Filed pursuant to Rule
424(b)(5)
Registration Statement No.
333-220419
PROSPECTUS SUPPLEMENT
(To Prospectus Dated September 21,
2017)
INNOVATION PHARMACEUTICALS
INC.
Up to 500 Shares of Series
B 5% Convertible Preferred Stock
Warrants to Purchase Up To
2,500 Shares of Series B 5% Convertible Preferred Stock
Pursuant to this
prospectus supplement and the accompanying prospectus, we are
offering 500 shares of our Series B 5% convertible preferred stock,
which we refer to as our Series B preferred stock, together with
warrants to purchase up to 2,500 shares of our Series B preferred
stock, which we refer to as the Series 4 warrants or warrants. This
prospectus supplement also covers the shares of our Series B
preferred stock issuable upon exercise of the warrants and payment
of in-kind dividends on the Series B preferred stock, and the
shares of Class A common stock, par value $0.0001 per share, which
we refer to as our common stock, issuable from time to time upon
conversion of the Series B preferred stock.
Each share of Series B
preferred stock has an initial stated value of $1,080 and may be
converted at any time at the holder’s option into shares of our
common stock at a conversion price equal of the lower of (i)
$0.31625 per share and (ii) 85% of the lowest volume weighted
average price of our common stock as reported on Bloomberg L.P. on
a trading day during the ten trading days prior to and ending on,
and including, the conversion date. The conversion price may be
adjusted following certain triggering events and is subject to
appropriate adjustment in the event of stock splits, stock
dividends, recapitalization or similar events affecting our common
stock.
Each Series 4 warrant
will entitle the holder thereof to purchase one share of our Series
B preferred stock at $982.50 per share, or approximately $2.5
million in aggregate for 2,500 shares of our Series B preferred
stock, for a period of up to nine months following issuance.
Our common stock is
currently quoted on the OTCQB under the symbol “IPIX.” On May 7,
2019, the last reported sales price of our common stock on the
OTCQB was $0.42 per share. There is no established public trading
market for our Series B preferred stock or the warrants and we do
not expect a market to develop. In addition, we do not intend to
apply for listing our Series B preferred stock or the warrants on
any national securities exchange or any other nationally recognized
trading system.
Investing in our
securities involves a high degree of risk. You should read “Risk
Factors” beginning on page S-4 of this prospectus supplement and
the reports we file with the Securities and Exchange Commission
(the “SEC”) pursuant to the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), incorporated by reference in this
prospectus supplement, to read about factors to consider before
purchasing our securities.
Neither the Securities
and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
The date of this prospectus
supplement is May 9, 2019.
TABLE OF CONTENTS
Prospectus
Supplement
Prospectus
We
have not authorized anyone to provide you with information
different from that contained or incorporated by reference in this
prospectus supplement, the accompanying prospectus or any free
writing prospectus we prepare or authorize, and we do not take any
responsibility for any other information that others may give you.
This prospectus supplement is not an offer to sell, nor is it a
solicitation of an offer to buy, the securities in any jurisdiction
where the offer or sale is not permitted. You should not assume
that the information contained in this prospectus supplement, the
accompanying prospectus or any free writing prospectus is accurate
as of any date other than the date on the front cover of those
documents, or that the information contained in any document
incorporated by reference is accurate as of any date other than the
date of the document incorporated by reference, regardless of the
time of delivery of this prospectus supplement or any sale of a
security. Our business, financial condition, results of operations
and prospects may have changed since those dates.
ABOUT THIS
PROSPECTUS SUPPLEMENT
This
prospectus supplement and the accompanying prospectus are part of a
registration statement on Form S-3 (File No. 333-220419) that we
filed with the Securities and Exchange Commission (the “SEC”) and
that was declared effective by the SEC on September 21, 2017. Under
this shelf registration process, we may, from time to time, offer
common stock, preferred stock, debt securities, warrants and units,
of which this offering is a part.
This
document is in two parts. The first part is this prospectus
supplement, which describes the terms of this offering of
securities and also adds, updates and changes information contained
in the accompanying prospectus and the documents incorporated
herein by reference. The second part is the accompanying
prospectus, which provides more general information about our
common stock, preferred stock, warrants and other securities that
do not pertain to this offering. To the extent that the information
contained in this prospectus supplement conflicts with any
information in the accompanying prospectus or any document
incorporated by reference, the information in this prospectus
supplement shall control. The information in this prospectus
supplement may not contain all of the information that is important
to you. You should read this entire prospectus supplement, the
accompanying prospectus and the documents incorporated by reference
carefully before deciding whether to invest in our securities.
The
representations, warranties and covenants made by us in any
agreement that is filed as an exhibit to any document that is
incorporated by reference in this prospectus supplement or the
accompanying prospectus were made solely for the benefit of the
parties to such agreement, including, in some cases, for the
purpose of allocating risk among the parties to such agreements,
and should not be deemed to be a representation, warranty or
covenant to you. Moreover, such representations, warranties and
covenants were accurate only as of the date when made; therefore,
such representations, warranties and covenants should not be relied
on as accurate representations of the current state of our
affairs.
References to “Innovation Pharmaceuticals,” the “Company”, “we,”
“our” and “us” in this prospectus supplement and the accompanying
prospectus are to Innovation Pharmaceuticals Inc., unless the
context otherwise requires. This document includes trade names and
trademarks of other companies. All such trade names and trademarks
appearing in this document are the property of their respective
holders.
DISCLOSURE
REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus supplement, the accompanying prospectus and the
documents we have incorporated by reference contain forward-looking
statements within the meaning of the federal securities laws.
Forward-looking statements convey our current expectations or
forecasts of future events. We intend such forward-looking
statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.
Forward-looking statements are generally identifiable by use of the
words “estimate,” “project,” “believe,” “intend,” “plan,”
“anticipate,” “expect” and similar expressions. These
forward-looking statements include, but are not limited to,
statements concerning our future drug development plans and
projected timelines for the initiation and completion of
preclinical and clinical trials; the potential for the results of
ongoing preclinical or clinical trials; other statements regarding
our future product development and regulatory strategies, including
with respect to specific indications; any statements regarding our
future financial performance, results of operations or sufficiency
of capital resources to fund our operating requirements; and any
other statements which are other than statements of historical
fact. Our ability to predict results or the actual effect of future
plans or strategies is inherently uncertain. Actual results could
differ materially from those in forward-looking statements because
of, among other reasons, the factors described below and in the
periodic reports that we file with the SEC from time to time,
including Forms 10-K, 10-Q and 8-K and any amendments thereto. The
forward-looking statements are not guarantees of future
performance. They are based on numerous assumptions that we believe
are reasonable, but they are open to a wide range of uncertainties
and business risks.
Key
factors that could cause actual results to be different than
expected or anticipated include, but are not limited to:
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our capital needs and ability to continue as a
going concern; |
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our ability to continue to fund and successfully
progress internal research and development efforts; |
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our ability to create effective,
commercially-viable drugs; |
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our ability to effectively and timely conduct
clinical trials; |
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our ability to ultimately distribute our drug
candidates; |
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compliance with regulatory requirements; and |
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other risks referred to in the section of this
prospectus supplement entitled “Risk Factors” and in the SEC
filings incorporated by reference in this prospectus
supplement. |
In light
of these risks, uncertainties and assumptions, you are cautioned
not to place undue reliance on forward-looking statements, which
are inherently unreliable and speak only as of the date of this
prospectus supplement, accompanying prospectus or as of the date of
any document incorporated by reference in this prospectus
supplement or accompanying prospectus, as applicable. When
considering forward-looking statements, you should keep in mind the
cautionary statements in this prospectus supplement, accompanying
prospectus and the documents incorporated by reference. We are not
under any obligation, and we expressly disclaim any obligation, to
update or alter any forward-looking statements, whether as a result
of new information, future events or otherwise, except as required
by law. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in or incorporated by reference in
this prospectus supplement and accompanying prospectus might not
occur.
PROSPECTUS
SUPPLEMENT SUMMARY
This
summary highlights selected information about Innovation
Pharmaceuticals Inc. This summary does not contain all of the
information that may be important to you in making an investment
decision. For a more complete understanding of Innovation
Pharmaceuticals Inc., you should read carefully this entire
prospectus supplement and the accompanying prospectus, including
the Risk Factors section and the other documents we refer to and
incorporate by reference. Unless otherwise indicated, common stock
means our Class A common stock, par value $0.0001 per
share.
Innovation Pharmaceuticals
Inc. Overview
We are a
clinical stage biopharmaceutical company developing innovative
therapies with dermatology, oncology, anti-inflammatory and
antibiotic applications. We own the rights to numerous drug
compounds, and we devote most of our efforts and resources on our
compounds in clinical trials: Prurisol for the treatment of
psoriasis, Kevetrin for the treatment of ovarian cancer, and
Brilacidin for treatments of skin infections, ulcerative proctitis
(inflammatory bowel disease) and prevention of oral mucositis
complicating chemoradiation treatment for cancer.
The
Company was incorporated as Econoshare, Inc. on August 1, 2005 in
the State of Nevada. On December 6, 2007, the Company acquired
Cellceutix Pharma, Inc., a privately owned corporation formed under
the laws of the State of Delaware on June 20, 2007. Following the
acquisition, the Company changed its name to Cellceutix
Corporation. Effective June 5, 2017, the Company amended its
Articles of Incorporation and changed its name from Cellceutix
Corporation to Innovation Pharmaceuticals Inc.
Our
principal executive offices are located at 100 Cummings Center,
Suite 151-B, Beverly, Massachusetts 01915, and our telephone number
is (978) 921-4125. Our website is www.ipharminc.com . The
information contained on or that can be accessed through or website
(other than the specified SEC filings incorporated by reference in
this prospectus supplement) is not incorporated in, and is not a
part of, this prospectus supplement, and you should not rely on any
such information in connection with your investment decision to
purchase our securities.
Issuance
Agreement
On May 9,
2019, we entered into a Warrant Restructuring and Additional
Issuance Agreement (the Issuance Agreement ) with the holders of
our Series B preferred stock and warrants to purchase Series B
preferred stock (collectively, the Series B holders ), pursuant to
which the Series B holders agreed to exercise warrants to purchase
up to $2.5 million of Series B preferred stock through November
2019, subject to the conditions described therein
In
addition, we agreed to issue to the Series B holders 100 shares of
Series B preferred stock following the execution of the Issuance
Agreement and up to an additional 400 shares of Series B preferred
stock upon exercise of the warrants to purchase Series B preferred
stock. We also agreed to issue warrants to purchase 2,500 shares of
Series B preferred stock to the Series B holders following
execution of the Issuance Agreement.
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The Offering
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The
following summary is provided solely for your convenience and is
not intended to be complete. You should read the full text and more
specific details contained elsewhere in this prospectus supplement
and the accompanying prospectus. For a more detailed description of
our common stock, see “Description of Our Capital Stock” in the
accompanying prospectus.
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Issuer
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Innovation Pharmaceuticals
Inc.
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Securities offered by us
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Up to 500 shares of our
Series B preferred stock and warrants to purchase 2,500 shares of
our Series B preferred stock, along with the shares of our Series B
preferred stock issuable upon exercise of the warrants and the
shares of our common stock issuable from time to time upon
conversion of the Series B preferred stock.
Each Series 4 warrant will
entitle the holder thereof to purchase one share of our Series B
preferred stock at $982.50 per share, or approximately $2.5 million
in aggregate for 2,500 shares of our Series B preferred stock, for
a period of up to nine months following issuance.
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Shares of Class A common
stock to be outstanding after this offering
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Up to 202.4 million shares
assuming sale of 3,000 shares of Series B preferred stock and
conversion of such shares of Series B preferred stock into 10.2
million shares of our Class A common stock at a conversion price of
$0.31625 per share, which is the highest conversion price provided
under the Series B preferred stock and would apply based on the
$0.42 per share closing price of our common stock on May 7, 2019.
