Impact's acquisition will expand its reach with an established footprint in the United States.

Toronto, Ontario--(Newsfile Corp. - October 25, 2024) - Impact Development Group Inc. (TSXV: IMPT) ("Impact", "IDG" or the "Company"), a leading Panamanian developer of affordable housing solutions, is pleased to announce that it has acquired Fusion Software, LLC. ("Fusion"), an innovative software platform designed to streamline the administration of Low-Income Housing Tax Credits ("LIHTC") for asset managers, developers and syndicators. The acquisition of Fusion was completed pursuant to a securities purchase agreement (the "Securities Purchase Agreement") with Fusion and the sole member of Fusion (the "Vendor") dated October 24, 2024, 100% of the issued and outstanding membership interests (the "Membership Interests") of Fusion (the "Transaction").

"IDG's acquisition of Fusion is a key step in furthering our legacy and commitment to affordable housing solutions," commented Tom Wenz, Chief Executive Officer of IDG. "By incorporating this advanced software, we are bringing our years of affordable housing development expertise from Panama to the U.S., optimizing LIHTC management and compliance to promote the overall growth of the program. This move strengthens our core capabilities, broadens our geographic footprint, diversifies revenue, and enhances our capacity to serve our clients."

Fusion Software

Fusion is a specialized software platform designed for the efficient management of LIHTC portfolios. Developed by asset managers for asset managers, Fusion simplifies the complex processes involved in LIHTC administration, from property construction to stabilization. The platform offers comprehensive tools for finance and compliance, data management, reporting, tax credit management, and property oversight, all within a single, user-friendly interface. Fusion enhances visibility, maximizes returns, and enables rapid scaling, making it an indispensable asset for organizations managing affordable housing investments.

By acquiring Fusion, IDG significantly enhances its ability to manage other mission-critical aspects of affordable housing development and positions IDG for continued expansion into other parts of the value chain. By integrating Fusion's robust platform, IDG can begin to offer a more comprehensive suite of services, enabling greater visibility over the development process and ensuring more efficient, scalable, and sustainable housing solutions.

Terms of the Transaction

As consideration for the acquisition of the Membership Interests, the Company has or will issue to the Vendor the following:

1. 1,666,667 common shares in the capital of the Company ("Common Shares"), each issued at a deemed price of USD$1.12 per Common Share (collectively, the "Consideration Shares") as of the date hereof; and
2. 1,166,667 Common Shares (collectively, the "Earn-Out Shares"), conditional upon the satisfaction of certain revenue milestones set out in the Securities Purchase Agreement (the "Revenue Milestones") on the first, second, and third anniversaries of the closing of Transaction.

Under the terms of the Securities Purchase Agreement, for 38 months after the closing date of the Transaction (the "Closing Date"), Impact will contribute a total of USD$3,000,000 to Fusion to help it meet the Revenue Milestones, as follows:

• USD$1,000,000 in the first 14 months following the Closing Date;

• An additional USD$1,000,000 in the first 26 months following the Closing Date; and

• An additional USD$1,000,000 in the first 38 months following the Closing Date.

If Impact fails to meet the deadlines set out above, and the related Revenue Milestones are not achieved by Fusion, then:

• For the first Revenue Milestone, Impact will issue a proportional number of Earn-Out Shares based on the amount contributed during the first 14 months following the Closing Date.

• For the second Revenue Milestone, Earn-Out Shares will be issued based on the amount contributed beyond USD$1,000,000 during the first 26 months following the Closing Date.

• For the third Revenue Milestone, Earn-Out Shares will be issued based on the amount contributed beyond USD$2,000,000 during the first 38 months following the Closing Date.

All securities issued pursuant to the Transaction will be subject to a statutory hold period of four months and one day from the date of issuance.

Loan Agreement

The Company has also entered into an unsecured draw down loan agreement dated October 24, 2024 (the "Loan Agreement"), under which the lender thereunder (the "Lender") has committed to providing up to USD$1,000,000 (the "Loan") to the Company, advanced in four tranches (each, an "Advance") over a period of three months (each, a "Funding Date"), as follows:

• The initial Advance of USD$250,000 paid on the effective date ("Effective Date") of the Loan Agreement;

• The second Advance of USD$333,333.33 payable on the date that is on or prior to 1 month following the Effective Date;

• The third Advance of USD$333,333.34 payable on the date that is on or prior to 2 months following the Effective Date; and

• One or more final Advance of USD$133,333.33 payable on the date that is on or prior to 2 months following the Effective Date.

