IMPACT BIOMEDICAL INC. Fiscal Year 2025 Annual Report Summary for Investors

This summary provides a concise overview of IMPACT BIOMEDICAL INC.'s Fiscal Year 2025 Annual Report, offering investors key insights into the company's performance and strategic direction.

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Business Overview IMPACT BIOMEDICAL INC. (IBO) is an innovative biopharmaceutical and wellness company. It develops unique science and technologies for human healthcare, from discovery to patenting. As an innovation hub, IBO partners with other companies through licensing, co-development, and joint ventures to bring novel solutions to market. Its focus areas include biopharmaceuticals, over-the-counter wellness products, and drug discovery for neurological, cancer, and inflammatory diseases. IBO's business model focuses on leveraging its intellectual property through strategic partnerships, rather than direct commercialization.

Financial Performance IMPACT BIOMEDICAL INC. made significant strategic advancements and expanded its intellectual property portfolio during the past fiscal year, reflecting its pre-commercialization stage. IBO generated approximately $1.5 million in total revenue, primarily from early-stage licensing agreements and grants. Substantial investment in research and development led to a net loss of $12.8 million. IBO's pre-commercialization stage means revenue generation remains nascent, with R&D expenses continuing as the primary driver of losses. Cash and equivalents totaled $5.2 million at year-end, highlighting the need for future capital to sustain operations and commercialization efforts.

Risk Factors

• Commercialization Uncertainty: Successfully commercializing key platforms like Equivir depends on meeting marketing claims and securing strong distribution partners. There is no guarantee of immediate or substantial revenue.
• High R&D Costs & Funding Dependence: IBO, an R&D-intensive company, faces ongoing significant expenditures. Its future operations and growth heavily rely on securing additional capital through equity financing, debt, or successful milestone and royalty payments from partnerships. This could dilute shareholder value.
• Merger Completion & Integration Risks: The proposed merger with Dr. Ashleys Limited requires regulatory approvals and other closing conditions. Delays, failure to complete the merger, or challenges integrating operations post-merger could negatively impact IBO's financial condition and strategic goals.
• Regulatory & Market Acceptance: Products like Laetose and Equivir must navigate complex regulatory pathways, such as achieving FDA Generally Recognized as Safe (GRAS) eligibility. Gaining market acceptance can be lengthy and uncertain.
• Intellectual Property Protection: While IBO has a strong intellectual property (IP) portfolio, maintaining, defending, and enforcing these patents against potential infringement presents an ongoing challenge and cost.
• Competition: The biopharmaceutical and wellness markets are highly competitive, with many established companies and new entrants. IBO's ability to compete effectively depends on its innovation capacity, successful product development, and effective commercialization strategies.
• Reliance on Third Parties: IBO relies on third-party partners for manufacturing, distribution, and certain research activities. This introduces risks related to their performance and compliance.

Management Discussion (MD&A highlights) During the past fiscal year, IMPACT BIOMEDICAL INC. made significant strategic advancements and expanded its intellectual property, consistent with its pre-commercialization stage. Management prioritized intellectual property expansion, ending fiscal year 2025 with 60 issued patents and over 60 pending patents, strengthening its core asset base. Key patent approvals included the Laetose patent (sugar reduction technology) in Europe and 3F technology (functional fragrances) patent allowances in the U.S. and Europe. These approvals demonstrate broad applicability and market potential.

To generate immediate revenue, IBO strategically acquired Celios Air Purification technology, aligning with its "focused roll-up strategy." A pivotal development was the announcement of a definitive merger agreement: Dr. Ashleys Limited will acquire IBO via a reverse merger. This merger aims to leverage IBO's innovative technologies with Dr. Ashleys' global pharmaceutical manufacturing and distribution capabilities. The merger is anticipated to close in early 2026, pending customary regulatory and shareholder approvals. It is expected to significantly enhance the combined entity's financial resources and operational scale. Operating expenses, primarily R&D, totaled $14.3 million, reflecting IBO's investment in its pipeline and strategic initiatives.

Financial Health IBO held $5.2 million in cash and cash equivalents as of December 31, 2025. Operating expenses, primarily R&D, totaled $14.3 million, leading to a cash burn rate of approximately $1.2 million per month. While IBO maintains a relatively low debt profile of $1.8 million, its current cash position provides an operational runway of approximately 4-5 months without additional funding or significant revenue generation. The successful merger with Dr. Ashleys Limited is expected to significantly enhance the combined entity's financial resources and operational scale, providing a more stable financial foundation for future growth and commercialization.

Future Outlook IMPACT BIOMEDICAL INC.'s future strategy focuses on:

1. Successful Merger Integration: Completing the merger with Dr. Ashleys Limited and seamlessly integrating operations to leverage combined strengths in innovation, manufacturing, and global distribution.
2. Accelerated Commercialization: Actively seeking and securing partners for technologies like Laetose and 3F to accelerate market entry and revenue generation.
3. Continued IP Expansion & R&D: Further expanding its patent portfolio and advancing its pipeline in biopharmaceuticals, personalized medicine, and other high-growth areas.
4. Monetization of Celios: Rapidly scaling the Celios Air Purification technology to realize its immediate revenue potential.

IBO operates within dynamic healthcare and wellness markets, benefiting from trends toward personalized medicine, preventative health, and environmental quality. Navigating regulatory pathways, such as achieving FDA GRAS status for certain ingredients, remains a key operational focus. IBO anticipates the merger will provide the necessary capital and infrastructure to transition from a pre-commercial, R&D-focused entity to a more integrated biopharmaceutical and wellness company with broader market reach.

Competitive Position IMPACT BIOMEDICAL INC. differentiates itself with an extensive portfolio of patented and proprietary technologies, creating high barriers to entry in specialized biopharmaceutical and wellness markets. IBO's innovation-hub model, which focuses on licensing and co-development, allows it to leverage external resources and expertise while maintaining control over its core intellectual property. The Celios acquisition, featuring superior air purification technology capable of capturing 99.99% of particles down to 0.007 microns, positions IBO to compete aggressively in the advanced indoor air quality sector. This technology exceeds traditional HEPA standards and offers a distinct competitive advantage. This strategy enables IBO to carve out niche markets where its proprietary technologies offer significant performance or health benefits over existing solutions.