Actual shares issued will vary, among other things, depending on
the conversion price of our Series B preferred stock.(1)
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Shares of Series B preferred
stock to be outstanding after this offering
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500 shares, assuming the
satisfaction of all of the conditions set forth in the Issuance
Agreement described below, or 3,000 shares if the warrants are also
exercised in full.
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Use of proceeds
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We intend to use the net
proceeds from this offering primarily for general working capital
purposes. Accordingly, we will retain broad discretion over how
these offering proceeds are used. See “Use of Proceeds” on page
S-5.
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Warrant Restructuring and Additional
Issuance Agreement
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On May 9, 2019, we entered
into a Warrant Restructuring and Additional Issuance Agreement with
the Series B holders, pursuant to which the Series B holders agreed
to exercise warrants to purchase up to $2.5 million of Series B
preferred stock through November 2019, subject to the conditions
described therein. In addition, we agreed to issue to the Series B
holders 100 shares of Series B preferred stock following the
execution of the Issuance Agreement and up to an additional 400
shares of Series B preferred stock upon exercise of the warrants to
purchase Series B preferred stock. We also agreed to issue warrants
to purchase 2,500 shares of Series B preferred stock to the Series
B holders following execution of the Issuance Agreement.
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OTCQB symbol
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IPIX
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No Market for Series B
preferred stock or warrants
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There is no established
public trading market for our Series B preferred stock or the
warrants, and we do not expect any such market to develop. In
addition, we do not intend to apply for listing of the Series B
preferred stock or the warrants on any national securities exchange
or other nationally recognized trading system.
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Risk factors
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An investment in our
securities involves risks, and prospective investors should
carefully consider the matters discussed under “Risk Factors”
beginning on page S-4 of this prospectus supplement and the reports
we file with the SEC pursuant to the Securities Exchange Act of
1934, as amended, incorporated by reference in this prospectus
supplement and the accompanying prospectus before making an
investment in our securities.
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(1)
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The number of shares of
common stock to be outstanding after this offering is based on
192.1 million shares of Class A common stock outstanding as of
April 30, 2019 and excludes:
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shares of our Class A common stock issuable upon the conversion of
1,027 shares of our Series B preferred stock outstanding as of
March 31, 2019 and up to 6,725 shares of our Series B preferred
stock issuable upon the exercise of warrants outstanding as of
March 31, 2019, which would convert into 26.5 million shares of our
Class A common stock a conversion price of $0.31625 per share,
which is the highest conversion price provided under the Series B
preferred stock; and
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66 million shares issuable as of March 31, 2019 upon the exercise
of outstanding stock options and warrants and the conversion of
amounts outstanding under a convertible note held by the Company’s
Chief Executive Officer.
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RISK FACTORS
An
investment in our securities involves a high degree of risk. Before
making an investment decision, you should consider carefully the
risks discussed under the sections captioned “Risk Factors” set
forth in the documents and reports filed by us with the SEC, that
are incorporated by reference into this prospectus supplement,
including in our most recent Annual Report on Form 10-K, as revised
or supplemented by our most recent Quarterly Reports on Form 10-Q,
each of which are on file with the SEC and are incorporated herein
by reference, as well as any risks described in our other filings
with the SEC, before deciding whether to buy our securities. Our
business, financial condition or results of operations could be
materially adversely affected by any of these risks. The trading
price of our securities could decline due to any of these risks,
and you may lose all or part of your investment. In addition,
please read “Disclosure Regarding Forward-Looking Statements” in
this prospectus supplement, where we describe additional
uncertainties associated with our business and the forward-looking
statements included or incorporated by reference in this prospectus
supplement. Please note that additional risks not presently known
to us or that we currently deem immaterial may also impair our
business and operations.
Our Series B preferred
stock converts into shares of common stock at a discount to the
market price of our common stock. As a result, our common
stockholders will experience substantial additional dilution if
shares of our Series B preferred stock are converted into common
stock.
Our
Series B preferred stock may be converted at any time at the
holder’s option into shares of our common stock at a conversion
price equal of the lower of (i) $0.31625 per share and (ii) 85% of
the lowest volume weighted average sale prices of our Class A
common stock as reported on Bloomberg L.P. on a trading day during
the ten trading days prior to and ending on, and including, the
conversion date. In addition, the conversion price may be decreased
following certain triggering events. Our Series B preferred stock,
of which 1,027 shares and warrants to purchase an additional 6,725
shares were outstanding as of March 31, 2019, has substantially
similar provisions. As a result, the number of shares of common
stock that the holders of our Series B preferred stock will receive
upon conversion will increase as our common stock price decreases,
and there is no floor to the conversion price, and our common
stockholders will experience substantial dilution as shares of our
Series B Preferred Stock offered hereby are converted into our
common stock. Any dilution or potential dilution may cause our
stockholders to sell their shares, which may contribute to a
downward movement in the stock price of our common stock.
Management will have
broad discretion as to the use of the proceeds from this offering,
and we may not use the proceeds effectively.
Our
management will have broad discretion in the application of the
proceeds from sales of our securities in this offering, and could
spend the proceeds in ways that do not improve our results of
operations or enhance the value of our common stock. Our failure to
apply these funds effectively could have a material adverse effect
on our business and cause the price of our common stock to
decline.
In addition to
potential dilution associated with future fundraising transactions,
we currently have significant numbers of securities outstanding
that are exercisable for our common stock, which could result in
significant additional dilution and downward pressure on our stock
price.
As of
April 30, 2019, there were 192.1 million shares of our common stock
outstanding. In addition, as of March 31, 2019, there were
outstanding stock options, warrants and a convertible note
representing the potential issuance of approximately an additional
66 million shares of our common stock, and 1,027 shares of our
Series B preferred stock and warrants to purchase an additional
6,725 shares of our Series B preferred stock convertible into 26.5
million shares of our Class A common stock assuming a conversion
price of $0.31625 per share. The issuance of these shares in the
future would result in significant dilution to our current
stockholders and could adversely affect the price of our common
stock and the terms on which we could raise additional capital. In
addition, the issuance and subsequent trading of shares could cause
the supply of our common stock available for purchase in the market
to exceed the purchase demand for our common stock. Such supply in
excess of demand could cause the market price of our common stock
to decline.
The Company has no
history of paying dividends on its common stock, and we do not
anticipate paying dividends in the foreseeable future.
The
Company has not previously paid dividends on its common stock. We
currently anticipate that we will retain all of our available cash,
if any, for use as working capital and for other general corporate
purposes. Any payment of future dividends on our common stock will
be at the discretion of our Board of Directors and will depend
upon, among other things, our earnings, financial condition,
capital requirements, level of indebtedness, statutory and
contractual restrictions applicable to the payment of dividends and
other considerations that our Board of Directors deems relevant.
Investors must rely on sales of their common stock after price
appreciation, which may never occur, as the only way to realize a
return on their investment.
There is no public
market for the Series B preferred stock or the warrants being
offered in this offering.
There is
no established public trading market for our Series B preferred
stock or the warrants being offered in this offering, and we do not
expect a market to develop. In addition, we do not intend to apply
for listing of our Series B preferred stock or the warrants on any
national securities exchange or other nationally recognized trading
system. Without an active market, the liquidity of our Series B
preferred stock and the warrants will be limited.
Holders of our Series
B preferred stock and the warrants will have no rights as a holder
of our common stock until such holders convert their Series B
preferred stock and exercise their warrants, as applicable, and
acquire our common stock.
Until
holders of our Series B preferred stock and warrants acquire shares
of our common stock upon conversion of the Series B preferred stock
or exercise of the warrants and conversion of the resulting shares
of Series B preferred stock, as applicable, holders of Series B
preferred stock and warrants will have no rights with respect to
the shares of our common stock underlying such shares of Series B
preferred stock and warrants, except as set forth in the related
certificate of designation. Upon conversion of the Series B
preferred stock or exercise of the warrants and conversion of the
resulting shares of Series B preferred stock, as applicable, the
holders thereof will be entitled to exercise the rights of a holder
of our common stock only as to matters for which the record date
occurs after the exercise date.
USE OF PROCEEDS
We will
receive up to $2.5 million upon the exercise of the warrants sold
by us in this offering, which if fully exercised would result in
proceeds to us, after deducting estimated offering expenses payable
by us, of approximately $2.4 million. We cannot predict when or if
the warrants will be exercised, and it is possible that the
warrants may expire and never be exercised. We intend to use the
net proceeds, if any, from this offering for general working
capital purposes. The amounts and timing of expenditures will
depend on a number of factors, such as the timing, scope, progress
and results of our research and development efforts, the timing and
progress of any partnering efforts, and the competitive environment
for our product candidates. As of the date of this prospectus
supplement, we cannot specify with certainty the particular uses of
the proceeds from this offering. Accordingly, we will retain broad
discretion over the use of such proceeds. Until we use the proceeds
for any purpose, we expect to invest them in short-term
investments.
RATIO OF
EARNINGS TO FIXED CHARGES
The table
below presents the ratio of earnings to fixed charges and the
coverage for the last five completed fiscal years and six months
ended December 31, 2018 and 2017.
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For the Year
Ended June 30,
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For the six months
ended December 31,
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2014
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2015
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2016
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2017
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2018
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2017
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2018
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Ratio of earnings to combined
fixed charges and preferred stock dividends
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N/A |
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N/A |
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N/A |
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N/A |
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N/A |
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N/A |
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Deficiency (in million)
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$ |
(8.2 |
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(13.1 |
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(12.9 |
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(15.5 |
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$ |
(16.4 |
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$ |
(9.1 |
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$ |
(6.0 |
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Our
earnings were inadequate to cover fixed charges for each of the
periods indicated above. We did not pay any preferred stock
dividends during the periods. The amount of the deficiency by which
our earnings did not cover our fixed charges for each such period
is disclosed in the second line of the above table.
This
information should be read in conjunction with our consolidated
financial statements and the accompanying notes incorporated by
reference in this prospectus supplement.
DILUTION
Our net tangible book
deficit as December 31, 2018 was approximately $(4.4) million, or
$(0.03) per share. We calculate net tangible book deficit per share
by dividing the net tangible book deficit, which is tangible assets
less total liabilities, by the number of outstanding shares of our
common stock. Dilution per share of our common stock to investors
in this offering represents the difference between the assumed
amount paid per share of our common stock underlying the Series B
preferred stock (assuming full exercise of the warrants in this
offering) and the assumed net tangible book deficit per share of
our common stock following the completion of this offering.
After giving effect to
the sale of 3,000 shares of our Series B preferred stock, which
includes 2,500 shares of Series B preferred stock issuable upon
exercise of warrants, for net proceeds of approximately $2.4
million after deducting estimated offering expenses payable by us,
and assuming a conversion price of $0.31625 per share, which is the
highest conversion price provided under the Series B preferred
stock and would apply based on the $0.42 per share closing price of
our common stock on May 7, 2019, our as adjusted net tangible book
deficit as of December 31, 2018 would have been approximately
$(2.0) million, or $(0.01) per share of common stock. This
represents an immediate increase in net tangible book deficit of
$0.02 per share to existing stockholders and assumed immediate
dilution in net tangible book deficit of $0.33 per share to
investors participating in this offering. The following table
illustrates this dilution on a per share basis:
Assumed average conversion price
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$ |
0.32 |
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Net tangible book deficit per share as of
December 31, 2018
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$ |
(0.03 |
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Increase per share attributable to the
offering
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$ |
0.02 |
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As adjusted net tangible book deficit per
share as of December 31, 2018, after giving effect to this
offering
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(0.01 |
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Dilution per share to new investors
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$ |
0.33 |
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The
foregoing dilution information assumes a conversion price for the
Series B preferred stock equal to $0.31625 per share, which is the
highest conversion price provided under the Series B preferred
stock and would apply based on the $0.42 per share closing price of
our common stock on May 7, 2019, and is based on 176.3 million
shares of our common stock outstanding as of December 31, 2018. The
actual price at which investors convert their Series B preferred
stock may be higher or lower than this assumed price and our total
shares may continue to change, and is expected to continue to
change. A decrease of $0.10 per share in the conversion price would
result in the same adjusted net tangible book deficit per share
after the offering but would decrease the dilution in net tangible
book deficit per share to new investors in this offering to $0.23
per share, after deducting estimated aggregate offering expenses
payable by us. This information is supplied for illustrative
purposes only.
