma basis. However, it does
not appear as
though you have presented combined proforma information for the year
ended December
31, 2020. Please revise the filing to delete reference to the combined
pro forma basis or
advise us accordingly.
11. We note the significant increase in your income tax benefit. Please
revise your results of
operations discussion to include analysis of your income tax benefit.
Other Expense, page 24
12. We note that through your distribution agreement with BioMed
Technologies Asia Pacific
Holdings Limited, you sold $82,664 of product during the year ended
December 31, 2021,
which was offset by costs of approximately $78,000. Please explain to
us how you are
accounting for this agreement under ASC 606, including your analysis
of whether you are
a principal or an agent in these transactions.
Critical Accounting Policies
Goodwill, page 25
13. We note your added disclosure in response to prior comment 11. Please
revise your
disclosure to provide more specific detail regarding your goodwill
impairment testing. As
you appear to only have done a qualitative analysis based on your
disclosure in Note 6.
Goodwill on page F-13, please address why no quantitative analysis was
necessary in light
of recurring operating losses, negative working capital and negative
operating cash flows.
In addition, as your business model appears to be to license, sell, or
co-develop your
technologies and your only significant agreement is with GRDG, which
appears to be a
related party, please tell us your consideration of how these factors
were considered in
determining your goodwill impairment analysis. If you performed a
quantitative analysis,
please address our prior comment 11, including the percentage by which
the fair value of
your reporting unit exceeded its carrying value at the date of the
most recent test.
Business, page 27
14. We note your response to our prior comment 13 and reissue in part. We
note your
statements that "natural compounds used in the Linebacker platform
have demonstrated
strong potential in treating and preventing a range of diseases . . ."
and that "use of
Laetose in a daily diet, compared to sugar, could result in 30% less
sugar consumption and
lower glycenmic index/load." Given the early stage of these products,
please explain your
basis for these claims. Please also describe any discovery activities
you have conducted
for these and your other product candidates.
Heng Fai Ambrose Chan
FirstName LastNameHeng
Impact BioMedical, Inc. Fai Ambrose Chan
Comapany
July NameImpact BioMedical, Inc.
21, 2022
July 21,
Page 5 2022 Page 5
FirstName LastName
15. We note your revisions in response to our prior comment 14 and reissue
in part. Please
describe the material terms of your joint venture with Quality
Ingredients, LLC and please
file the Exclusive Distribution Agreement with BioMed as an exhibit.
Equivir, page 30
16. If known, please describe the potential mechanism of action for
Equivir. If not known or
understood, please make that clear.
DSS Note, page 32
17. We note your revisions in response to our prior comment 18. We also
note that while
your disclosure states that the Revolving Promissory Note was amended
on December 31,
2021, the Revolving Promissory Note you filed as Exhibit 10.6 appears
to be dated June
30, 2021. Please revise to clarify whether this is the same promissory
note and file the
amended December 31, 2021 Revolving Promissory Note as an exhibit.
Additionally,
please provide a definition for the "Maximum Lawful Rate."
Intellectual Property, page 35
18. We note your revisions in response to our prior comment 15. Please
provide the expected
expiration dates of your pending patent applications. Please also
remove your
expired Patent No. 63,027,775 from your chart.
Management, page 38
19. We reissue our prior comment 19. Please revise your management section
to identify and
disclose Mr. Daryl Thompson's background to the same extent as your
executive officers,
as required by Item 401(c) of Regulation S-K. Please also clarify the
role of Dr. Rajen M.
Dato and to the extent that he is expected to make significant
contributions to your
business, please similarly identify and disclose his background to the
same extent as your
executive officers.
Certain Relationships and Related Party Transactions, page 43
20. We note your revisions in response to prior comment 20 and note that
you continue to
attribute the value of the acquired suite of technologies to an
independent valuation
expert. While management may elect to take full responsibility for
valuation used, if you
elect to refer to an expert, you may need to include their consent as
an exhibit to
registration statement. Please refer to Question 141.02 of the
Compliance and Disclosure
Interpretations on Securities Act Sections and file the consent of
Destum Partners if
required.