Pursuant to the Loan Agreement, the Company is not obligated to draw down an Advance; if the Company elects to skip an Advance, it may choose to combine the skipped amount with the next Advance. Notwithstanding the foregoing, the Company and the Lender may determine to alter the Funding Dates, including the timing and number thereof, and the amount of any Advance applicable to such Funding Dates, provided that in no event shall the aggregate principal amount exceed $1,000,000. The outstanding amount of the principal Loan will accrue interest at a rate of 12% per annum. The outstanding Loan will become due and payable on October 31, 2028.

In connection with the Loan Agreement, the Company has agreed to issue non-transferable common share purchase warrants (each, a "Bonus Warrant") to the Lender on each Funding Date. The number of Bonus Warrants issued by the Company at each Funding Date will be equal to the amount of the Advance divided by the current market price of the Company's common shares as at the Funding Date. The Bonus Warrants will have an exercise price equal to the applicable current market price of the Company's common shares at the time of issuance and will be exercisable for a period of three years from the date of issue. In accordance with the policies of the TSX Venture Exchange (the "Exchange"), if the principal is repaid during first year following the final Funding Date, a pro rata number of the total Bonus Warrants shall have their term reduced to the later of: (a) one year from issuance of the Bonus Warrants and (b) 30 days from the reduction or repayment of the loan. In connection with the first Advance, the Company has issued 223,274 Bonus Warrants to the Lender, each exercisable at a price of USD$1.12 for the purchase of one Common Share. The issuance of the Bonus Warrants is subject to the final approval of the Exchange.

The Lender is not a Non-Arm's Length Party (as defined in the policies of the Exchange) to the Company. The Loan will be used towards the working capital and general operations of Fusion.

ABOUT IMPACT

Impact is a Panamanian based real estate developer that provides affordable housing solutions to Panama's growing middle-class supported by a longstanding subsidized government program. The vision of IHC Panama is effectuated by a vertically integrated model which coordinates all services necessary to develop high-quality residential and commercial buildings, including land acquisition, financing, architectural, engineering, off-site manufacturing, general contracting, property management, and administration.

Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this release.

FORWARD-LOOKING STATEMENTS

This press release contains certain "forward-looking statements" that reflect the Company's current expectations and projections about its future results. Wherever possible, words such as "may", "will", "should", "could", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict" or "potential" or the negative or other variations of these words, or similar words or phrases, have been used to identify these forward-looking statements. Forward-looking statements in this press release include, but are not limited to, statements relating to the Company's business activities in Panama; the Company's plans to bring its expertise acquired in the Panamanian market into the US market; the Company's plans to expand its global reach; the Company's ability to repay the Loan; the Company's plans to issue the Bonus Warrants; the Company's plans to utilize Fusion's software platform to expand into adjacent markets and revenue streams; and the Company's hopes of promoting the development of affordable housing across a wider geographic area.

The forward-looking statements, while considered reasonable by the Company, are inherently based upon assumptions that are subject to significant risks and uncertainties, including, but not limited to, the Company being able to carry out its business plan as contemplated; the Company's ability to maintain and retain the intellectual property rights to the Fusion software platform; and the Company's plans to scale and develop more sustainable housing solutions in Central America and globally. Although the Company believes that the expectations reflected in forward-looking statements are reasonable, they can give no assurances that the expectations of any forward-looking statements will prove to be correct.

Such statements and information reflect the current view of the Company. Risks and uncertainties exist that may cause actual results to differ materially from those indicated or implied in the forward-looking statements and information. Such factors include, among others: the limited business history of the Company; the Company's reliance on key management; risks related to the Company's growth strategy, including that previous and future acquisitions do not meet expectations or potential acquisitions cannot be completed; risks related to the Loan Agreement; the dilutive effect of the issue of the Bonus Warrants (if exercised); dependence on and availability of third party financing; the business of the Company being subject to broader economic and political factors; disruptions or changes in the credit or security markets; financial results of the Company's operations; unanticipated costs and expenses; and general market and industry conditions.

The forward-looking information contained in this press release represents the expectations of the Company as of the date of this press release and, accordingly, is subject to change after such date. Readers should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While the Company may elect to, it does not undertake to update this information at any particular time except as required in accordance with applicable laws.

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