The
number of shares of common stock to be outstanding after this
offering is based on 176.3 million shares of Class A common stock
outstanding as of December 31, 2018 and excludes:
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shares of our Class A common stock issuable upon
the conversion of 1,027 shares of our Series B preferred stock
outstanding as of March 31, 2019 and up to 6,725 shares of our
Series B preferred stock issuable upon the exercise of warrants
outstanding as of March 31, 2019, which would convert into 26.5
million shares of our Class A common stock a conversion price of
$0.31625 per share, which is the highest conversion price provided
under the Series B preferred stock; and |
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66 million shares issuable as of March 31, 2019
upon the exercise of outstanding stock options and warrants and the
conversion of amounts outstanding under a convertible note held by
the Company’s Chief Executive Officer. |
DESCRIPTION OF
SECURITIES
In this
offering, we are offering 500 shares of our Series B preferred
stock and warrants to purchase 2,500 shares of our Series B
preferred stock, as well as the shares of Series B preferred stock
issuable upon exercise of the warrants and payment of in-kind
dividends on the Series B preferred stock, and the shares of common
stock that are issuable from time to time upon conversion of such
Series B preferred stock.
There is
no established public trading market for our Series B preferred
stock or the warrants, and we do not expect any such market to
develop. In addition, we do not intend to apply for listing of our
Series B preferred stock or the warrants on any national securities
exchange or other nationally recognized trading system.
Description of Class A
Common Stock
The
material terms and provisions of our Class A common stock are
described under the caption “Description of Capital Stock” starting
on page 6 of the accompanying prospectus.
Description of Series B
Preferred Stock
The
following is a summary of certain terms and provisions of the
Certificate of Designation of Preferences, Rights and Limitations
of Series B 5% Convertible Preferred Stock (as amended, the
“Certificate of Designation”) establishing the rights and
preferences of the Series B preferred stock offered in this
offering. The description of the Series B preferred stock contained
herein does not purport to be complete and is qualified in its
entirety by reference to the Certificate of Designation, which will
be filed as an exhibit to a Current Report on Form 8-K or Quarterly
Report on Form 10-Q to be filed with the SEC by us in connection
with this offering.
General
Our
Amended and Restated Articles of Incorporation authorizes our Board
of Directors to issue up to 10,000,000 shares of preferred stock,
par value $0.001 per share, of which no shares are issued and
outstanding.
Subject
to the limitations prescribed by our Articles of Incorporation, our
Board is authorized to establish the number of shares constituting
each series of preferred stock and to fix the designation, powers,
preferences and relative participating, optional and other rights
of each of those series and the qualifications, limitations and
restrictions of each of those series, all without any further vote
or action by our stockholders. Our Board has designated 20,000 of
the 10,000,000 authorized shares of preferred stock as Series B 5%
Convertible Preferred Stock. When sold, issued and paid for in
accordance with the terms of the Issuance Agreement, the shares of
Series B preferred stock will be validly issued, fully paid and
non-assessable.
Voluntary
Conversions by Holders
Each
holder of Series B preferred stock may, at any time, elect to
convert shares of Series B preferred stock into shares of our
common stock at the conversion price, subject to certain beneficial
ownership volume limitations described below. The number of shares
into which each share of Series B preferred stock is determined by
dividing the then stated value of the share of Series B preferred
stock by the conversion price. The conversion price is defined as
lower of (i) $0.31625 per share and (ii) 85% of the lowest volume
weighted average sales price of the Class A Common Stock as
reported on Bloomberg L.P. at 4:02 p.m. (New York City time) on a
trading day during the ten trading days prior to and ending on, and
including, the conversion date. The conversion price is subject to
appropriate adjustment in the event of stock splits, stock
dividends, recapitalization or similar events affecting our common
stock. In addition, upon the occurrence of a triggering event (as
defined below), the variable conversion rate will drop to 70% in
(ii) above, and the $0.31625 price reflected in (i) could be
adjusted downward under certain circumstances. In addition, in the
event we issue dilutive securities within five trading days after a
holder’s conversion of Series B preferred stock into common stock,
we will issue additional shares of common stock to such holder as
provided in the Certificate of Designation.
Fundamental
Transactions
In the
event we effect certain mergers, consolidations, sales of
substantially all of our assets, tender or exchange offers,
reclassifications or share exchanges in which our common stock is
effectively converted into or exchanged for other securities, cash
or property, or we consummate a business combination in which
another person acquires 50% or more of the outstanding shares of
our common stock, then, upon any subsequent conversion of the
Series B preferred stock, the holders of such Series B preferred
stock will have the right to receive any shares of the successor or
acquiring corporation and any additional consideration it would
have been entitled to receive if it had been a holder of the number
of shares of common stock then issuable upon conversion in full
(including accrued but unpaid dividends thereon) of the Series B
preferred stock immediately prior to any of the foregoing
transactions.
In
addition, we have agreed to have any successor entity in any of the
foregoing transactions in which we are not the surviving entity to
assume in writing all of our obligations under the Certificate of
Designation.
Limitations on
Conversion and Issuance
The
Series B preferred stock may not be converted and shares of our
common stock may not be issued under the Certificate of Designation
with respect to such Series B preferred stock if, after giving
effect to the conversion or issuance, a holder together with its
affiliates would beneficially own in excess of 9.99% of the
outstanding shares of our common stock.
The
holders of the Series B preferred stock are limited in the amount
of stated value of the Series B preferred stock they can convert on
any trading day. The conversion cap limits conversions by the
holders to the greater of $75,000 and an amount equal to 30% of the
aggregate dollar trading volume of our common stock on our primary
trading market for the five trading days immediately preceding, and
including, the conversion date. However, the conversion cap will be
increased if the trading volume in the first 30 minutes of any
trading session exceeds certain trailing average daily volume
amounts.
Dividends
Holders
of the Series B preferred stock are entitled to receive, and we
shall pay, cumulative dividends at a rate per share of 5% per annum
(calculated quarterly as a percentage of the stated value per share
for each quarterly period). Unless we elect to pay dividends in
cash, dividends on a share of Series B preferred stock will
increase such share of Series B preferred stock’s stated value and
will be payable on each dividend payment date (plus two trading
days or standard settlement period, whichever is shorter).
If at any
time while the Series B preferred stock is outstanding, we make
distributions of rights, cash or other assets to holders of our
common stock, the holders of the Series B preferred stock will be
entitled to participate in such distribution, on a per share basis,
as if the shares of Series B preferred stock were converted into
shares of common stock (without regard to any beneficial ownership
limitation) at the time of payment of such distribution.
Liquidation
Preference
Upon our
liquidation, dissolution or winding up, the holders of the Series B
preferred stock shall be entitled to receive out of our assets,
whether capital or surplus, an amount equal to such holder’s then
stated value for each share of Series B Preferred Stock before any
distribution to the holders of our common stock or other junior
securities. If there are insufficient assets to pay in full such
amounts, then the available assets shall be ratably distributed to
the holders of the Series B preferred stock in accordance with the
respective amounts that would be payable on such shares if all
amounts payable thereon were paid in full.
Redemption
Rights
Shares of
Series B preferred stock are not otherwise entitled to any
redemption rights, or mandatory sinking fund or analogous fund
provisions, other than as set forth under “Triggering Events”
below. Following 30 days after the closing, the Company may elect
to redeem the Series B preferred stock for 120% of the aggregate
stated value then outstanding, plus all accrued but unpaid
dividends and all liquidated damages and other amounts due in
respect of the Series B preferred stock. The Company’s right to
redeem the Series B preferred stock is contingent upon it having
complied with a number of conditions, including compliance with its
obligations under the Certificate of Designation.
Voting Rights;
Negative Covenants
Shares of
Series B preferred stock will generally have no voting rights,
except as required by law and except that the Company shall not,
without the consent of the holders of a majority of the then
outstanding shares of the Series B Preferred Stock:
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alter or change adversely the powers, preferences
or rights given to the Series B preferred stock or alter or amend
the Certificate of Designation; |
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authorize or create or issue any class of stock
ranking as to dividends, redemption or distribution of assets upon
a liquidation senior to, or otherwise pari passu with, the Series B
preferred stock; |
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amend its Articles of Incorporation or other
charter documents in any manner that adversely affects any rights
of the holders of the Series B preferred stock; |
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increase the number of authorized shares of Series
B preferred stock; or |
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enter into any agreement with respect to any of
the foregoing. |
In
addition, so long as any shares of Series B preferred stock are
outstanding, the Company may not, without the consent of at 67% of
the stated value of the then outstanding shares of Series B
preferred stock:
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amend the Company’s charter documents, including,
without limitation, its articles of incorporation and bylaws, in
any manner that materially and adversely affects any rights of the
holders of the Series B preferred stock; |
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repay, repurchase or offer to repay, repurchase or
otherwise acquire more than a de minimis number of shares of its
common stock or other junior securities, subject to certain
exceptions; |
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pay cash dividends or distributions on its common
stock or other junior securities; |
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enter into any transaction with any affiliate
which would be required to be disclosed in any public filing with
the SEC, unless such transaction is made on an arm’s-length basis
and expressly approved by a majority of the Company’s disinterested
directors; or |
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enter into any agreement with respect to any of
the foregoing. |
Triggering
Events
Upon the
occurrence of certain triggering events, the conversion price will
decrease as specified under “Voluntary Conversions by Holders”
above and the holders of the Series B preferred stock will have the
right to require the Company to redeem the preferred stock at a
price equal to the greater of (i) 120% of the aggregate stated
value then outstanding and (ii) the product of the volume weighted
average price on the trading day immediately preceding the date of
the triggering event and the stated value divided by the then
conversion price, plus in either case all accrued but unpaid
dividends thereon and all liquidated damages and other costs,
expenses or amounts due in respect of the preferred stock. Each of
the following would constitute a triggering event if the holders of
a majority of the Series B preferred stock did not otherwise
consent:
(i) if
the Company fails to provide at all times a registration statement
that permits the Company to issue shares of common stock upon
conversion of the Series B preferred stock or warrants, subject to
a grace period of 20 calendar days in the aggregate in any 365-day
period, or if the Company cannot issue shares of common stock under
Section 3(a)(9) of the Securities Act of 1933, as amended;
(ii) the
Company fails to deliver common stock issuable upon a conversion
prior to the seventh trading day after such shares are required to
be delivered, or the Company provides written notice that it does
not intend to comply with requests for conversion of shares of the
Series B preferred stock;
(iii) the
Company fails to pay the amount of cash due pursuant to a buy-in
(as specified in the Certificate of Designation) within five
calendar days after notice;
(iv) the
occurrence of an authorized share failure (as defined in the
Securities Purchase Agreement);
(v) the
Company fails to take certain actions to maintain the effectiveness
of a Form S-3 registration statement relating to the
securities;
(vi) the
Company fails to observe or perform other covenants, agreements or
warranties in the Securities Purchase Agreement, Certificate of
Designation and other transaction documents and such failure or
breach is not cured within 30 calendar days after the date of such
failure or breach;
(vii) the
Company redeems more a de minimis number of junior securities,
subject to certain exceptions;
(viii)
the Company is party to a change of control transaction or a
fundamental transaction (each as defined in the Certificate of
Designation);
(ix) the
occurrence of a bankruptcy event involving the Company;
(x) our
common stock fails to be listed or quoted for trading on certain
specific trading markets for more than five trading days;
(xi) any
monetary judgment, writ or similar final process is entered or
filed against the Company, any subsidiary or their property or
assets for more than $250,000, and such judgment, writ or similar
final process remains unvacated, unbonded or unstayed for a period
of 60 calendar days;
(xii) the
electronic transfer of our common stock through the Depository
Trust Company or another established clearing corporation is no
longer available or is subject to a “chill”;
(xiii)
notice of any litigation or arbitration against the Company or a
subsidiary that relates to outstanding accounts payable in an
amount that exceeds $500,000 and such litigation or arbitration
remains unvacated, unbonded and unstayed for a period of 45 days;
or
(xiv) the
Company fails to file a Form 8-K disclosing the number of issued
and outstanding shares within five trading days of a request.
