Innovation Pharmaceuticals Inc (IPIX)

[loanranger]

"no individual or entity is going to hand IPIX $5mm for preferred shares, warrants, etc. if they didn’t think the company had a shot at success. No one will convince me otherwise."

I gain nothing from convincing you, but I think you should know why the terms of this deal might motivate this investor to put up some money regardless of their perception of IPIX's prospects.

Every Preferred share that they buy has a stated value (the dollar amount used for any subsequent conversion to common) of $1,080 and pays a 5% dividend on that amount. They are paying $982.50 for each share.
The conversion price is defined in the Certificate of Designation:
"Conversion Price. The conversion price for the Preferred Stock shall equal the lesser of (i) $0.35 until August 15th, 2021 and $0.50 thereafter, subject to adjustment herein (the “Set Conversion Price”), and (ii) 85% of the lowest VWAP of the Common Stock on a Trading Day during the ten (10) Trading Days prior to and ending on, and including, the Conversion Date (the “Conversion Price”)."

So unless there is a significant improvement (60%+) in the current market price of the shares the preferred shares would convert as in (ii).
Today, for example, the lowest VWAP of the Common Stock on a Trading Day during the ten (10) Trading Days is likely to have been $.17***, probably a little less.
So the investor would be able to convert one preferred share this way:
$.17 x 85% = $.145 (rounded)
$1,080/$.145 = 745 shares
Remember that he only paid $982.50 for his preferred share so his price per common share was actually:
$982.50/745 = $.132

So the investor would effectively be paying $.132 for a share that he could sell to you or anyone else on the open market today for $.185.


And that's why whether or not "the company had a shot at success" was undoubtedly very secondary in his decision making process.


Check my math.


***https://ih.advfn.com/stock-market/USOTC/innovation-pharmaceuticals-qb-IPIX/historical