Equity Investment

12 Months Ended

Jun. 30, 2022

4. Equity Investment

BT BeaMedical Technologies Ltd. (formerly known as Squalus Medical Ltd.)

On June 9, 2022, the Company entered into a Series A Preferred Share Purchase Agreement (the “Purchase Agreement”) with BT BeaMedical Technologies Ltd. (formerly known as Squalus Medical Ltd.), a company established under the laws of the State of Israel (“BTL”), pursuant to which the Company purchased 55,556 shares of BTL’s Series A Redeemable Preferred Shares (the “Series A Shares”) and a warrant to purchase 27,778 Series A Shares for aggregate consideration of $4,000,000, or approximately $72.00 per Series A Share. Following the closing under the Purchase Agreement, the Company owns approximately 35.7% of BTL’s issued and outstanding equity securities and approximately 41.6% of BTL’s equity securities on a fully diluted basis. The Company also entered into customary investor rights and indemnification agreements with BTL. The Company therefore recorded an equity investment on our June 30, 2022 consolidated balance sheet.

The Company’s equity in losses in excess of its investment are accounted for under the equity method consisted of the following as of June 30, 2022 (rounded to nearest thousand):

Investment Name	Ownership Interest			Carrying Amount
BT BeaMedical Technologies Limited (“BTL”)		35.7	%
Total contributions				$	4,000,000
Less: Share of the loss in investment in BTL					(22,000	)
Equity losses in excess of investment				$	3,978,000

The Company invested approximately $4,000,000 in BTL as of June 30, 2022. The cash balance in BTL at June 30, 2022 was approximately $3.8 million. During the year ended June 30, 2022, BTL incurred a loss of approximately $63,000, and accordingly, the Company recorded its share of the loss in investment in BTL, in accordance with the provisions in the purchase agreement, of approximately $22,000 in the accompanying consolidated statement of operations.

We were committed to fund BTL for our share of its liabilities at June 30, 2022. The Company will continue providing additional equity contributions in 2023 and for the foreseeable future.

Summarized balance sheet information for the Company’s equity method investee BTL as of June 30, 2022 is presented in the following table (rounded to nearest thousand):

Current assets
Cash	$	3,850,000
Other current assets		1,000
Total assets	$	3,851,000
Current liabilities	$	(195.000	)
Total liabilities	$	(195,000	)

Summarized income statement information for the Company’s equity method investee BTL is presented in the following table for the period from June 9, 2022 (date of acquisition) to June 30, 2022 (rounded to nearest thousand):

Net sales and revenue	$	-
Research and development costs		7,000
Administrative expenses		55,000
Total operating expense	$	62,000
Loss from operations	$	62,000
Other expense		1,000
Net loss	$	63,000

Innovation Pharmaceuticals Inc. 10-K