No Exchange Listing
of Preferred Shares
We do not
plan on making an application to list the Series B Preferred Stock
on any national securities exchange or other nationally recognized
trading system. Our common stock issuable upon conversion of shares
of Series B preferred stock is quoted on the OTCQB.
Description of Warrants
The
following is a summary of certain terms and provisions of the
Series 4 warrants offered in this offering. The description of the
warrants contained herein does not purport to be complete and is
qualified in its entirety by reference to the form of warrant which
will be filed as an exhibit to a Current Report on Form 8-K or
Quarterly Report on Form 10-Q to be filed with the SEC by us in
connection with this offering.
Exercisability,
Exercise Price and Term
Each
Series 4 warrant will entitle the holder thereof to purchase one
share of our Series B preferred stock at $982.50 per share, or
approximately $2.5 million in aggregate for 2,500 shares of our
Series B preferred stock, for a period of up to nine months
following issuance. The terms of the warrants are subject to
extension if we do not have sufficient authorized shares for the
issuance of the underlying securities or we do not have an
effective registration statement for the issuance of such
shares.
Following
exercise of a warrant, the holder of the warrant may deliver notice
of conversion for the underlying Series B preferred stock and
receive the shares of common stock issuable upon conversion of such
Series B preferred stock instead of shares of preferred stock.
The
exercise price and the number of shares issuable upon exercise of
the warrants is subject to appropriate adjustment in the event of
recapitalization events, stock dividends, stock splits, stock
combinations, reclassifications, reorganizations or similar events
affecting our common stock.
Prior to
the exercise of any warrants, holders of the warrants will not have
any of the rights of holders of our Series B preferred stock or
common stock.
Call
Provision
Subject
to the satisfaction of certain circumstances, we may call for
cancellation any or all of the warrants following 90 days after
their issuance, for a payment equal to 8% of the aggregate exercise
price of the warrants being called. The warrants subject to any
such call notice will be cancelled 30 days following our payment of
the call fee, provided that the warrant holders have not exercised
the warrants prior to cancellation.
Fundamental
Transactions.
In the
event we effect certain mergers, consolidations, sales of
substantially all of our assets, tender or exchange offers,
reclassifications or share exchanges in which our common stock is
effectively converted into or exchanged for other securities, cash
or property, or we consummate a business combination in which
another person acquires 50% or more of the outstanding shares of
our common stock, then the holders of the Warrants will be entitled
to receive upon exercise of the warrants the same kind and amount
of securities, cash or property which the holders would have
received had they exercised the warrants and converted the
underlying Series B preferred stock immediately prior to such
fundamental transaction. Any successor to us or surviving entity is
required to assume the obligations under the warrants.
No Exchange Listing
of Warrants
We do not
plan on making an application to list the warrants on any national
securities exchange or other nationally recognized trading
system.
PLAN OF
DISTRIBUTION
We have
entered into the Issuance Agreement with the Series B holders
providing for the issuance of 100 shares of our Series B preferred
stock and warrants to purchase 2,500 shares of Series B preferred
stock following the execution of the Issuance Agreement, plus the
issuance of up to an additional 400 shares of our Series B
preferred stock following the exercise of warrants to purchase
Series B preferred stock as provided in the Issuance Agreement. The
closing relating to the issuance of 100 shares of our Series B
preferred stock and issuance of warrants is expected to occur on or
about May 9, 2019, and subsequent closings relating to the sale of
the additional 400 shares of Series B preferred stock is expected
to occur through November 2019, subject to the conditions set forth
in the Issuance Agreement. The Issuance Agreement contains
customary representations and warranties by us and the other
parties thereto, and provides that the obligations of the Series B
holders to purchase the securities are subject to certain customary
conditions precedent. All of the securities sold in this offering
will be sold at the same price.
This
offering is a best efforts offering being made directly by us,
without an underwriter or placement agent. We are not required to
sell any specific number or dollar amount of securities in this
offering, but will use our best efforts to sell the securities
offered. We will receive all of the proceeds from any securities
sold in this offering. We currently estimate offering expenses of
approximately $50,000, including reimbursement of legal fees and
expenses of $10,000 to the lead purchaser.
For the
complete terms of the Issuance Agreement, you should refer to the
form Issuance Agreement which is to be filed as an exhibit to a
Current Report on Form 8-K or Quarterly Report on Form 10-Q filed
with the SEC in connection with this offering and is incorporated
by reference into the registration statement of which this
prospectus supplement is part.
LEGAL MATTERS
Gary R.
Henrie, Nauvoo, Illinois, has passed upon the validity of the
Series B 5% convertible preferred stock and common stock offered
hereby. Hogan Lovells US LLP has passed upon the validity of the
warrants offered hereby.
EXPERTS
The
consolidated balance sheets of Innovation Pharmaceuticals Inc. as
of June 30, 2018 and 2017, and the related consolidated statements
of operations, stockholders’ deficit and cash flows for the years
ended June 30, 2018 and 2017 and the effectiveness of internal
control over financial reporting as of June 30, 2018 have been
audited by Baker Tilly Virchow Krause, LLP, an independent
registered public accounting firm, as stated in its report, which
is incorporated herein by reference. Such financial statements have
been incorporated herein by reference in reliance on the report of
such firm given upon their authority as experts in accounting and
auditing.
WHERE YOU CAN
FIND MORE INFORMATION
We file
annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any reports,
statements or other information that we file at the SEC’s public
reference room at 100 F Street, N.E., Washington, District of
Columbia 20549. Please call the SEC at 1-800-SEC-0330 for more
information on the public reference room. Our SEC filings are also
available to the public from commercial retrieval services and at
the website maintained by the SEC at www.sec.gov . The
reports and other information filed by us with the SEC are also
available at our website. The address of our website is
www.ipharminc.com . Information contained on our website or
that can be accessed through our website is not incorporated by
reference into this prospectus supplement or the accompanying
prospectus.
INFORMATION
INCORPORATED BY REFERENCE
The SEC
allows us to incorporate information into this prospectus
supplement “by reference,” which means that we can disclose
important information to you by referring you to another document
that we file separately with the SEC. The information incorporated
by reference is deemed to be part of this prospectus supplement,
except for any information superseded by information contained
directly in this prospectus supplement. These documents contain
important information about Innovation Pharmaceuticals and its
financial condition, business and results.
We are
incorporating by reference the filings listed below and any
additional documents that we may file with the SEC pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934, as
amended, on or after the date we file this prospectus supplement
and prior to the termination of the offering, except we are not
incorporating by reference any information furnished (but not
filed) under Item 2.02 or Item 7.01 of any Current Report on Form
8-K and corresponding information furnished under Item 9.01 as an
exhibit thereto:
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our Annual Report on Form 10-K for the fiscal year
ended June 30, 2018, filed with the SEC on September 11, 2018; |
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our Quarterly Reports on Form 10-Q filed with the
SEC for the quarters ended September 30, 2018 and December 31,
2018, filed with the SEC on November 8, 2018 and February 8,
2019; |
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our Current Reports on Form 8-K filed with the SEC
on September 21, 2018, October 9, 2018, November 13, 2018, December
17, 2018, December 18, 2018, January 7, 2019 and January 31, 2019;
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The description of our common stock contained in
our Form 8-A filed on April 27, 2015, including any amendments or
reports filed for the purpose of updating the description. |
We will
provide, without charge, to each person to whom a copy of this
prospectus supplement has been delivered, including any beneficial
owner, a copy of any and all of the documents referred to herein
that are summarized in this prospectus supplement, if such person
makes a written or oral request directed to:
Innovation Pharmaceuticals
Inc.
100 Cummings Center, Suite
151-B
Beverly, Massachusetts
01915
Attn: Chief Executive
Officer
(978) 633-3623
PROSPECTUS
Innovation Pharmaceuticals
Inc.
$75,000,000 of
Class A Common
Stock
Preferred Stock
Debt Securities
Warrants
Units
We may offer and sell, from time to time, in
one or more offerings, any combination of debt and equity
securities that we describe in this prospectus, either individually
or in units, having a total initial offering price not exceeding
$75,000,000. We may also offer shares of common stock or preferred
stock upon conversion of debt securities, common stock upon
conversion of preferred stock, or common stock, preferred stock or
debt securities upon the exercise of warrants.
This prospectus provides you with a general
description of these securities. We will file prospectus
supplements and may provide other offering material at later dates
that will contain specific terms of each offering of securities by
us. These supplements may also add, update or change information
contained in this prospectus.
You should read this prospectus and the
applicable prospectus supplement carefully before you invest in the
securities described in the applicable prospectus supplement. This
prospectus may not be used to consummate sales of securities unless
accompanied by a prospectus supplement.
We will sell these securities directly to
our stockholders or to other purchasers or through agents on our
behalf or through underwriters or dealers as designated from time
to time. If any agents or underwriters are involved in the sale of
any of these securities, the applicable prospectus supplement will
provide the names of the agents or underwriters and any applicable
fees, commission or discounts.
Our Class A common stock is currently quoted
on the OTCQB under the symbol “IPIX”.
Investing in our securities involves a
high degree of risk. See the section entitled “Risk Factors” on
page 2 of this prospectus and in the documents
we filed with the Securities and Exchange Commission that are
incorporated in this prospectus by reference for certain risks and
uncertainties you should consider.
Neither the Securities and Exchange
Commission nor any state securities commission has approved or
disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
This prospectus is
dated September 21 , 201 7 .
TABLE OF CONTENTS
ABOUT THIS
PROSPECTUS
This prospectus of Innovation
Pharmaceuticals Inc., a Nevada corporation (the “Company”,
“Innovation Pharmaceuticals”, or “we”, “us”, or “our”) is a part of
a registration statement on Form S-3 that we filed with the
Securities and Exchange Commission (“SEC”) utilizing a “shelf”
registration process. Under this shelf registration process, we
may, from time to time, sell the securities described in this
prospectus in one or more offerings.
The registration statement containing this
prospectus, including the exhibits to the registration statement,
provides additional information about us and the securities offered
under this prospectus. The registration statement, including the
exhibits and the documents incorporated herein by reference, can be
read on the SEC website or at the SEC offices mentioned under the
heading “Where You Can Find More Information.”
We may provide a prospectus supplement
containing specific information about the amounts, prices and other
important terms of the securities for a particular offering. The
prospectus supplement may add, update or change information in this
prospectus. If the information in the prospectus is inconsistent
with a prospectus supplement, you should rely on the information in
that prospectus supplement. You should read both this prospectus
and, if applicable, any prospectus supplement. See “Where You Can
Find More Information” for more information.
