Innovation Pharmaceuticals Inc (IPIX)

[loanranger]

"That's the undiluted market cap, the relevant market cap is fully diluted, which is not quite $80MM."

What makes the fully diluted market cap more relevant than the undiluted market cap?

That's just an issue of my personal curiosity...I have what I think is a better, more relevant curiosity, for shareholders:
When the market cap based on non-affiliates drops below $75M...which it clearly has...the company has limitations imposed on its ability to issue shares.

From the S-3 Registration Form:
"Primary Offerings by Certain Registrants.
Securities to be offered for cash by or on behalf of a registrant, or outstanding securities to be offered for cash for the account of any person other than the registrant, including securities acquired by standby underwriters in connection with the call or redemption by the registrant of warrants or a class of convertible
securities; provided that the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant is $75 million or more."
(The aggregate market value of the registrant’s outstanding voting and non-voting common equity shall
be computed by use of the price at which the common equity was last sold, or the average of the bid and asked prices of such common equity, in the principal market for such common equity as of a date within 60 days prior to the date of filing.)


Now that the market cap as described has dropped below $75M exactly what are those limitations?

Again, from the Form:
"Limited Primary Offerings by Certain Other Registrants. Securities to be offered for cash by or on behalf of a
registrant; provided that:
(a) the aggregate market value of securities sold by or on behalf of the registrant pursuant to this
Instruction I.B.6. during the period of 12 calendar months immediately prior to, and including, the sale is
no more than one-third of the aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant;"


As I understand it, that says that as long as the market cap as described is less than $75M the company cannot issue shares in excess of 1/3 of that market cap in a 12 month period to Aspire or anyone else.
I did not see where the company raised this issue in the latest 10-Q. The relevant facts are:
How many shares are held by non-affilates?
What is one third of the market value of those shares?
What is the market value of all the shares "sold by or on behalf of" IPIX in the last 12 months.


We've discussed this before and at the time I believe that you felt that the market value of all the shares "sold by or on behalf of" IPIX in the last 12 months was well under i/3 of the market value of the shares held by non-affiliates and I believe that was true at the time.

At this point I think the company itself should be addressing the issue because while the above calculation MAY have a similar result if done today the issue of access to funding needs to considered in light of what the company's trial plans are and how much they might cost. While it's plainly true that there is over $20M remaining on the Aspire agreement it's not quite as clear that the Company could actually access it.


I could be wrong about this, but I believe the non-affiliated share count is calculated at the end of the calendar year and reported at the end of the fiscal year in the 10-K. Hence the last count was in the 6/30/17 10-K which indicated that the count was 100,598,158 shares as of 12/31/16. If that number hasn't changed the current market value calculation result is about $43M, one third of which is about $14M.

Rather than trying to pinpoint the market value of all the shares "sold by or on behalf of" IPIX in the last 12 months I'd note this from the latest 10-Q:
"Accordingly, the Company’s planned operations, including total budgeted expenditures of approximately $12.2 million for the next twelve months, raise doubt about its ability to continue as a going concern."

Unless I'm mistaken, which I have been known to be on occasion, the company should be at least mentioning this issue in the coming 10-Q if not laying out the specifics of it.