8-K: Impact BioMedical and Dr Ashleys Limited Announce Strategic Reverse Merger to Boost Pharmaceutical IP Commercialization

Impact BioMedical Inc. and Dr Ashleys Limited have entered into a Merger and Share Exchange Agreement, which will result in a reverse merger forming a new publicly traded entity, Dr Ashleys Limited, on the NYSE American, aiming to accelerate the market reach of Impact BioMedical's innovative pharmaceutical patents.

Summary

• Impact BioMedical Inc. (Impact) and Dr Ashleys Limited (Dr Ashleys) executed a Merger and Share Exchange Agreement on June 21, 2025, for a strategic reverse merger.
• Under the agreement, Dr Ashleys Nevada Sub, Inc. (Merger Sub), a wholly-owned subsidiary of Dr Ashleys Limited (PubCo), will merge into Impact, with Impact becoming the surviving entity and a wholly-owned direct subsidiary of PubCo.
• Simultaneously, PubCo will acquire all outstanding ordinary shares of Dr Ashleys Bio Labs Limited (Dr Ashleys Cayman) from its sole shareholder, Kanans Visvanats, making Dr Ashleys Cayman a wholly-owned subsidiary of PubCo.
• Impact shareholders will receive PubCo Ordinary Shares representing 4.80% of the total issued and outstanding PubCo Ordinary Shares at closing, following a mutually agreed reverse stock split of Impact's common stock.
• Dr Ashleys Shareholder will receive PubCo Ordinary Shares representing 94.20% of the total issued and outstanding PubCo Ordinary Shares.
• BMI Capital International LLC will receive PubCo Ordinary Shares representing 1.00% of the total issued and outstanding PubCo Ordinary Shares, totaling 1,800,000 shares, subject to adjustments.
• Impact's CEO, Frank D. Heuszel, will receive 22,000 PubCo Ordinary Shares as compensation, which will be deducted from the Dr Ashleys Shareholder's consideration to prevent dilution to Impact shareholders.
• Prior to the merger, Impact's Series A Preferred Stock and a promissory note from DSS, Inc. will convert into Impact Common Stock.
• In-the-money Impact options and warrants will convert into Impact Common Stock before the merger, while out-of-the-money and at-the-money options/warrants will be cancelled for no consideration.
• Impact is required to have net cash of at least $10,000 and net debt of $0 at the closing of the transaction.
• The combined entity will be renamed Dr Ashleys USA Inc. and its management team will be designated by Dr Ashleys.

Sentiment

Score: 8

Explanation: The document announces a strategic merger with strong positive language from both companies' leadership, highlighting benefits like accelerated market reach, IP integration, and financial strength. While it lists standard risks associated with mergers, the overall tone is highly optimistic about the transaction's potential.

Positives

• The merger is a strategic move intended to accelerate the market reach for Impact BioMedical's innovative pharmaceutical patents.
• It aims to integrate Impact BioMedical's 'impressive IP portfolio' into Dr Ashleys' R&D efforts, fostering the development of groundbreaking therapies.
• The transaction is expected to leverage Dr Ashleys' 'global reach and financial capabilities' to bring innovations to market.
• The Boards of Directors of both Dr Ashleys and Impact BioMedical have unanimously approved the proposed transaction.
• The transaction is intended to be treated as a tax-free transaction for U.S. federal income tax purposes under Section 351(a) and Section 368(a) of the Code.

Risks

• Impact may be unable to obtain stockholder approval required for the proposed merger.
• Conditions to the closing of the merger may not be satisfied, potentially preventing consummation.
• The merger may involve unexpected costs, liabilities, or delays.
• Impact's business may suffer as a result of uncertainty surrounding the merger.
• The outcome of any legal proceedings related to the merger could be adverse.
• Impact may be adversely affected by other economic, business, and/or competitive factors.
• The occurrence of any event, change, or other circumstances could give rise to the termination of the Merger Agreement.
• The announcement of the Merger Agreement could adversely affect Impact's ability to retain key personnel and maintain relationships with customers, suppliers, and others.
• There is a risk that the merger will not be consummated within the expected time period or at all.
• Risks related to the biopharmaceutical sector include changes in consumer preference and purchasing habits, raw material supply fluctuations, governmental regulatory and enforcement changes, market competition, and competitive product and pricing activity.
• Risks relating to the PubCo's ability to enhance its products, manage its intellectual property portfolio, execute its business strategy, expand its customer base, and maintain stable relationships with its business partners.

Future Outlook

The merger is anticipated to accelerate the development of groundbreaking pharmaceutical therapies and expand Dr Ashleys' global health impact by integrating Impact BioMedical's intellectual property portfolio with Dr Ashleys' global reach and financial capabilities. The newly formed PubCo will be managed by Dr Ashleys' team, and the transaction is structured to qualify as a tax-free event for U.S. federal income tax purposes.

Management Comments

• Dr. Kanans Visvanats, Director of Dr. Ashleys Limited, stated: "This merger represents a significant milestone in our journey to bring innovative pharmaceutical treatments to patients worldwide. By integrating Impact BioMedical's impressive IP portfolio into our R&D efforts, we are poised to accelerate the development of groundbreaking therapies and expand our Impact on global health."
• Frank D. Heuszel, CEO of Impact BioMedical Inc., commented: "We are thrilled to join forces with Dr. Ashleys Limited. Their global reach and financial strength will provide the resources and infrastructure needed to bring our innovations to market, ultimately benefiting people around the world."