We have not authorized any dealer, salesman
or other person to give any information or to make any
representation other than those contained or incorporated by
reference in this prospectus or any prospectus supplement. You must
not rely upon any information or representation not contained or
incorporated by reference in this prospectus or any prospectus
supplement. This prospectus and any prospectus supplement do not
constitute an offer to sell or the solicitation of an offer to buy
any securities other than the registered securities to which they
relate, nor do this prospectus and any prospectus supplement
constitute an offer to sell or the solicitation of an offer to buy
securities in any jurisdiction to any person to whom it is unlawful
to make such offer or solicitation in such jurisdiction. You should
not assume that the information contained in this prospectus or any
prospectus supplement is accurate on any date subsequent to the
date set forth on the front of such document or that any
information we have incorporated by reference is correct on any
date subsequent to the date of the document incorporated by
reference, even though this prospectus and any prospectus
supplement is delivered or securities are sold on a later date.
ABOUT THE
COMPANY
We are a clinical stage biopharmaceutical
company developing innovative therapies with dermatology, oncology,
anti-inflammatory and antibiotic applications. We own the rights to
numerous drug compounds, and we devote most of our efforts and
resources on our compounds in clinical trials: Prurisol for the
treatment of psoriasis, Kevetrin for the treatment of ovarian
cancer, and Brilacidin for treatments of skin infections,
ulcerative proctitis (inflammatory bowel disease) and prevention of
oral mucositis complicating chemoradiation treatment for
cancer.
We anticipate using our expertise to manage
and perform what we believe are the most critical aspects of the
product development process which include: (i) design and oversight
of clinical trials; (ii) development and execution of strategies
for the protection and maintenance of intellectual property rights;
and (iii) interactions with regulatory authorities domestically and
internationally. We expect to concentrate on product development
and engage in a limited way in product discovery, avoiding the
significant investment of time and financial resources that is
generally required for a promising compound to be identified and
brought into clinical trials.
The Company was incorporated as Econoshare,
Inc. on August 1, 2005 in the State of Nevada. On December 6, 2007,
the Company acquired Cellceutix Pharma, Inc., a privately owned
corporation formed under the laws of the State of Delaware on June
20, 2007. Following the acquisition, the Company changed its name
to Cellceutix Corporation. Effective June 5, 2017, the Company
amended its Articles of Incorporation and changed its name from
Cellceutix Corporation to Innovation Pharmaceuticals Inc.
Our principal executive offices are located
at 100 Cummings Center, Suite 151-B, Beverly, Massachusetts 01915,
and our telephone number is (978) 921-4125. Our website is
www.ipharminc.com . The information contained on or that can
be accessed through our website (other than the specified SEC
filings incorporated by reference in this prospectus) is not
incorporated in, and is not a part of, this prospectus, and you
should not rely on any such information in connection with your
investment decision to purchase our securities.
RISK FACTORS
An investment in our securities involves a
high degree of risk. Before making an investment decision, you
should consider carefully the risks discussed under the sections
captioned “Risk Factors” set forth in the documents and reports
filed by us with the SEC, that are incorporated by reference into
this prospectus, including in our most recent Annual Report on Form
10-K, as revised or supplemented by our most recent Quarterly
Report on Form 10-Q, each of which are on file with the SEC and are
incorporated herein by reference, as well as any risks described in
any applicable prospectus supplement, before deciding whether to
buy our securities. Our business, financial condition or results of
operations could be materially adversely affected by any of these
risks. The trading price of our securities could decline due to any
of these risks, and you may lose all or part of your
investment.
This prospectus and the incorporated
documents also contain forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially
from those anticipated in these forward-looking statements as a
result of certain factors, including the risks mentioned below.
Forward-looking statements included in this prospectus are based on
information available to us on the date hereof, and all
forward-looking statements in documents incorporated by reference
are based on information available to us as of the date of such
documents. We disclaim any intent to update any forward-looking
statements.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the documents
incorporated by reference herein, contains forward-looking
statements within the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995. All statements in this
prospectus other than statements of historical fact are
“forward-looking statements” for purposes of these provisions.
Statements that include the use of terminology such as “may,”
“will,” “expects,” “believes,” “plans,” “estimates,” “potential,”
or “continue,” or the negative thereof or other and similar
expressions are forward-looking statements. In addition, in some
cases, you can identify forward-looking statements by words or
phrases such as “trend,” “potential,” “opportunity,” “believe,”
“comfortable,” “expect,” “anticipate,” “current,” “intention,”
“estimate,” “position,” “assume,” “outlook,” “continue,” “remain,”
“maintain,” “sustain,” “seek,” “achieve,” and similar
expressions.
Any statements that refer to: our future
drug development plans and projected timelines for the initiation
and completion of preclinical and clinical trials; the potential
for the results of ongoing preclinical or clinical trials; other
statements regarding our future product development and regulatory
strategies, including with respect to specific indications; any
statements regarding our future financial performance, results of
operations or sufficiency of capital resources to fund our
operating requirements; and any other statements which are other
than statements of historical fact and any statement of assumptions
underlying any of the foregoing are forward-looking statements. The
forward-looking statements in this prospectus, in any related
prospectus supplement or free writing prospectus and in any
incorporated documents speak only as of the date hereof (or
thereof, as applicable), and caution should be taken not to place
undue reliance on any such forward-looking statements, which are
qualified in their entirety by this cautionary statement.
Forward-looking statements are subject to
numerous assumptions, events, risks, uncertainties and other
factors, including those that may be outside of our control and
that change over time. As a result, actual results and/or the
timing of events could differ materially from those expressed in or
implied by the forward-looking statements and future results could
differ materially from historical performance. Such assumptions,
events, risks, uncertainties and other factors include, among
others, those described under the section herein entitled “Risk
Factors” and elsewhere in this prospectus or in any related
prospectus supplement or free writing prospectus, as well as in
reports and documents we file with the SEC and include, without
limitation, the following:
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our ability to continue to fund and successfully
progress internal research and development efforts; |
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our ability to create effective,
commercially-viable drugs; |
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our ability to effectively and timely conduct
clinical trials; |
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our ability to ultimately distribute our drug
candidates; |
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compliance with regulatory requirements; |
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our capital needs; |
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other risks referred to in the section of this
prospectus entitled “Risk Factors” and in the SEC filings
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All forward-looking statements included in
this document are made as of the date hereof, based on information
available to us as of the date hereof, and we assume no obligation
to update any forward-looking statements.
WHERE YOU CAN
FIND MORE INFORMATION
We are subject to the information
requirements of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”). Accordingly, we file annual, quarterly and
current reports, and proxy statements as may be required and other
information with the SEC and filed a registration statement on Form
S-3 under the Securities Act of 1933, as amended (the “Securities
Act”) relating to the securities offered by this prospectus. This
base prospectus, which forms part of the registration statement in
Form S-3, does not contain all of the information included in the
registration statement. For further information, you should refer
to the registration statement and its exhibits.
You may read and copy the registration
statement and any document we file with the SEC at the SEC’s Public
Reference Room at 100 F Street, N.E., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on
the operation of the Public Reference Room. You can also review our
filings by accessing the website maintained by the SEC at
http://www.sec.gov. The site contains reports, proxy and
information statements and other information regarding issuers that
file electronically with the SEC.
DOCUMENTS
INCORPORATED BY REFERENCE
The SEC allows us to “incorporate by
reference” into this prospectus certain information that we file
with the SEC, which means that we can disclose important
information to you by referring you to other documents separately
filed by us with the SEC that contain such information. The
information we incorporate by reference is considered to be part of
this prospectus and information we later file with the SEC will
automatically update and supersede the information in this
prospectus. The following documents filed by us with the SEC
pursuant to Section 13(a) of the Exchange Act and any of our future
filings under Sections 13(a), 13(c), 14 or 15 (d) of the Exchange
Act, except for information furnished under Item 2.02 or 7.01 of
Current Report on Form 8-K, or exhibits related thereto, made
before the termination of the offering are incorporated by
reference herein:
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our Annual Report on Form
10-K for the fiscal year ended June 30, 2017, filed with the SEC on
September 11, 2017; and
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the description of our
common stock contained in our Form 8-A filed on April 27, 2015,
including any amendments or reports filed for the purpose of
updating the description.
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In addition, all documents subsequently
filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act before the date our offering is terminated or complete
are deemed to be incorporated by reference into, and to be a part
of, this prospectus.
We will provide to each person, including
any beneficial owner, to whom a prospectus is delivered, a copy of
any or all of the reports or documents that have been incorporated
by reference in the prospectus contained in the registration
statement but not delivered with the prospectus, other than an
exhibit to these filings unless we have specifically incorporated
that exhibit by reference into the filing, upon written or oral
request and at no cost to the requester. Requests should be made by
writing or telephoning us at the following address:
Innovation Pharmaceuticals
Inc.
100 Cummings Center, Suite
151-B
Beverly, MA 01915
(978) 921-4125
Attention: Leo Ehrlich, Chief
Executive Officer
USE OF PROCEEDS
Unless otherwise specified in the applicable
prospectus supplement, we intend to use the net proceeds from the
sale of the securities described in this prospectus for general
corporate and operations purposes. The applicable prospectus
supplement will provide more details on the use of proceeds of any
specific offering.
DILUTION
We will set forth in a prospectus supplement
and/or a free writing prospectus the following information, as
required, regarding any dilution of the equity interests of
investors purchasing securities in an offering under this
prospectus:
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the net tangible book value per share of our
equity securities before and after the offering; |
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the amount of the change in such net tangible book
value per share attributable to the cash payments made by
purchasers in the offering; and |
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the amount of the immediate dilution from the
public offering price which will be absorbed by such
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RATIO OF
EARNINGS TO FIXED CHARGES
If any debt securities or preferred stock
are offered pursuant to this prospectus, we will provide a table
setting forth our ratio of earnings to fixed charges or ratio of
combined fixed charges and preferred stock dividends on a
historical basis in the applicable prospectus supplement, if
required.
DESCRIPTION OF
OUR CAPITAL STOCK
The following summary
describes the material terms of our capital stock and is subject
to, and qualified in its entirety by, our Articles of Incorporation
and bylaws that are included as exhibits to certain of the
documents incorporated by reference herein and by the provisions of
applicable Nevada law. We refer you to the foregoing documents and
to Nevada law for a detailed description of the provisions
summarized below.
Common Stock
We are authorized to issue
300,000,000 shares of Class A common stock, par value $0.0001 per
share, and 100,000,000 Class B common stock, par value $0.0001 per
share. As of September 1, 2017, there were 137,874,421 shares of
our Class A common stock outstanding that were held of record by
approximately 71 stockholders and zero shares of Class B common
stock.
Class A Common Stock
Each holder of Class A
common stock is entitled to one vote for each share on all matters
submitted to a vote of the stockholders, including the election of
directors, and each holder does not have cumulative voting rights.
Accordingly, the holders of a majority of the shares of Class A
common stock entitled to vote in any election of directors can
elect all of the directors standing for election.
Subject to preferences that
may be applicable to any then outstanding preferred stock, holders
of Class A common stock are entitled to receive ratably those
dividends, if any, as may be declared from time to time by the
board of directors out of legally available funds. In the event of
our liquidation, dissolution or winding up, holders of Class A
common stock will be entitled to share ratably in the net assets
legally available for distribution to stockholders after the
payment of all of our debts and other liabilities and the
satisfaction of any liquidation preference granted to the holders
of any outstanding shares of preferred stock.
Holders of Class A common
stock do not have preemptive or conversion rights or other
subscription rights, and there are no redemption or sinking fund
provisions applicable to the Class A common stock. All outstanding
shares of Class A common stock are, and the shares of Class A
common stock offered by us in any offering utilizing this
prospectus, when issued and paid for, will be fully paid and
nonassessable. The rights, preferences and privileges of the
holders of Class A common stock are subject to, and may be
adversely affected by, the rights of the holders of shares of any
series of preferred stock which we may designate in the future.
