Innovation Pharmaceuticals Inc (IPIX)

[BillyBahama]

Liquidity

As of September 30, 2020, the Company’s cash amounted to $7.3 million and current liabilities amounted to $6.6 million. The Company had expended substantial funds on its clinical trials and expects to continue our spending on research and development expenditures. Our net losses incurred for the three months ended September 30, 2020 and 2019, amounted to $1.2 million and $1.6 million, respectively, and we had a working capital of approximately $0.7 million at September 30, 2020 and a working capital deficit of approximately $(1.2) million at June 30, 2020.

On July 31, 2020, the Company entered into a new common stock purchase agreement (the “2020 Agreement”) with Aspire Capital which provides that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of $30.0 million of the Company’s common stock over the 24-month term of the Agreement. In consideration for entering into the 2020 Agreement, the Company issued to Aspire Capital 6,250,000 shares of its Class A Common Stock as a commitment fee. The commitment fee of approximately $1.4 million was recorded as deferred financing costs and additional paid-in capital and this asset will be amortized over the life of the 2020 Agreement. As of September 30, 2020, the available balance is $27.1 million.

We anticipate that future budget expenditures will be approximately $10.3 million for the fiscal year ending June 30, 2021, including approximately $8.3 million for clinical activities, supportive research, and drug product. Alternatively, if we decide to pursue a more aggressive plan with our clinical trials, we will require additional sources of capital during the fiscal year 2021 to meet our working capital requirements for our planned clinical trials. Potential sources for capital include grant funding for COVID-19 research and equity financings. There can be no assurances that we will be successful in receiving any grant funding for our programs.

Management believes that the amounts available from Aspire Capital and under the Company’s effective shelf registration statement will be sufficient to fund the Company’s operations for the next 12 months.