Industry Context

This merger aligns with broader trends in the biopharmaceutical industry, where companies seek strategic alliances to enhance research and development, expand market access, and leverage specialized intellectual property. The focus on complex active pharmaceutical ingredients (APIs) and orphan drugs for rare diseases, alongside infectious diseases, reflects a growing emphasis on addressing critical global health challenges and meeting specialized market demands through innovation and collaboration.

Management Changes

Corporate Governance

Legal Proceedings

• No pending or, to the knowledge of the Company or Impact, threatened legal proceedings that involve either company or their personnel (in their capacity as such) or assets, or that challenge or interfere with the Contemplated Transactions.
• No orders to which Impact or its subsidiaries are subject that would prevent or interfere with the merger.
• No legal proceedings, allegations, investigations, or inquiries concerning Sanctions Law violations pending or threatened against Impact or its personnel since August 21, 2020.
• No legal proceedings with respect to Anti-Corruption Law pending or threatened against Impact or its personnel since August 21, 2020.

Related Party Transactions

• A second amended and restated promissory note dated September 16, 2024, between Impact and DSS, Inc., will convert into Impact Shares prior to the Effective Time.
• A Voting Agreement was executed by DSS, Inc., DSS BioHealth Security, Inc., and DSS PureAir, Inc. (collectively holding 86.81% of Impact's shareholding on an as-converted basis), agreeing to vote in favor of the merger.
• A Transition Arrangement Agreement was entered into by DSS, Inc., PubCo, Impact, and Frank D. Heuszel to facilitate an orderly transition of Impact's business and operations.
• Impact's CEO, Frank D. Heuszel, will receive 22,000 Compensation Shares as part of the transaction.
• Impact's COO, Mark Suseck, will have his employment terminated in connection with the merger.
• Impact's CFO, Todd Macko, will continue in his role until the effectiveness of the Registration Statement for transition purposes.

Stakeholder Impact

• **Shareholders (Impact)**: Will become shareholders of the new public entity (PubCo), receiving 4.80% of the combined company's shares after a reverse stock split. Their in-the-money options/warrants will convert to shares, while others will be cancelled. They are required to vote on the merger.
• **Shareholders (Dr Ashleys)**: The sole shareholder of Dr Ashleys Bio Labs Limited will receive 94.20% of the PubCo Ordinary Shares, gaining significant ownership in the new public entity.
• **Employees (Impact)**: All employees and consultants of Impact will be terminated immediately prior to the Effective Time. Key executives (CEO, COO, CFO) have specific transition arrangements, with the CEO transitioning to an independent contractor role for a limited period.
• **Customers and Suppliers**: The merger aims to accelerate market reach for pharmaceutical patents, which could lead to new product availability and potentially benefit customers. However, the forward-looking statements acknowledge a risk of disruption to relationships with customers and suppliers due to the transaction's announcement.
• **Creditors**: Impact is required to have net debt of $0 at closing, suggesting that existing debt obligations will be addressed or settled prior to the merger, which could benefit creditors.

Next Steps

• Impact and PubCo will prepare and file a joint proxy statement/prospectus (Registration Statement on Form F-4 or S-4) with the SEC.
• The Registration Statement must become effective and be mailed to Impact's stockholders.
• A Special Impact Stockholder Meeting will be held to vote on Specified Impact Stockholder Matters, including the adoption of the Merger Agreement, the NYSE Reverse Split, the appointment of PubCo and Surviving Corporation Directors, and the adoption of the PubCo Equity Incentive Plan.
• Dr Ashleys Bio Labs Limited must obtain written consent from its shareholders.
• The Company Share Swap must be completed within 15 business days of the agreement date.
• The Company must deliver a list of all issued Patents (Company Registered IP) to Impact within 15 business days of the agreement date.
• Impact will deliver an employment termination notice to Mark Suseck (Impact COO) within five business days of the agreement date.
• Impact's CEO, Frank D. Heuszel, will provide Transition-related services to PubCo for up to one month from the Effective Time.
• Todd Macko (Impact CFO) will continue as CFO of Impact until the effectiveness of the Registration Statement.
• PubCo's initial listing application with NYSE (or another national securities exchange) must be approved, including conditional approval prior to the Effective Time.
• The PubCo Ordinary Shares to be issued must be approved for listing on NYSE, subject to official notice of issuance, prior to the Closing Date.
• The closing of the merger and share exchange will occur on the next Business Day after all closing conditions are satisfied or waived.
• PubCo will issue a press release announcing the consummation of the transactions (Closing Press Release) within 24 hours after Closing.
• PubCo will file a current report on Form 8-K (Closing Filing) within four business days of execution of the agreement.

Key Dates

Recommendation

Keywords

Merger, Share Exchange, Reverse Merger, Pharmaceutical, Biotechnology, Patents, Intellectual Property, Biopharmaceuticals, SEC Filing, NYSE American, Dr Ashleys Limited, Impact BioMedical Inc., Corporate Governance, Risk Management, Strategic Alliance