Class B Common Stock
The holders of shares of the
Class B common stock at their election shall have the right, at any
time or from time to time, to convert any or all of their shares of
Class B common stock into shares of Class A common stock, on a one
for one basis, by delivery to the Company of the certificates
representing such shares of Class B common stock duly endorsed for
such conversion. Any shares of the Class B common stock that are
transferred will automatically convert into shares of the Class A
Common Stock, on a one to one basis, effective as of the date on
which certificates representing such shares are presented for
transfer on the books of the Company. The Board of Directors of the
Company has sole discretion to issue the Class B common stock.
Holder of shares of the
Class B common stock are entitled to cast ten (10) votes in person
or by proxy for each share of Class B common stock standing in such
holder’s name on the transfer books of the Company. Except as
otherwise provided above and subject to the limitations provided by
law and subject to any voting rights applicable to shares of
preferred stock, the holders of shares of the Class A Common Stock
and Class B common stock shall vote together as a single class,
together with the holders of any shares of the Preferred Stock
which are entitled to vote, and not as a separate class.
Krishna Menon and Leo
Ehrlich, our President and Chief Executive Officer, respectively,
each have vested options that they can each exercise and convert
into 18,000,000 shares of Class B common stock.
Preferred Stock
We are authorized to issue
up to 10,000,000 shares of preferred stock in one or more series,
with such designations, preferences and relative, participating,
option and other special rights, qualifications, limitations or
restrictions as determined by our board of directors, without any
further vote or action by our stockholders, including dividend
rights, conversion rights, voting rights, redemption rights and
terms of redemption and liquidation preferences.
No shares of preferred stock
are issued and outstanding; however, on May 9, 2012, our board of
directors designated an aggregate of 500,000 shares of preferred
stock as Series A Convertible Preferred Stock (the “Series A”), of
which no shares of Series A Stock are currently issued or
outstanding.
Our board of directors may
fix the number of shares constituting any series and the
designations of these series by adopting a certificate of
designation relating to each series including:
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the maximum number of shares
in the series and the distinctive designation thereof;
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the terms on which dividends
will be paid, if any;
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the terms on which the
shares will be redeemed, if at all;
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the liquidation preference,
if any;
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the terms of any retirement
or sinking fund for the purchase or redemption of the shares of the
series;
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the terms and conditions, if
any, on which the shares of the series will be convertible into, or
exchangeable for, shares of any other class or classes of capital
stock;
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the voting rights, if any,
on the shares of the series;
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any securities exchange or
market on which the shares will be listed; and
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any other preferences and
relative, participating, operation or other special rights or
qualifications, limitations or restrictions of the shares.
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Our issuance of preferred
stock may have the effect of delaying or preventing a change in
control. Our issuance of preferred stock could decrease the amount
of earnings and assets available for distribution to the holders of
Class A common stock or could adversely affect the rights and
powers, including voting rights, of the holders of Class A common
stock. The issuance of preferred stock could have the effect of
decreasing the market price of our Class A common stock.
DESCRIPTION OF
DEBT SECURITIES
The following description,
together with the additional information we include in any
applicable prospectus supplement, summarizes the material terms and
provisions of the debt securities that we may offer from time to
time under this prospectus. While the terms we have summarized
below will generally apply to any future debt securities that may
be offered under this prospectus, we will describe the particular
terms of any debt securities that may be offered in more detail in
the applicable prospectus supplement. The terms of any debt
securities offered under a prospectus supplement may differ from
the terms we describe below.
We may issue secured or
unsecured debt securities offered under this prospectus, which may
be senior, subordinated or junior subordinated, and which may be
convertible and which may be issued in one or more series. We will
issue any new senior debt securities under a senior indenture that
we will enter into with a trustee named in such senior indenture.
We will issue any subordinated debt securities under a subordinated
indenture that we will enter into with a trustee named in such
subordinated indenture. The terms of the debt securities will
include those set forth in the applicable indenture, any related
supplemental indenture and any related securities documents that
are made a part of the indenture by the Trust Indenture Act of
1939, as amended (the “Trust Indenture Act”). You should read the
summary below, the applicable prospectus supplement and the
provisions of the applicable indenture, any supplemental indenture
and any related security documents, if any, in their entirety
before investing in our debt securities. We use the term
“indentures” to refer to both the senior indentures and the
subordinated indentures.
The indentures will be qualified under the
Trust Indenture Act. We use the term “trustee” to refer to either a
trustee under the senior indenture or a trustee under the
subordinated indenture, as applicable.
The following summaries of material
provisions of any senior debt securities, any subordinated debt
securities and the related indentures are subject to, and qualified
in their entirety by reference to, all the provisions of the
indentures and any supplemental indenture or related document
applicable to a particular series of debt securities. In addition,
the material specific financial, legal and other terms as well as
any material U.S. federal income tax consequences particular to
securities of each series will be described in the prospectus
supplement relating to the securities of that series. The
prospectus supplement may or may not modify the general terms found
in this prospectus and will be filed with the SEC. For a complete
description of the terms of a particular series of debt securities,
you should read both this prospectus and the prospectus supplement
relating to that particular series, as well as the complete
indentures that contain the terms of the debt securities. See
“Prospectus Summary - Where You Can Find More Information” for
information on how to obtain a copy of the appropriate indenture.
Except as we may otherwise indicate, the terms of any senior
indenture and any subordinated indenture will be identical.
General
We will describe in the applicable
prospectus supplement the terms relating to a series of debt
securities, including:
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the principal amount being
offered, and if a series, the total amount authorized and the total
amount outstanding;
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any limit on the amount that
may be issued;
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whether or not we will issue
the series of debt securities in global form, and, if so, the terms
and who the depositary will be;
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the principal amount due at
maturity, and whether the debt securities will be issued with any
original issue discount;
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whether and under what
circumstances, if any, we will pay additional amounts on any debt
securities held by a person who is not a United States person for
tax purposes, and whether we can redeem the debt securities if we
have to pay such additional amounts;
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the annual interest rate,
which may be fixed or variable, or the method for determining the
rate and the date interest will begin to accrue, the dates interest
will be payable and the regular record dates for interest payment
dates or the method for determining such dates;
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whether or not the debt
securities will be secured or unsecured, and the terms of any
secured debt;
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the terms of the
subordination of any series of subordinated debt;
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the place where payments
will be payable;
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restrictions on transfer,
sale or other assignment, if any;
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our right, if any, to defer
payment of interest and the maximum length of any such deferral
period;
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the date, if any, after
which, the conditions upon which, and the price at which, we may,
at our option, redeem the series of debt securities pursuant to any
optional or provisional redemption provisions and the terms of
those redemption provisions;
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provisions for a sinking
fund, purchase or other analogous fund, if any;
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the date, if any, on which,
and the price at which we are obligated, pursuant to any mandatory
sinking fund or analogous fund provisions or otherwise, to redeem,
or at the holder’s option, to purchase, the series of debt
securities;
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whether the indenture will
restrict our ability and/or the ability of our subsidiaries to:
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incur additional
indebtedness;
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issue additional
securities;
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pay dividends or make
distributions in respect of our capital stock or the capital stock
of our subsidiaries;
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place restrictions on our
subsidiaries’ ability to pay dividends, make distributions or
transfer assets;
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make investments or other
restricted payments;
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sell or otherwise dispose of
assets;
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enter into sale-leaseback
transactions;
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engage in transactions with
stockholders or affiliates;
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issue or sell stock of our
subsidiaries; or
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effect a consolidation or
merger;
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whether the indenture will
require us to maintain any interest coverage, fixed charge, cash
flow-based, asset-based or other financial ratios;
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a discussion of any material
or special U.S. federal income tax considerations applicable to the
debt securities;
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information describing any
book-entry features;
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the procedures for any
auction and remarketing, if any;
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the denominations in which
we will issue the series of debt securities, if other than
denominations of $1,000 and any integral multiple thereof;
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if other than U.S. dollars,
the currency in which the series of debt securities will be
denominated and the currency in which principal, premium, if any,
and interest will be paid; and
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any other specific terms,
preferences, rights or limitations of, or restrictions on, the debt
securities, including any events of default that are in addition to
or different than those described in this prospectus or any
covenants provided with respect to the debt securities that are in
addition to those described above, and any terms which may be
required by us or advisable under applicable laws or regulations or
advisable in connection with the marketing of the debt
securities.
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In addition to the debt
securities that may be offered pursuant to this prospectus, we may
issue other debt securities in public or private offerings from
time to time. These other debt securities may be issued under other
indentures or documentation that are not described in this
prospectus, and those debt securities may contain provisions
materially different from the provisions applicable to one or more
issues of debt securities offered pursuant to this prospectus.
Original Issue Discount
One or more series of debt
securities offered under this prospectus may be sold at a
substantial discount below their stated principal amount, bearing
no interest or interest at a rate that at the time of issuance is
below market rates. The federal income tax consequences and special
considerations applicable to any series of debt securities
generally will be described in the applicable prospectus
supplement.
Senior Debt Securities
Payment of the principal or,
premium, if any, and interest on senior debt securities will rank
on a parity with all of our other indebtedness that is not
subordinated.
Subordination of Subordinated Debt
Securities
The subordinated debt
securities will be subordinate and junior in priority of payment to
certain of our other indebtedness to the extent described in a
prospectus supplement.
Conversion or Exchange Rights
We will set forth in the
applicable prospectus supplement the terms on which a series of
debt securities may be convertible into or exchangeable for our
common stock, our preferred stock or other securities, including
the conversion or exchange rate, as applicable, or how it will be
calculated, and the applicable conversion or exchange period. We
will include provisions as to whether conversion or exchange is
mandatory, at the option of the holder or at our option. We may
include provisions pursuant to which the number of securities that
the holders of the series of debt securities receive upon
conversion or exchange would, under the circumstance described in
those provisions, be subject to adjustment, or pursuant to which
those holders would, under those circumstances, receive other
property upon conversion or exchange, for example in the event of
our merger or consolidation with another entity.
Consolidation, Merger or Sale
If the debt securities are convertible for
our other securities, the person with whom we consolidate or merge
or to whom we sell all of our property must make provisions for the
conversion of the debt securities into securities which the holders
of the debt securities would have received if they had converted
the debt securities before the consolidation, merger or sale.
Events of Default under the
Indentures
Except as otherwise set forth in an
applicable prospectus supplement, the following are events of
default under the indentures with respect to any series of debt
securities that we may issue:
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if we fail to pay interest
when due and payable and our failure continues for 30 days and the
time for payment has not been extended or deferred;
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if we fail to pay the
principal, or premium, if any, when due and payable and the time
for payment has not been extended or delayed;
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if we fail to observe or
perform any other covenant contained in the debt securities or the
indentures, other than a covenant solely for the benefit of another
series of debt securities, and our failure continues for 90 days
after we receive notice from the trustee or holders of at least 25%
in aggregate principal amount of the outstanding debt securities of
the applicable series; and
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if specified events of
bankruptcy, insolvency or reorganization occur.
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If an event of default with respect to debt
securities of any series occurs and is continuing, other than an
event of default specified in the last bullet point above under
“Events of Default Under the Indentures,” the trustee or the
holders of at least 25% in aggregate principal amount of the
outstanding debt securities of that series, by notice to us in
writing, and to the trustee if notice is given by such holders, may
declare the unpaid principal of, premium, if any, and accrued
interest, if any, due and payable immediately. If an event of
default specified in the last bullet point above “Events of Default
Under the Indentures” occurs with respect to us, the principal
amount of and accrued interest, if any, of each series of debt
securities then outstanding shall be due and payable without any
notice or other action on the part of the trustee or any
holder.
The holders of a majority in aggregate
principal amount of the outstanding debt securities of an affected
series may waive any default or event of default with respect to
the series and its consequences (other than bankruptcy defaults),
except there may be no waiver of defaults or events of default
regarding payment of principal, premium, if any, or interest,
unless we have cured the default or event of default in accordance
with the applicable indenture.