Report of Independent Registered Public Accounting Firm, page F-2
21. We note that Freed Maxick CPAs, P.C. audited your December 31, 2020
financial
statements and Turner, Stone & Company, LLP audited your December 31,
2021 financial
Heng Fai Ambrose Chan
FirstName LastNameHeng
Impact BioMedical, Inc. Fai Ambrose Chan
Comapany
July NameImpact BioMedical, Inc.
21, 2022
July 21,
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FirstName LastName
statements. Please revise your filing to provide the information
required by Item 304 of
Regulation S-K . Refer to Item 11(i) of Form S-1.
Financial Statements for the years ended December 31, 2021
2. Summary of Significant Accounting and Reporting Policies
Intangible Assets, page F-11
22. Refer to prior comment number 24 and address the following.
Please tell us supplementally how you addressed Staff Accounting
Bulletin (SAB)
Topic 5:G when determining how to record the developed technology
and pending
patents. In this regard, tell us your consideration of whether or
not the parties
involved in the transfer of the company, including Alset, are
considered promoters of
the offering and or a shareholders. We note that Mr. Chan is the
Chairman of the
Board and largest shareholder of DSS and is the Chief Executive
Officer and largest
shareholder of Alset International Ltd. If you do not believe SAB
Topic 5G applies,
please tell us why.
You state beginning on page 28 that you do not plan to conduct
preclinical testing or
clinical trials or other testing of your platforms/technology and
you intend to identify
third parties or customers that are interested in purchasing,
licensing or co-developing
products for your product candidates. Please provide us an
analysis as to why you
believe the intangible assets were not impaired at each balance
sheet date.
If you continue to believe the intangible assets are not impaired
at the balance sheet
date, please provide the disclosures required by ASC 350-30-50 in
your interim and
annual financial statements.
Note 5. Investments, page F-12
23. Refer to your response to prior comment number 22. You state on page
F-13 that you
entered an agreement to purchase 500,000 shares of Vivacitas common
stock with an
option to purchase 1,500,000 additional shares (Vivacitas Agreement
#1). On March 18,
2021 you acquired Impact Oncology PTE Ltd., which owned 2,480,000
shares of common
stock of Vivacitas along with the option to purchase an additional
250,000 shares of
common stock. It appears you also acquired additional shares of
Vivacitas on April 1,
2021 in connection with Vivacitas Agreement #2. On July 22, 2021, you
exercised
1,000,000 of available options under the Vivacitas Agreement #1. You
state that your
equity position in Vivacitas was 90,000 shares or 16% as of December
31, 2021. Please
address the following:
Disclose the number of shares of Vivacitas you acquired in
connection with the
Vivacitas Agreement #2.
Tell us how you concluded you owned 90,000 shares as of December
31, 2021 in
light of the disclosures noted above. In this regard, clarify if
some of the shares
acquired were sold during the period.
If you owned more than 16% of Vivacitas, please update your
analysis of your
accounting treatment of Vivacitas, particularly in light of your
two seats on the board
Heng Fai Ambrose Chan
Impact BioMedical, Inc.
July 21, 2022
Page 7
of directors.
Exhibits
24. We note that you have entered into a License Agreement with ProPhase Labs
and a
Licensing Proceeds Distribution Agreement with DRDG. Please describe the
material
terms of each agreement, including a description of each party's rights
and obligations, a
quantification of any payment obligations including milestones and range
of royalty
payments, the contract term and any termination provisions. Please also
file the
agreements as exhibits or provide us with an analysis supporting a
determination that you
are not required to file them as an exhibit.
25. Please file complete exhibits. For example, it appears that Exhibit B
mentioned in Section
6.2 of Exhibit 10.13 appears to be missing.
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
July 21, 2022 Page 7
cc: Darrin M. Ocasio, Esq.
FirstName LastName