Innovation Pharmaceuticals Inc (IPIX)

[kfcyahoo]

LR,

I won´t claim to be an expert in prefunded warrants(or contactural arrangements other standard business contracts, sub-contracts, etc..). After reading the 6/28/18 prospectus in late June, the term prefunded warrants caught my eye. In the opening sentence of the prospectus it states, in part, ¨..... ,and up to an additional $5.0 million aggregate amount of our securities, consisting of common stock or five-year warrants to purchase shares of our common stock at an exercise price of $0.01 per share (the “pre-funded warrants”), directly to Aspire Capital Fund, LLC (“Aspire Capital”) under a Securities Purchase Agreement entered into on June 28, 2018 (the “Purchase Agreement”).¨ As I was not familiar with its definition. I found many definitions (, but the following I found most helpful-https://www.mofojumpstarter.com/2017/09/27/practice-pointers-on-pre-funded-warrants/[img]). I also found this description provided by a cfo to the sec in response to sec questions:
(sec question)1. Please clearly describe what is meant by the description of the warrants as "pre-funded," including whether the "pre-funded" amount will be returned to the purchaser or other holder of the warrants if the warrants expire unexercised, the purpose of "pre-funding" warrants, and how the warrants you are offering achieve this purpose. Likewise, describe the purpose of the ownership thresholds included in the pre-funded warrants.


Company Response: The term “pre-funded” refers to the fact that the purchase price of the warrants includes almost all of the exercise price that will be paid upon closing of the offering, except for a nominal exercise price of $0.01. Investors would choose to purchase the Class B Units containing the pre-funded warrants if they want to initially invest a larger amount of capital into the Company without triggering certain ownership restrictions, and receive the ability to exercise their “right” to the shares underlying the pre-funded warrants at such nominal price when ready. Like many other convertible securities, the pre-funded warrants contain contractual language between the Company and the holder implementing certain blockers on ownership levels as well as specific expiration dates. Pre-funded Series B Warrants that expire unexercised will have no further value and the holder of such warrant will lose the pre-funded amount paid at closing. We will revise the disclosure surrounding the pre-funded warrants to clarify that the purchase price will not be returned should the warrants expire unexercised.

In newest ipix/Aspire agreement, Aspire will invest further, as described by the milestones, provided the share price is 50 cents or higher. They can elect to purchase common shares at the average market price(5 day average i think), or pay 1 cent per prefunded warrant without conting those shares until those prefunded warrants are exercised at some future point in time(within 5 years commiting to those prefunded warrants. The exercise price would be The average market price when commitment was made minus the 1 cent they paid on that commitment for the prefunded warrants.

¨I don't get your point. As far as I can tell the sole beneficiary of the pre-funded warrant option is Aspire. If you believe that it has a value to IPIX please explain what it is and why you think the IPIX attorneys are behind it.¨

Aspire stands to make out hansomely if ipix succeeds. I believe there are ~175M shares outstanding now. Aspire must not exceed 4.99% (8,732,500 shares) if they want to continue to avoid filing. The prefunded warrants allow them an option to continue to invest without increasing their share count. When, and if, Apire the decides to exercise any prefunded warrants(pw), those pw´s become common shares and further dilute the stock. Hopefully, good news hits (in waves) and the sp responds in kind.

Sorry for the long winded response, but those are my thoughts. I will take no offense to opposing comments.

kfc



6/28/18 Prospectus-https://www.sec.gov/Archives/edgar/data/1355250/000147793218003252/ipix_424b5.htm#DESCRIPTION%20OF%20SECURITIES(S)