Subject to the terms of the indentures, if
an event of default under an indenture shall occur and be
continuing, the trustee will be under no obligation to exercise any
of its rights or powers under such indenture at the request or
direction of any of the holders of the applicable series of debt
securities, unless such holders have offered the trustee indemnity
satisfactory to it. The holders of a majority in principal amount
of the outstanding debt securities of any series will have the
right to direct the time, method and place of conducting any
proceeding for any remedy available to the trustee, or exercising
any trust or power conferred on the trustee, with respect to the
debt securities of that series, provided that:
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the direction so given by
the holder is not in conflict with any law or the applicable
indenture; and
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subject to its duties under
the Trust Indenture Act, the trustee need not take any action that
might involve it in personal liability or might be unduly
prejudicial to the holders not involved in the proceeding.
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A holder of the debt securities of any
series will only have the right to institute a proceeding under the
indentures or to appoint a receiver or trustee, or to seek other
remedies if:
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the holder has given written
notice to the trustee of a continuing event of default with respect
to that series;
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the holders of at least 25%
in aggregate principal amount of the outstanding debt securities of
that series have made written request to the trustee, and such
holders have offered indemnity satisfactory to the trustee, to
institute the proceeding as trustee; and
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the trustee does not
institute the proceeding, and does not receive from the holders of
a majority in aggregate principal amount of the outstanding debt
securities of that series other conflicting directions, within 90
days after the notice, request and offer.
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These limitations do not apply to a suit
instituted by a holder of debt securities if we default in the
payment of the principal, premium, if any, or interest on, the debt
securities.
We will periodically file statements with
the trustee regarding our compliance with the covenants in the
indentures.
Modification of Indenture; Waiver
We and the trustee may modify an indenture
or enter into or modify any supplemental indenture without the
consent of any holders of the debt securities with respect to
specific matters, including:
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to fix any ambiguity, defect
or inconsistency in the indenture;
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to comply with the
provisions described above under “—Consolidation, Merger or
Sale;”
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to comply with any
requirements of the SEC in connection with the qualification of any
indenture under the Trust Indenture Act;
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to evidence and provide for
the acceptance of appointment hereunder by a successor trustee;
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to provide for
uncertificated debt securities and to make any appropriate changes
for such purpose;
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to add to, delete from, or
revise the conditions, limitations and restrictions on the
authorized amount, terms or purposes of issuance, authorization and
delivery of debt securities of any unissued series;
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to add to our covenants such
new covenants, restrictions, conditions or provisions for the
protection of the holders, to make the occurrence, or the
occurrence and the continuance, of a default in any such additional
covenants, restrictions, conditions or provisions an event of
default, or to surrender any of our rights or powers under the
indenture; or
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to change anything that does
not materially adversely affect the legal rights of any holder of
debt securities of any series.
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In addition, under the indentures, the
rights of holders of a series of debt securities may be changed by
us and the trustee with the written consent of the holders of at
least a majority in aggregate principal amount of the outstanding
debt securities of each series that is affected. However, we and
the trustee may only make the following changes with the consent of
each holder of any outstanding debt securities affected:
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extending the fixed maturity
of the series of debt securities;
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reducing the principal
amount, reducing the rate of or extending the time of payment of
interest, or reducing any premium payable upon the redemption of
any debt securities; or
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reducing the percentage of
debt securities, the holders of which are required to consent to
any supplemental indenture.
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Discharge
Each indenture provides that, subject to the
terms of the indenture and any limitation otherwise provided in the
prospectus supplement applicable to a particular series of debt
securities, we can elect to be discharged from our obligations with
respect to one or more series of debt securities, except for
specified obligations, including obligations to:
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register the transfer or
exchange of debt securities of the series;
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replace stolen, lost or
mutilated debt securities of the series;
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maintain paying agents and
agencies for payment, registration of transfer and exchange and
service of notices and demands;
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recover excess money held by
the trustee;
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compensate and indemnify the
trustee; and
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appoint any successor
trustee.
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In order to exercise our rights to be
discharged, we must deposit with the trustee money or government
obligations sufficient to pay all the principal of, any premium and
interest on, the debt securities of the series on the dates
payments are due.
“Street Name” and Other Indirect
Holders
Investors who hold
securities in accounts at banks or brokers generally will not be
recognized by us as legal holders of debt securities. This manner
of holding securities is called holding in “street name.” Instead,
we would recognize only the bank or broker, or the financial
institution that the bank or broker uses to hold its securities.
These intermediary banks, brokers and other financial institutions
pass along principal, interest and other payments on the debt
securities, either because they agree to do so in their customer
agreements or because they are legally required to do so. If you
hold debt securities in “street name,” you should check with your
own institution to find out, among other things:
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how it handles payments and
notices;
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whether it imposes fees or
charges;
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how it would handle voting
if applicable;
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whether and how you can
instruct it to send you debt securities registered in your own name
so you can be a direct holder as described below; and
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if applicable, how it would
pursue rights under your debt securities if there were a default or
other event triggering the need for holders to act to protect their
interests.
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Our obligations, as well as
the obligations of the trustee under the indentures and those of
any third parties employed by us or the trustee under either of the
indentures, run only to persons who are registered as holders of
debt securities issued under the applicable indenture. As noted
above, we do not have obligations to you if you hold in “street
name” or other indirect means, either because you choose to hold
debt securities in that manner or because the debt securities are
issued in the form of global securities as described below. For
example, once we make payment to the registered holder, we have no
further responsibility for the payment even if that holder is
legally required to pass the payment along to you as a “street
name” customer but does not do so.
Form, Exchange and Transfer
We may issue debt securities
of each series only in fully registered form without coupons and,
unless we otherwise specify in the applicable prospectus
supplement, in denominations of $1,000 and any integral multiple
thereof. The indentures will provide that we may issue debt
securities of a series in temporary or permanent global form and as
book-entry securities that will be deposited with, or on behalf of,
The Depository Trust Company or another depositary named by us and
identified in a prospectus supplement with respect to that series
(the “Depository”). See “Book-Entry” below for a further
description of the terms relating to any book-entry securities.
At the option of the holder,
subject to the terms of the indentures and the limitations
applicable to global securities described below or in the
applicable prospectus supplement, the holder of the debt securities
of any series can exchange the debt securities for other debt
securities of the same series, in any authorized denomination and
of like tenor and aggregate principal amount.
Subject to the terms of the
indentures and the limitations applicable to global securities set
forth below in the applicable prospectus supplement, holders of the
debt securities may present the debt securities for exchange or for
registration of transfer, duly endorsed or with the form of
transfer endorsed thereon duly executed if so required by us or the
security registrar, at the office of the security registrar or at
the office of any transfer agent designated by us for this purpose.
Unless otherwise provided in the debt securities that the holder
presents for transfer or exchange, we will make no service charge
for any registration of transfer or exchange, but we may require
payment of any taxes or other governmental charges.
We will name in the
applicable prospectus supplement the security registrar, and any
transfer agent in addition to the security registrar, that we
initially designate for any debt securities. We may at any time
designate additional transfer agents or rescind the designation of
any transfer agent or approve a change in the office through which
any transfer agent acts, except that we will be required to
maintain a transfer agent in each place of payment for the debt
securities of each series.
If we elect to redeem the
debt securities of any series, we will not be required to:
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issue, register the transfer
of, or exchange any debt securities of any series being redeemed in
part during a period beginning at the opening of business 15 days
before the day of mailing of a notice of redemption of any debt
securities that may be selected for redemption and ending at the
close of business on the day of the mailing; or
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register the transfer of or
exchange any debt securities so selected for redemption, in whole
or in part, except the unredeemed portion of any debt securities we
are redeeming in part.
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Book-Entry Securities
The following description of
book-entry securities will apply to any series of debt securities
issued in whole or in part in the form of one or more global
securities, except as otherwise described in a related prospectus
supplement.
Book-entry securities of
like tenor and having the same date will be represented by one or
more global securities deposited with and registered in the name of
a depositary that is a clearing agent registered under the Exchange
Act, as amended. Beneficial interests in book-entry securities will
be limited to institutions that have accounts with the depositary,
or “participants,” or persons that may hold interests through
participants.
Ownership of beneficial
interests by participants will only be evidenced by, and the
transfer of that ownership interest will only be effected through,
records maintained by the depositary. Ownership of beneficial
interests by persons that hold through participants will only be
evidenced by, and the transfer of that ownership interest within
such participant will only be effected through, records maintained
by the participants. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such
securities in definitive form. Such laws may impair the ability to
transfer beneficial interests in a global security.
Payment of principal of and
any premium and interest on book-entry securities represented by a
global security registered in the name of or held by a depositary
will be made to the depositary, as the registered owner of the
global security. Neither we, the trustee nor any agent of ours or
the trustee will have any responsibility or liability for any
aspect of the depositary’s records or any participant’s records
relating to or payments made on account of beneficial ownership
interests in a global security or for maintaining, supervising or
reviewing any of the depositary’s records or any participant’s
records relating to the beneficial ownership interests. Payments by
participants to owners of beneficial interests in a global security
held through such participants will be governed by the depositary’s
procedures, as is now the case with securities held for the
accounts of customers registered in “street name,” and will be the
sole responsibility of such participants.
A global security
representing a book-entry security is exchangeable for definitive
debt securities in registered form, of like tenor and of an equal
aggregate principal amount registered in the name of, or is
transferable in whole or in part to, a person other than the
depositary for that global security, only if (i) the depositary
notifies us that it is unwilling or unable to continue as
depositary for that global security or the depositary ceases to be
a clearing agency registered under the Exchange Act, (ii) there
shall have occurred and be continuing an event of default with
respect to the debt securities of that series or (iii) other
circumstances exist that have been specified in the terms of the
debt securities of that series. Any global security that is
exchangeable pursuant to the preceding sentence shall be registered
in the name or names of such person or persons as the depositary
shall instruct the trustee. It is expected that such instructions
may be based upon directions received by the depositary from its
participants with respect to ownership of beneficial interests in
such global security.
Except as provided above,
owners of beneficial interests in a global security will not be
entitled to receive physical delivery of debt securities in
definitive form and will not be considered the holders thereof for
any purpose under the indentures, and no global security shall be
exchangeable, except for a security registered in the name of the
depositary. This means each person owning a beneficial interest in
such global security must rely on the procedures of the depositary
and, if such person is not a participant, on the procedures of the
participant through which such person owns its interest, to
exercise any rights of a holder under the indentures. We understand
that under existing industry practices, if we request any action of
holders or an owner of a beneficial interest in such global
security desires to give or take any action that a holder is
entitled to give or take under the indentures, the depositary would
authorize the participants holding the relevant beneficial
interests to give or take such action, and such participants would
authorize beneficial owners owning through such participant to give
or take such action or would otherwise act upon the instructions of
beneficial owners owning through them.
Information Concerning the
Trustee
The trustee, other than
during the occurrence and continuance of an event of default under
an indenture, undertakes to perform only those duties as are
specifically set forth in the applicable indenture and is under no
obligation to exercise any of the powers given it by the indentures
at the request of any holder of debt securities unless it is
offered reasonable security and indemnity against the costs,
expenses and liabilities that it might incur. However, upon an
event of default under an indenture, the trustee must use the same
degree of care as a prudent person would exercise or use in the
conduct of his or her own affairs.
Payment and Paying
Agents
Unless we otherwise indicate
in the applicable prospectus supplement, we will make payment of
the interest on any debt securities on any interest payment date to
the person in whose name the debt securities, or one or more
predecessor securities, are registered at the close of business on
the regular record date for the interest.
We will pay principal of and
any premium and interest on the debt securities of a particular
series at the office of the paying agents designated by us, except
that, unless we otherwise indicate in the applicable prospectus
supplement, we may make interest payments by check which we will
mail to the holder or by wire transfer to certain holders. We will
designate an office or agency of the trustee as our paying agent
for payments with respect to debt securities of each series in the
applicable prospectus supplement. We will name in the applicable
prospectus supplement any other paying agents that we initially
designate for the debt securities of a particular series. We will
maintain a paying agent in each place of payment for the debt
securities of a particular series.
All money we pay to a paying
agent or the trustee for the payment of the principal of or any
premium or interest on any debt securities which remains unclaimed
at the end of two years after such principal, premium or interest
has become due and payable will be repaid to us, and the holder of
the debt security thereafter may look only to us for payment
thereof.
Governing Law
Except as otherwise
specified in the applicable prospectus supplement, the indentures
and the debt securities will be governed by and construed in
accordance with the laws of the state of New York except to the
extent that the Trust Indenture Act is applicable.
DESCRIPTION OF
WARRANTS
We may issue warrants for the purchase of
shares of our common stock, preferred stock and/or debt securities
in one or more series together with other securities or separately,
as described in each applicable prospectus supplement. Warrants may
be issued independently or together with any preferred stock,
common stock, or debt securities, and may be attached to or
separate from any offered securities. Each series of warrants will
be issued under a separate warrant agreement to be entered into
between a warrant agent specified in the agreement and us. The
warrant agent will act solely as our agent in connection with the
warrants of that series and will not assume any obligation or
relationship of agency or trust for or with any holders or
beneficial owners of warrants. This summary of some provisions of
the securities warrants is not complete. You should refer to the
securities warrant agreement, including the forms of securities
warrant certificate representing the securities warrants, relating
to the specific securities warrants being offered for the complete
terms of the securities warrant agreement and the securities
warrants. The securities warrant agreement, together with the terms
of the securities warrant certificate and securities warrants, will
be filed with the SEC in connection with the offering of the
specific warrants.
The applicable prospectus supplement will
describe, where applicable, the following terms of and other
information relating to the warrants:
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the specific designation and
aggregate number of, and the price at which we will issue, the
warrants;
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the currency or currency
units in which the offering price, if any, and the exercise price
are payable;
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the designation, amount and
terms of the securities purchasable upon exercise of the
warrants;
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if applicable, the exercise
price for shares of our common stock and the number of shares of
common stock to be received upon exercise of the warrants;
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if applicable, the exercise
price for shares of our preferred stock, the number of shares of
preferred stock to be received upon exercise of the warrants, and a
description of that series of our preferred stock;
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if applicable, the exercise
price for our debt securities, the amount of our debt securities to
be received upon exercise of the warrants, and a description of
that series of debt securities;
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the date on which the right
to exercise the warrants will begin and the date on which that
right will expire or, if the warrants may not be continuously
exercised throughout that period, the specific date or dates on
which the warrants may be exercised;
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whether the warrants will be
issued in fully registered form or bearer form, in definitive or
global form or in any combination of these forms, although, in any
case, the form of a warrant included in a unit will correspond to
the form of the unit and of any security included in that unit;
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any applicable material U.S.
federal income tax consequences;
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the identity of the warrant
agent for the warrants and of any other depositaries, execution or
paying agents, transfer agents, registrars or other agents;
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the proposed listing, if
any, of the warrants or any securities purchasable upon exercise of
the warrants on any securities exchange or market;
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if applicable, the date from
and after which the warrants and the common stock, preferred stock
and/or debt securities will be separately transferable;
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if applicable, the minimum
or maximum amount of the warrants that may be exercised at any one
time;
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information with respect to
book-entry procedures, if any;
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the anti-dilution provisions
of the warrants, if any;
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any redemption or call
provisions;
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whether the warrants are to
be sold separately or with other securities as parts of units;
and
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any additional terms of the
warrants, including terms, procedures and limitations relating to
the exchange and exercise of the warrants.
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Transfer Agent and Registrar
The transfer agent and registrar for any
warrants will be set forth in the applicable prospectus
supplement.
DESCRIPTION OF
UNITS
We may issue units composed of one or more
of the other securities described in this prospectus in any
combination. Each unit will be issued so that the holder of the
unit is also the holder of each security included in the unit.
Thus, the holder of a unit will have the rights and obligations of
a holder of each included security. The unit agreement under which
a unit is issued may provide that the securities included in the
unit may not be held or transferred separately, at any time or at
any time before a specified date.
The applicable prospectus supplement may
describe:
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the designation and terms of
the units and of the securities comprising the units, including
whether and under what circumstances those securities may be held
or transferred separately;
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any provisions for the
issuance, payment, settlement, transfer or exchange of the units or
of the securities comprising the units;
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the terms of the unit
agreement governing the units;
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United States federal income
tax considerations relevant to the units; and
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whether the units will be
issued in fully registered or global form.
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The preceding description and any
description of units in the applicable prospectus supplement does
not purport to be complete and is subject to and is qualified in
its entirety by reference to the unit agreement and, if applicable,
collateral arrangements and depositary arrangements relating to
such units.
PLAN OF
DISTRIBUTION
We may sell the securities described in this
prospectus on a continuous or delayed basis directly to purchasers,
through underwriters, broker-dealers or agents that may receive
compensation in the form of discounts, concessions or commissions
from us or the purchasers of the securities, in “at the market
offerings” within the meaning of Rule 415(a)(4) of the Securities
Act, to or through a market maker or into an existing trading
market, on an exchange, or otherwise or through a combination of
any such methods of sale. Discounts, concessions or commissions as
to any particular underwriter, broker-dealer or agent may be in
excess of those customary in the types of transactions
involved.
The securities may be sold from time to time
in one or more transactions at fixed prices, which may be changed
from time to time, at prevailing market prices at the time of sale,
at varying prices determined at the time of sale or at negotiated
prices. These sales may be effected in transactions, which may
involve crosses or block transactions:
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on any national securities
exchange or quotation service on which the securities may be listed
or quoted at the time of sale, including, as of the date of this
prospectus, the OTCQB in the case of our common stock;
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in the over-the-counter
market;
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in transactions otherwise
than on these exchanges or services or in the over-the-counter
market; or
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through the writing of
options, whether the options are listed on an options exchange or
otherwise.
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Each time that we use this prospectus to
sell our securities, we shall also provide a prospectus supplement.
For each series of securities, the applicable prospectus supplement
will set forth the terms of the offering including:
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the public offering
price;
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the name or names of any
underwriters, dealers or agents;
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the purchase price of the
securities;
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the proceeds from the sale
of the securities to us;
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any underwriting discounts,
agency fees, or other compensation payable to underwriters or
agents;
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any discounts or concessions
allowed or reallowed or repaid to dealers; and
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the securities exchanges on
which the securities will be listed, if any.
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If we use underwriters in the sale of
securities, the securities will be acquired by the underwriters for
their own account. The underwriters may then resell the securities
in one or more transactions at a fixed public offering price or at
varying prices determined at the time of sale or thereafter. The
securities may be either offered to the public through underwriting
syndicates represented by managing underwriters, or directly by
underwriters. The obligations of the underwriters to purchase the
securities will be subject to certain conditions. The underwriters
will be obligated to purchase all the securities offered if they
purchase any securities. The public offering price and any
discounts or concessions allowed or re-allowed or paid to dealers
may be changed from time to time.
If we use dealers in the sale of securities,
we will sell securities to such dealers as principals. The dealers
may then resell the securities to the public at varying prices to
be determined by such dealers at the time of resale. We may solicit
offers to purchase the securities directly, and we may sell the
securities directly to institutional or other investors, who may be
deemed underwriters within the meaning of the Securities Act with
respect to any resales of those securities. The terms of these
sales will be described in the applicable prospectus supplement. If
we use agents in the sale of securities, unless otherwise indicated
in the prospectus supplement, they will use their reasonable best
efforts to solicit purchases for the period of their appointment.
Unless otherwise indicated in a prospectus supplement, if we sell
directly, no underwriters, dealers or agents would be involved. We
will not make an offer of securities in any jurisdiction that does
not permit such an offer.
We may grant underwriters who participate in
the distribution of securities an option to purchase additional
securities to cover overallotments, if any, in connection with the
distribution. Any underwriter may engage in overallotment,
stabilizing transactions, short covering transactions and penalty
bids in accordance with SEC orders, rules and regulations and
applicable law. To the extent permitted by applicable law and SEC
orders, rules and regulations, an overallotment involves sales in
excess of the offering size, which create a short position.
Stabilizing transactions permit bids to purchase the underlying
security so long as the stabilizing bids do not exceed a specified
maximum. To the extent permitted by applicable law and SEC orders,
rules and regulations, short covering transactions involve
purchases of the common stock in the open market after the
distribution is completed to cover short positions. Penalty bids
permit the underwriters to reclaim a selling concession from a
dealer when the common stock originally sold by the dealer is
purchased in a covering transaction to cover short positions. Those
activities may cause the price of the common stock to be higher
than it would otherwise be. If commenced, the underwriters may
discontinue any of the activities at any time.
Underwriters, dealers and agents that
participate in any distribution of securities may be deemed to be
underwriters as defined in the Securities Act. Any discounts,
commissions or profit they receive when they resell the securities
may be treated as underwriting discounts and commissions under the
Securities Act. Only underwriters named in the prospectus
supplement are underwriters of the securities offered in the
prospectus supplement. We may have agreements with underwriters,
dealers and agents to indemnify them against certain civil
liabilities, including certain liabilities under the Securities
Act, or to contribute with respect to payments that they may be
required to make.
We may authorize underwriters, dealers or
agents to solicit offers from certain institutions whereby the
institution contractually agrees to purchase the securities from us
on a future date at a specific price. This type of contract may be
made only with institutions that we specifically approve. Such
institutions could include banks, insurance companies, pension
funds, investment companies and educational and charitable
institutions. The underwriters, dealers or agents will not be
responsible for the validity or performance of these contracts.
Each series of securities will be a new
issue of securities. Our Class A common stock is traded on the
OTCQB under the symbol “IPIX”. Unless otherwise specified in the
applicable prospectus supplement, our securities (other than our
common stock) will not be listed on any exchange. It has not
presently been established whether the underwriters, if any, of the
securities will make a market in the securities. If the
underwriters make a market in the securities, such market making
may be discontinued at any time without notice.
Agents, dealers and underwriters may be
entitled to indemnification by us against certain civil
liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments which the agents, dealers or
underwriters may be required to make in respect thereof. Agents,
dealers or underwriters may be customers of, engage in transactions
with, or perform services for us and our subsidiaries in the
ordinary course of business.
LEGAL MATTERS
Certain legal matters in connection with the
offered debt securities, warrants and units will be passed upon for
us by Hogan Lovells US LLP, Denver, Colorado. Certain legal matters
with respect to the offered common stock and preferred stock and
with respect to Nevada corporate law will be passed upon for us by
Gary R. Henrie, Esq., Nauvoo, Illinois. The legality of the
securities for any underwriters, dealers or agents will be passed
upon by counsel as may be specified in the applicable prospectus
supplement.
EXPERTS
The financial statements of Innovation
Pharmaceuticals Inc. appearing in our Annual Report on Form 10-K
for the year ended June 30, 2017, and the effectiveness of our
internal control over financial reporting as of June 30, 2017, have
been audited by Baker Tilly Virchow Krause, LLP, an independent
registered public accounting firm, as set forth in their reports
thereon, included therein, and incorporated herein by reference.
Such financial statements are incorporated herein by reference in
reliance upon such reports given on the authority of Baker Tilly
Virchow Krause, LLP as experts in accounting and auditing.
INNOVATION PHARMACEUTICALS
INC.
$75,000,000 of
Class A Common
Stock
Preferred Stock
Debt Securities
Warrants
Units
PROSPECTUS
Innovation Pharmaceuticals (QB) (USOTC:IPIX)
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From Dec 2020 to Jan 2021
Innovation Pharmaceuticals (QB) (USOTC:IPIX)
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From Jan 2020 to Jan 2021